Helix Corporation uses the weighted-average method in its process costing system

Question

Helix Corporation uses the weighted-average method in its process costing system. It produces prefabricated flooring in a series of steps carried out in production departments. All of the material that is used in the first production department is added at the beginning of processing in that department. Data for May for the first production department follow: Percent Complete Units Materials 61,000 41,000 Conversion 100 % 100 % Work in process inventory, May 1 Work in process inventory, May 31 Materials cost in work in process inventory, May 1 Conversion cost in work in process inventory, May 1 Units started into productiorn Units transferred to the next production department Materials cost added during May Conversion cost added during May 40 % 25 % $ 50,700 $ 14,200 250,500 270,500 $83,245 204,785 Required: 1. Calculate the first production department's equivalent units of production for materials and conversion for May. 2. Compute the first production department's cost per equivalent unit for materials and conversion for May 3. Compute the first production department's cost of ending work in process inventory for materials, conversion, and in total for May. 4. Compute the first production department's cost of the units transferred to the next production department for materials, conversion, and in total for May

Explanation / Answer

Answer: Quantity Schedule Units to account for Beginning Inventory                          61,000 Units started during Feburary                        250,500 Total units to account for                        311,500 Total units accounted for Units completed and transferred out                        270,500 Ending Inventory                          41,000 Total units accounted for                        311,500 To show better performance, the department supervisor might report a higher degree of completion resulting in understated cost per equivalent unit and overstated operating income. If performance for the period is very good, the department supervisor may be tempted to report a lower degree of completion, reducing income in the current period. This has the effect of reducing the costs carried in ending inventory and the costs carried to the following year in beginning inventory Requirement 1 Equivalent units of production-Weighted average method (unit*% Material) (unit*% Conversion) Units % Material EUP-Material % Conversion EUP-Conversion Units completed and transferred out                        270,500 100%                        270,500 100%                 270,500 Ending Inventory                          41,000 100%                          41,000 25% $               10,250 Equivalent Units of conversion                        311,500                 280,750 Requirement 2 Cost per Unit Material Conversion Total Cost of beginning work in progress $                      50,700 $               14,200 $               64,900 Cost incurred during the year $                      83,245 $            204,785 $            288,030 Total Cost Cost $                    133,945 Cost $            218,985 $            352,930 Equivalent Units of production EUP                        311,500 EUP                 280,750 Cost per Unit $                           0.43 $                   0.78 Requirement 4 Cost assignment and reconciliation aa bb aa*bb EUP Cost per EUP Total Cost Cost transferred out Direct material                        270,500 $                           0.43 $                    116,315 Conversion Cost                        270,500 $                           0.78 $                    210,990 Total transferred out $                    327,305 Requirement 3 Cost of ending work in progress Direct material                          41,000 $                           0.43 $                      17,630 Conversion Cost                          41,000 $                           0.20 $                        7,995 (0.78*25%) $                      25,625 Total Cost accounted for $            352,930 Note: 1 Since direct material are added at the beginning of the process degree of completion would be 100%

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