1. The Morgan Company uses the weighted-average method in its process costing sy
ID: 2499240 • Letter: 1
Question
1. The Morgan Company uses the weighted-average method in its process costing system. For a particular department, the company had 54,000 equivalent units with respect to conversion costs in March. There were 7,500 units in the department's beginning work in process inventory, two thirds complete with respect to conversion costs. During March, 52,500 units were started and 50,000 were completed and transferred out of the department. The ending work in process inventory in the department:
consisted of 5,000 units
consisted of 2,500 units
was 65% complete with respect to conversion costs
was 40% complete with respect to conversion costs
2. The Richmond Company uses the weighted-average method in its process costing system. The company has only a single processing department. The company's ending work in process inventory on August 31 consisted of 18,000 units. The units in the ending work in process inventory were 100% complete with respect to materials and 60% complete with respect to labor and overhead. If the cost per equivalent unit for August was $2.75 for materials and $4.25 for labor and overhead, the total cost assigned to the ending work in process inventory was:
$126,000
$75,600
$95,400
$80,100
Explanation / Answer
The Morgan Company uses the weighted-average method in its process costing system. For a particular department, the company had 54,000 equivalent units with respect to conversion costs in March. There were 7,500 units in the department's beginning work in process inventory, two thirds complete with respect to conversion costs. During March, 52,500 units were started and 50,000 were completed and transferred out of the department. The ending work in process inventory in the department:
7,500 + 52,500 = 60,000 less 50,000 transferred out = EI of 10,000 units
EI equiv. units = 54,000 - 50,000 = 4,000 EU therefore 4/10 = 40% complete
2. The Richmond Company uses the weighted-average method in its process costing system. The company has only a single processing department. The company's ending work in process inventory on August 31 consisted of 18,000 units. The units in the ending work in process inventory were 100% complete with respect to materials and 60% complete with respect to labor and overhead. If the cost per equivalent unit for August was $2.75 for materials and $4.25 for labor and overhead, the total cost assigned to the ending work in process inventory was
Answer
18,000*$2.75 + 18,000*.6*$4.25 = $95,400
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