A firm has earnings before interest and taxes of $27,130, net income of $16,220, and taxes of $5,450 for the year. While the fir
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A company uses the weighted average method of process costing. It had 40,000 units in the beginning inventory, which were 70% complete as to materials and 80% complete as to conversion and during month it started 110,000 units. At the end of the month, 32,000 units were in inventory which 65% complete as to materials and 60% complete as to conversion. <u>The total cost accounted for the month is $1,614,360 with cost per equivalent unit of productions for direct material is $5.70 and for conversion is $4.87</u>
Weighted average method is an approach to valuing a company's business inventory stock and determines the average cost of all inventory items.
Please reference to the first picture for more information about this case.
From the information we know that:
Beginning work in process inventory:
Direct materials costs $158,200
Conversion costs $193,600
Total beginning inventory cost $351,800
Costs added during the month:
Direct materials costs $632,960
Conversion costs $629,600
Total costs added during the month $1,262,560
Total production costs $1,614,360
Units Materials% Conversion%
Beginning inventory 40,000 70% 80%
Unit started 110,000
Ending inentory 32,000 65% 60%
To find the costs per equivalent units of production, we need to know the total equivalent units of production first.
The total equivalent units of production could be found by adding the units completed and transferred out with units of ending work in process. The equivalent units completed and transferred out could be calculated by adding the unit started at the month to the beginning inventory and eliminating the ending inventory units. Please make sure that the beginning inventory amount calculated here should be counted as 100% instead of the presented percentage in the case.
Equivalent units of production Direct materials Conversion
Equivalent units completed and transferred out 129,200 130,800
Equivalent units for ending work in process 20,800 19,200
Total equivalent units of production 138,800 169,199
Cost per Equivalent unit of production Direct materials Conversion
Costs of beginning work in process inventory $158,200 $193,600
Costs added during month $632,960 $629,600
Total costs $791,160 $823,200
Equivalent units of production 138,800 169,199
Costs per equivalent units of production $5.70 $4.87
For more complete calculation, please refer to the second image below.
Learn more about Weighted Average Method here: brainly.com/question/15095915
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