Shiffon Electronics manufactures music player. Its costing system uses two cost categories, direct materials and conversion cost
s. Each product must pass through the Assembly Department, the Programming department, and the Testing Department. Direct materials are added at the beginning of the production process. Conversion costs are allocated evenly throughout production. Shiffon Electronics uses weighted-average costing. The following information is available for the month of March 2017 for the Assembly department. Work in process, beginning inventory 340 units Conversion costs (25% complete) Units started during March 860 units Work in process, ending inventory: 140 units Conversion costs (60% complete) The cost details for the month of March are as follows: Work in process, beginning inventory: Direct materials $349,000 Conversion costs $360,000 Direct materials costs added during March $703,500 Conversion costs added during March $1,130,000 What amount of conversion costs is assigned to the ending Work-in-Process account for March
Under this method the percentage completion done in the Beginning Inventory is ignored while calculating the equivalent completed units during the current period. Beginning Inventory Units are treated as fresh units introduced for production.
Cost Accounted for:
- The cost of opening work-in-progress and cost of the current period are aggregated and the aggregate cost is divided by output in terms of completed equivalent units.
- The units of Beginning Inventory of WIP and their cost are taken in full under this method.
