Answer:
1,550(option d), 1,580(option b), $2.00(option a)
Question:
Burton Company uses the weighted-average method in its process costing system. The Packaging Department sorted the month with 200 units in process, stated 1500 units, and had 150 units in process at the end of the period. All materials are added at the beginning of the process, and conversion costs are incurred uniformly. The units in the process at the end of the month are 20% complete with respect to conversion costs. The department incurred the following costs:
(table included in the attached PDF file)
1. How many units were completed sod transferred out?
a. 150 unit b. 1,500 unit c. 1,150 unit d. 1,550 unit
2. For conversion cost, the equivalent units of production are.
a. 1,700 unit. b. 1,500 unit c. 1.500 unit d. 1,550 unit.
3. The cost per equivalent unit for direct materials is
a. $2.00. b. $4.00. c. 58.00. d. $1000.
Step-by-step explanation:
In weighted average method, equivalent units are calculated for units completed and transferred out and units lying as end of work in process. Reason being that, it is assumed units entered into process are integral part of total units and no differentiation between units transferred and units introduced from beginning of work to current process respectively.
Note that
Conversion cost = Labor cost + Overheads
(1)
Units in the beginning inventory 200
Units Added 1500
Total 1700
Units in Ending Inventory 150
Unit transferred out 1550 (option d above)
Equivalent Unit of Production 1,700 1,580 (option b)
(2)
(table included in the attached PDF file)
The following columns were calculated as follows:
EUP Materials, (c) = (a) x (b)
EUP Conversion, (e) = (c) x (d)
(3)
(table included in the attached PDF file)
Cost of beginning work in process conversion ($500) is given in the question
Cost added in the course of the month for conversion ($5,820) is also given
EUP is given in the table of question 2
Cost per EUP for Direct Materials = $3,400/1,700 = $2.00
(option a) is the answer
Cost per EUP for Conversion = $6,320/1580 = $4.00
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