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Safari File Edit View History Bookmarks Window Help ? new connect.mheducation.com 2018 Spr- BUS 5(1 Gmail Files Connect Solved: During April, the... Arrow Video Chegg Study | Guided Ss Chapter Twenty, Process Costing Saved Help Save & Exit Sbmit During April, the production department of a process manufacturing system completed a number of units of a product and transferred them to finished goods. Of these transferred units, 60,000 were in process in the production department at the beginning of April and 240,000 were started and completed in Apri. April's beginning inventory units were 60% complete with respect to materials and 40% complete with respect to labor. At the end of April, 82,000 additional units were in process in the production department and were 80% complete with respect to materials and 30% complete with respect to labor. 4 points The production department had $850,000 of direct materials and $650,000 of direct labor cost charged to it during April. Also, its beginning inventory included $118,840 of direct materials cost and $47,890 of direct labor. Hint Print References1&2.Using the weighted-average method, compute the direct materials cost and the direct labor cost per equivalent unit and assign April's costs to the department's output. (Round "Cost per EUP" to 2 decimal places.) Equivalent units of production (EUP)-weighted average method Units % Materials EUP-Materials % Labor EUP- Labor Equivalent units of production st per equivalent unit of production Materials Labor Mc Prev 18 of 18 Next> Hill 20Explanation / Answer
Solution:
First of all we need to understand the treatment of cost and units in process costing when Weighted Average Method is used.
Weighted Average (Average Cost) Method
Physical Units Count
Under this method the percentage completion done in the Beginning Inventory is ignored while calculating the equivalent completed units during the current period. Beginning Inventory Units are treated as fresh units introduced for production.
Cost Accounted for:
- The cost of opening work-in-progress and cost of the current period are aggregated and the aggregate cost is divided by output in terms of completed equivalent units.
- The units of Beginning Inventory of WIP and their cost are taken in full under this method
Ending Inventory
The Ending Inventory of WIP is valued at total cost i.e. Cost added during the month/period and Cost of Beginning WIP.
Equivalent units of production (EUP) - Weighted Average Method
Units
% Material
EUP - Materials
% Labor
EUP - Labor
Started and Completed during the period
240000
100%
240000
100%
240000
Ending Work In Process
82000
80%
65600
30%
24600
Equivalent units of production
305600
264600
Cost per equivalent unit of production
Materials
Labor
Cost related to beginning work in process
$118,840
$47,890
Cost incurred during the period
$850,000
$650,000
Total Costs
Costs
$968,840
Costs
$697,890
Equivalent Units of Production
EUP
305600
EUP
264600
Cost per Equivalent Unit of production
$3.17
$2.64
Total costs to account for:
beginning direct material cost
$118,840
Beginning labor cost
$47,890
material cost incurred during the period
$850,000
Labor cost incurred during the period
$650,000
Total costs to account for:
$1,666,730
Total costs accounted for
$1,667,296
Difference due to rounding cost / unit
$566
Cost Assignment and Reconciliation
Cost of units transferred out:
EUP
Cost per EUP
Total Cost
Direct materials
240000
$3.17
$760,800
Direct labor
240000
$2.64
$633,600
Total costs transferred out
$1,394,400
Cost of ending goods in process
Direct materials
65600
$3.17
$207,952
Direct labor
24600
$2.64
$64,944
Total cost of ending goods in process
$272,896
Total costs accounted for
$1,667,296
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Equivalent units of production (EUP) - Weighted Average Method
Units
% Material
EUP - Materials
% Labor
EUP - Labor
Started and Completed during the period
240000
100%
240000
100%
240000
Ending Work In Process
82000
80%
65600
30%
24600
Equivalent units of production
305600
264600
Cost per equivalent unit of production
Materials
Labor
Cost related to beginning work in process
$118,840
$47,890
Cost incurred during the period
$850,000
$650,000
Total Costs
Costs
$968,840
Costs
$697,890
Equivalent Units of Production
EUP
305600
EUP
264600
Cost per Equivalent Unit of production
$3.17
$2.64
Total costs to account for:
beginning direct material cost
$118,840
Beginning labor cost
$47,890
material cost incurred during the period
$850,000
Labor cost incurred during the period
$650,000
Total costs to account for:
$1,666,730
Total costs accounted for
$1,667,296
Difference due to rounding cost / unit
$566
Cost Assignment and Reconciliation
Cost of units transferred out:
EUP
Cost per EUP
Total Cost
Direct materials
240000
$3.17
$760,800
Direct labor
240000
$2.64
$633,600
Total costs transferred out
$1,394,400
Cost of ending goods in process
Direct materials
65600
$3.17
$207,952
Direct labor
24600
$2.64
$64,944
Total cost of ending goods in process
$272,896
Total costs accounted for
$1,667,296
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