Question

Victory Company uses weighted-average process costing to account for its production costs.

Answer 1

Answer:

1. Direct Materials = 987,000 units , Direct Labor = 912,200 units

2.Direct Materials = $1.50 , Direct Labor = $3.50

3.

Units Completed and Transferred Costs

Direct Materials = $ 1,200,000

Direct Labor =  $ 2,800,000

Ending goods in process inventory cost

Direct Materials = $ 280,500

Direct Labor = $ 392,700

Explanation:

First step is to determine the equivalent units of production with respect to direct labor and direct materials

Direct Materials

Note : Materials are added at beginning of the process hence, they are 100 % complete for both units categories

Units Completed and Transferred (800,000 × 100%) =  800,000

Units of Ending Work In Process (187,000 × 100%)     =   187,000

Equivalent units of production                                      =   987,000

Direct Labor

Note : Conversion costs are added evenly throughout the process, hence we need to establish units to the extent of work done.

Units Completed and Transferred (800,000 × 100%) =  800,000

Units of Ending Work In Process (187,000 × 60%)     =      112,200

Equivalent units of production                                      =    912,200

The next step is to Calculate the Total Cost of Production with respect to direct labor and direct materials incurred during the period.

Direct Materials

Cost in Opening Work In Process =    $192,465

Cost added during the period       = $1,288,035

Total Costs                                      = $1,480,500

Conversion

Cost in Opening Work In Process =     $159,635

Cost added during the period       = $3,033,065

Total Costs                                      =  $3,192,700

Then use the above data to calculate the cost per equivalent unit for direct labor and direct materials.

Cost per equivalent unit. = Total Cost / Total Equivalent units

Direct Materials = $1,480,500 / 987,000 = $1.50

Direct Labor = $3,192,700 / 912,200 = $3.50

CONCLUSION :

Units Completed and Transferred Costs

Direct Materials = (800,000 ×  $1.50) = $ 1,200,000

Direct Labor = (800,000 ×  $3.50) = $ 2,800,000

Ending goods in process inventory cost

Direct Materials = (187,000 ×  $1.50) = $ 280,500

Direct Labor = (112,200 ×  $3.50) = $ 392,700