Problem 20-2A Weighted average: Cost per equivalent unit; costs assigned to prod

Question

Problem 20-2A Weighted average: Cost per equivalent unit; costs assigned to products LO C2, C3 [The following information applies to the questions displayed below.] 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 750,000 units of product to finished goods. At the end of November, the work in process inventory consists of 208,000 units that are 40% complete with respect to conversion. Beginning inventory had $560,430 of direct materials and $124,980 of conversion cost. The direct material cost added in November is $3,750,570, and the conversion cost added is $2,374,620. Beginning work in process consisted of 62,000 units that were 100% complete with respect to direct materials and 80% complete with respect to conversion. Of the units completed, 62,000 were from beginning work in process and 688,000 units were started and completed during the period.

1. Determine the equivalent units of production with respect to direct materials and conversion.

2. Compute both the direct material cost and the conversion cost per equivalent unit.

3. Compute the direct material cost and the conversion cost assigned to units completed and transferred out and ending work in process inventory. (Round "Cost per EUP" to 2 decimal places.)

Explanation / Answer

1. Determine the equivalent units of production with respect to direct materials and conversion.

2. Compute both the direct material cost and the conversion cost per equivalent unit.

3. Compute the direct material cost and the conversion cost assigned to units completed and transferred out and ending work in process inventory.

Cost of unit transfered out = (4.5+3)*750000 = 5625000

Ending work in process = (208000*4.5+83200*3) = 1185600

Physical unit % material % conversion cost Unit completed and transferred out 750000 100% 750000 100% 750000 Ending work in process 208000 100% 208000 40% 83200 Total equivalent unit of production 958000 833200

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