Question

At the end of November, work in process inventory consists of 181,000 units that are 50% complete with respect to conversion. Beginning work in process inventory had $460,720 of direct materials and $178,988 of conversion cost. The direct material cost added in November is $3,083,280, and the conversion cost added is $3,400,762. Beginning work in process consisted of 61,000 units that were 100% complete with respect to direct materials and 80% complete with respect to conversion. Of the units completed, 61,000 were from beginning work in process and 644,000 units were started and completed during the period. Required: For the first process: 1. Determine the equivalent units of production with respect to direct materials and conversion

Answer 1

Question Completion:

Victory Company uses weighted-average process costing to account for its production costs. Conversion cost is added evenly throughout the process. Direct materials are added at the beginning of the process.

Answer:

Victory Company

                             Direct Materials       Conversion

Equivalent units         886,000                795,500

Explanation:

a) Data and Calculations:

                                           Direct Materials   Conversion Cost

Beginning WIP Inventory        $460,720             $178,988

Costs added in November    3,083,280           3,400,762

Total costs of production    $3,544,000        $3,579,750

Production Process:

Beginning Inventory =      61,000

Started and completed 644,000

Units transferred out = 705,000

Ending WIP inventory     181,000

Units under process    886,000

Equivalent units of production:

                                            Direct Materials       Conversion

Units transferred out          705,000 (100%)    705,000 (100%)

Ending WIP Inventory           181,000 (100%)      90,500 (50%)

Total equivalent units         886,000                795,500