Answer:
First we find the equivalent units. Then Cost Per Equivalent Units. We apply these costs to the units to find the total cost. Then we compare the given costs with the found costs to see the difference.
Explanation:
Equivalent Units
Particulars Units % of Completion Equivalent Units
Materials Conversion Materials Conversion
Units transfered 6050 100 1000 6050 6050
<u>Ending WIP 450 40 30 180 135</u>
<u>Equivalent Units 6230 6185</u>
Units Completed And Transferred
Particulars Units
Beginning WIP 300
Units started in production 6200
Total Units Available 6500
<u>Less Ending WIP 450</u>
<u>Units Completed and Transferred 6050</u>
<u></u>
<u>Cost Per Equivalent Unit</u>
Particulars Materials Conversion
Beginning WIP $10,500 $6,750
Costs added 332,150 407,645
Total Costs 342,650 414,395
Equivalent Units 6230 6185
Cost Per Equivalent Unit 342,650 / 6230 414,395/ 6185
=$ 55 =$ 67
<u>Costs Assigned</u>
<u>Ending WIP $ 18945</u>
Materials ( 180 * 55) = $ 9900
Conversion ( 135 * 67) = $ 9045
<u>Units Completed And Transferred Out : $ 738100</u>
Materials ( 6050 *55) = $ 332750
Conversion ( 6050 * 67) = $ 405350
<u>Cost Reconciliation </u>
Cost to be accounted for
Beginning WIP ( $10,500 + $6,750 )= $ 17250
Cost added ( 332,150+ 407,645)= $ 739795
<u>Total Costs $ 757045</u>
<u></u>
Ending WIP $ 18945
Units Completed And Transferred Out : $ 738100
<u>Total Costs $ 757045</u>
Which is the same.
