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Weighted Average Method, Equivalent Units, Unit Cost, Multiple Departments
Fordman Company has a product that passes through two processes: Grinding and Polishing. During December, the Grinding Department transferred 20,000 units to the Polishing Department. The cost of the units transferred into the second department was $40,000. Direct materials are added uniformly in the second process. Units are measured the same way in both departments.
The second department (Polishing) had the following physical flow schedule for December:
Units to account for:
Units, beginning work in process 4,000 (40% complete)
Units started ?
Total units to account for ?
Units accounted for:
Units, ending work in process 8,000 (50% complete)
Units completed ?
Units accounted for ?
Costs in beginning work in process for the Polishing Department were direct materials, $5,000; conversion costs, $6,000; and transferred in, $8,000. Costs added during the month: direct materials, $32,000; conversion costs, $50,000; and transferred in, $40,000.
Required:
1. Assuming the use of the weighted average method, prepare a schedule of equivalent units. Enter percentages as whole numbers.
Fordman Company
Schedule of Equivalent Units
For the month of December
Direct Materials Conversion Costs Transferred In
Units completed
Ending WIP:
x
%
x
%
Total equivalent units
2. Compute the unit cost for the month. If required, round your answer to the nearest cent.
$ per equivalent unit

Sagot :

anthougo

Answer:

Fordman Company

1. Fordman Company

Schedule of Equivalent Units

For the month of December

                                     Direct Materials  Conversion Costs  Transferred In

Units completed                    16,000               16,000                20,000

Ending WIP:                             4,000                4,000                

                                         (8,000 * 50%)       (8,000 * 50%)

Total equivalent units          20,000              20,000               20,000

2. Cost per equivalent unit:

                                    Direct Materials Conversion Costs  Transferred In

Total costs of production     $37,000         $56,000              $48,000

Total equivalent units            20,000            20,000                20,000

Cost per equivalent unit       $1.85                $2.80                  $2.40

Explanation:

a) Data and Calculations:

Transferred in units = 20,000

Cost of units transferred in = $40,000

Units to account for:

Units, beginning work in process 4,000 (40% complete)

Units started                                20,000

Total units to account for            24,000

Units accounted for:

Units, ending work in process     8,000 (50% complete)

Units completed                          16,000

Units accounted for                   24,000

                                            Materials     Conversion   Transferred in

Beginning work in process    $5,000         $6,000           $8,000

Costs added during month    32,000         50,000           40,000

Total costs of production     $37,000       $56,000         $48,000

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