Thank you! WaferCo is a fast-growing manufacturer of computer chips. Direct mate
ID: 2719918 • Letter: T
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WaferCo is a fast-growing manufacturer of computer chips. Direct materials are added at the start of the production process. Conversion costs are added evenly during the process. Some units of this product are spoiled as a result of defects not detectable before inspection of finished goods. Spoiled units are disposed of at zero net disposal value. WaferCo uses the weighted-average method of process costing. Summary data for September 2014 are as follows: For each cost category, compute equivalent units. Show physical units in the first column of your schedule. Summarize the total costs to account for; calculate the cost per equivalent unit for each cost category; and assign costs to units completed and transferred out (including normal spoilage), to abnormal spoilage, and to units in ending work in process. Do Exercise 18-25 using the FIFO method of process costing. Should WaferCo's managers choose the weighted-average method or the FIFO method Explain briefly.Explanation / Answer
1) Material Cost Analysis Units Equivalent Units Work in process, beginning inventory (Sep 1) 1200 Units started during Sep 2257 Units to account for 3457 Completed and transferred out during Sep 2300 2300 Normal spoilage (15 percent of good units) 345 345 Work in process, ending inventory (Sep 30) 520 520 Abnormal Spoilage(3457-3165) 292 292 Units accounted for 3457 3457 Cost of beginning inventory 158,635 costs added during the period 830,654 Total cost 989,289 Total Equivalent Units 3,457 Cost per Equivalent Units 286.17 Weighted Average — Equivalent Units (Sep) Equivalent Units Cost Per Unit Total Cost Completed, transferred 2300 $286.17 $658,191 Normal spoilage 345 $286.17 $98,729 Cost of good units 2645 $286.17 $756,920 Abnormal spoilage 292 $286.17 $83,562 Work in process, ending 520 $286.17 $148,808 Totals 3457 $286.17 $989,290 under FIFO- Equivalent units units Direct material 2,257 conversion cost(1200*30%+2257) 2,617 Unit cost under FIFO $ Direct material (573278/2257) 254.00 conversion cost (257376/2617) 98.35 Total 352.35 Cost already incurred as opening WIP $ 158635 Material 100% complete 0 Conversion 1200*30%= 360*98.35 35,406 Cost of units put in process 2257*352.35 795,254 TOTAL cost 830,660
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