Question

Fordman Company has a product that passes through two processes: Grinding and Polishing. During December, the Grinding Department transferred 20,000 units to the Polishing Department. The cost of the units transferred into the second department was $40,000. Direct materials are added uniformly in the second process. Units are measured the same way in both departments.
The second department (Polishing) had the following physical flow schedule for December:

Units to account for:
Units, beginning work in process 4,000 (40% complete)
Units started ?
Total units to account for ?
Units accounted for:
Units, ending work in process 8,000 (50% complete)
Units completed ?
Units accounted for ?

Costs in beginning work in process for the Polishing Department were direct materials, $5,000; conversion costs, $6,000; and transferred in, $8,000. Costs added during the month: direct materials, $32,000; conversion costs, $50,000; and transferred in, $40,000.

Required:
Assuming the use of the weighted average method, prepare a schedule of equivalent units. Enter percentages as whole numbers.

Answer 1

Answer:

Fordman Company

A Schedule of Equivalent Units (Weighted-Average Method)

Equivalent units of production:

                                 Units     Direct Materials     Conversion

Units completed      16,000        16,000                  16,000

Ending WIP               8,000          4,000                    4,000

Total equivalent units               20,000                  20,000

Explanation:

a) Data and Calculations:

Units transferred from Grinding Department = 20,000

Cost of units transferred = $40,000

Polishing Department's

Physical Flow Schedule for December:

Units to account for:

Units, beginning work in process 4,000 (40% complete)

Units started                                20,000

Total units to account for            24,000

Units accounted for:

Units, ending work in process 8,000 (50% complete)

Units completed                      16,000 (100% complete)

Units accounted for                24,000

Cost of production:

                                                Direct     Conversion   Transferred    Total

                                             Materials                                In

Beginning work in process   $5,000       $6,000         $8,000      $19,000

Current period                       32,000       50,000         40,000      122,000

Total costs of production    $37,000     $56,000      $48,000     $141,000

Equivalent units of production:

                                 Units     Direct Materials     Conversion

Units completed      16,000        16,000                  16,000

Ending WIP               8,000          4,000                    4,000

Total equivalent units               20,000                  20,000

Cost per equivalent units:

                                         Direct Materials     Conversion     Total

                                         & Transferred In

Total costs of production    $85,000                $56,000

Total equivalent units            20,000                  20,000

Cost per equivalent units       $4.25                    $2.80