Answer:
Using weighted average method
Statement of equivalent units
Material Conversion
Units Units
Units transferred out 19,000 19,000
Add: Closing work-in-progress <u> 6,000 </u> <u> 1,800</u>
Average divisor <u> 25,000 </u> <u>20,800</u>
Computation of cost per unit
Material Conversion
$ $
Cost of beginning work-in-progress 10,000 19,000
Cost added <u> 50,000 </u> <u>112,248</u>
Total cost <u> 60,000 </u> <u>131,248</u>
Material cost per unit = <u>$60,000</u>
25,000 units
= $2.40 per unit
Conversion cost per unit = <u>$131,248</u>
20,800 units
= $6.31 per unit
Value of units transferred out
Material = 19,000 x $2.40 = $45,600
Conversion = 19,000 x $6.31 = $119,890
Value of closing work-in-progress
Material = 6,000 x $2.40 = $14,400
Conversion = 1,800 x $6.31 = 11,358
Explanation:
In this case, we need to prepare statement of equivalent units in order to ascertain the average divisor. The average divisor is the sum of units transferred out and closing work-in-progress. Then, we will obtain the total cost of material and conversion, which is the aggregate of cost of opening work-in-progress and cost of units added. We will also calculate the cost per unit, which is total cost of material and conversion divided by average divisor. Finally, the units transferred and ending work-in-progress will be valued at unit cost of material and conversion.
