Victory Company uses weighted-average process costing to account for its product
ID: 2532638 • Letter: V
Question
Victory Company uses weighted-average process costing to account for its production costs. Conversion cost is added evenly throughout the process. Direct materials are added at the beginning of the process. During November, the company transferred 735,000 units of product to finished goods. At the end of November, the work in process inventory consists of 181,000 units that are 70% complete with respect to conversion. Beginning inventory had $535860 of direct materials and $150,798 of conversion cost. The direct material cost added in November is $3,586,140, and the conversion cost added is $2.865152. Beginning work in process consisted of 73,000 units that were 100% complete with respect to direct materials and 80% complete with respect to conversion. Of the units completed, 73,000 were from beginning work in process and 662,000 units were started and completed during the period. 2. Compute both the direct material cost and the conversion cost per equivalent unit. Cost per equivalent unit of production Materials Conversion Total costs Costs Costs Equivalent units of production Cost per equivalent unit of production (rounded to 2 decimals) EUP EUPExplanation / Answer
Equivalent units of production (EUP)- weighted average method
Units
% Materials
EUP- Materials
% Conversion
EUP- Conversion
Units completed and transferred out
735,000
100%
735,000
100%
735,000
Ending goods in process - units
181,000
100%
181,000
70%
126,700
Total units
916,000
916,000
861,700
Cost per equivalent unit of production
Materials
Conversion
Cost of beginning goods in process
$535,860
$150,798
Costs incurred this period
3,586,140
2,865,152
Total costs
Costs
$4,122,000
Costs
$3,015,950
÷ Equivalent units of production
EUP
916,000
EUP
861,700
Cost per equivalent unit of production (rounded to 2 decimals)
$4.50
$3.50
1Equivalent units of production (EUP)- weighted average method
Units
% Materials
EUP- Materials
% Conversion
EUP- Conversion
Units completed and transferred out
735,000
100%
735,000
100%
735,000
Ending goods in process - units
181,000
100%
181,000
70%
126,700
Total units
916,000
916,000
861,700
2Cost per equivalent unit of production
Materials
Conversion
Cost of beginning goods in process
$535,860
$150,798
Costs incurred this period
3,586,140
2,865,152
Total costs
Costs
$4,122,000
Costs
$3,015,950
÷ Equivalent units of production
EUP
916,000
EUP
861,700
Cost per equivalent unit of production (rounded to 2 decimals)
$4.50
$3.50
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