Answer:
Pharma Company
1. Weighted Average method:
Weighted Average Method:
Equivalent units of production:
Started and completed this period 55,000
Ending WIP 10,000
Total equivalent unit produced = 65,000
Total cost of production:
Beginning WIP = $150,000
Current period 600,000
Total cost = $750,000
Cost per equivalent unit = $11.54 ($750,000/65,000)
Cost assigned to:
Units completed = 55,000 * $11.5385 = $634,617
Ending WIP = 10,000 * $11.5385 = 115,385
Total cost of production = $750,002
Cost Reconciliation:
Beginning WIP = $150,000
Completed units 600,000
Total costs = $750,000
Ending WIP = 115,385
Cost assigned to
production 634,617
2. FIFO method:
Explanation:
a) Data and Calculations:
Units Completion % Cost
Beginning WIP = 5,000 2,000 (40%) $150,000
Current completion (WIP) 3,000 (60%)
Completed 55,000 55,000 (100%) 600,000
Ending WIP 20,000 10,000 (50%)
Weighted Average Method:
Equivalent units of production:
Beginning WIP 3,000
Started and completed this period 55,000
Ending WIP 10,000
Total equivalent unit produced = 68,000
Total cost of production:
Current period 600,000
Cost per equivalent unit = $8.82 ($600,000/68,000)
Cost assigned to:
Beginning WIP =
Units completed
Beginning WIP = $150,000
= 3,000 * $8.82 = $26,460
= 55,000 * $8.82 = 485,100
Ending WIP:
= 10,000 * $8.82 = 88,200
Total cost of production = $749,760
Cost Reconciliation:
Beginning WIP (40%) = $150,000
WIP completed (60%) 26,460
Completed units 485,100
Ending WIP = 88,200
Total cost = $749,760
