Weighted-Average Method The T. L. Lin Company manufactures a variety of natural

Question

Weighted-Average Method The T. L. Lin Company manufactures a variety of natural fabrics for the clothing industry in a suburb of Shanghai. The following data in Chinese currency called yuan pertain to the month of October Work-in-process inventory, October 1 Direct materials: 60% complete Conversion: 30% complete 50,000 units 55,440 yuarn 54,425 yuarn Costs incurred during October Direct materials Conversion 820,400 yuan 1,350,600 yuan During October, 200,000 units were completed and transferred out. At the end of the month 30,000 units (direct materials 80% and conversion 50% complete) remain in work-in-process inventory. Required Calculate each of the following amounts using weighted-average process costing 1. Equivalent units of direct materials and conversion 2. Unit costs of direct materials and conversion 3. Cost of goods completed and transferred out during October 4. Cost of the work-in-process inventory at October 31 5. Check the most recent issue of The Wall Street Journal or go to www.federalreserve.gov/releases/H10/hist/ to learn the exchange rate between the U.S. dollar and the Chinese vuan

Explanation / Answer

1 Equivalent Units of Production Materials Conversion Units transferred to the next department           200,000        200,000 Equivalent units in ending work in process inventory: Materials              24,000 Conversion          15,000 Equivalent units of production           224,000        215,000 2 Costs per Equivalent Unit Materials Conversion Cost of beginning work in process inventory              55,440          54,425 Yuan Costs added during the period           820,400    1,350,600 Yuan Total cost           875,840    1,405,025 Yuan Equivalent units of production           224,000        215,000 Cost per equivalent unit                   3.91                6.54 Yuan 3 Costs of goods completed and transferred Out Materials Conversion Total Units transferred to the next department           200,000        200,000 Cost per equivalent unit                   3.91                6.54 Yuan Cost of units transferred out           782,000    1,307,000    2,089,000 Yuan 4 Cost of ending Work in Process Inventory Materials Conversion Total Ending work in process inventory: Equivalent units              24,000          15,000 Cost per equivalent unit                   3.91                6.54 Yuan Cost of ending work in process inventory              93,840          98,025        191,865 Yuan

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