Equivalent Units and Product Cost Report-Weighted Average Method The following data (and annotations) are for Nelson Company's processing department work-in-process account for the month of September 2019:

Beginning inventory (1,500 units, 70% complete)

Direct materials: $22,000
Conversion costs: 10,000
Current period Direct materials (6,000 units) 50,000
Direct labor 41,000
Manufacturing overhead applied 65,440

Nelson uses the weighted average method. Materials are added at the beginning of the process and conversion costs are incurred evenly throughout. Ending work-in-process is composed of 1,000 units, 60% complete. Compute the following:

a. Equivalent units for direct materials and conversion.
b. Cost per equivalent unit for direct materials and conversion.

Question

contestada

Respuesta :

Zviko Zviko · Answer 1 · 2020-10-03T02:47:57+02:00

Answer:

1. Direct Materials = 7,500 units and Conversion Costs = 7,100 units

2. Direct Materials = $9.60 and Conversion Costs = $16.40

Explanation:

First Calculate the Units Completed and transferred to Finished Goods

Units Completed and transferred to Finished Goods = Opening Work In Process Inventory + Units added during the year - Closing Work In Process

Therefore,

Units Completed and transferred to Finished Goods = 1,500 + 6,000 - 1,000

= 6,500

Calculation of the Equivalent Units of Production with respect to Materials and Conversion Costs.

1. Direct Materials

Completed and Transferred to Finished Goods (6,500 × 100%) = 6,500

Closing Work In Process Inventory (1,000 × 100%) = 1,000

Equivalent Units of Production with respect to Direct Materials = 7,500

2. Conversion Costs

Completed and Transferred to Finished Goods (6,500 × 100%) = 6,500

Closing Work In Process Inventory (1,000 × 60%) = 600

Equivalent Units of Production with respect to Conversion = 7,100

Calculation of Cost per equivalent unit for direct materials and conversion.

Cost per equivalent unit = Total Cost ÷ Total Equivalent Units

1. Direct Materials

Cost per equivalent unit = ($22,000 + $50,000) ÷ 7,500

= $9.60

2. Conversion Costs

Cost per equivalent unit = ($10,000+ $41,000 + $65,440) ÷ 7,100

= $16.40