Cost of Units Transferred Out and Ending Work in Process The costs per equivalen
ID: 2331738 • Letter: C
Question
Cost of Units Transferred Out and Ending Work in Process The costs per equivalent unit of direct materials and conversion in the Filling Department of Eve Cosmetics Company are $0.40 and $0.10, respectively. The equivalent units to be assigned costs are as follows: Equivalent Units Direct Materials Conversion Inventory in process, beginning of period 0 1,600 Started and completed during the period 42,000 42,000 Transferred out of Filling (completed) 42,000 43,600 Inventory in process, end of period 8,000 2,000 Total units to be assigned costs 50,000 45,600 The beginning work in process inventory had a cost of $1,800. Determine the cost of completed and transferred-out production and the ending work in process inventory.
Explanation / Answer
Solution:
It is assumed that the company is following Weighted Average Method.
Weighted Average (Average Cost) Method
Physical Units Count
Under this method the percentage completion done in the Beginning Inventory is ignored while calculating the equivalent completed units during the current period. Beginning Inventory Units are treated as fresh units introduced for production.
Cost Accounted for:
- The cost of opening work-in-progress and cost of the current period are aggregated and the aggregate cost is divided by output in terms of completed equivalent units.
- The units of Beginning Inventory of WIP and their cost are taken in full under this method
Ending Inventory
The Ending Inventory of WIP is valued at total cost i.e. Cost added during the month/period and Cost of Beginning WIP.
Cost of Completed and Transferred Out Production
Equivalent Units
Cost per Equivalent Unit
Total Costs
Direct Materials
42,000
$0.40
$16,800
Conversion
43,600
$0.10
$4,360
Total Cost assigned to Completed and Transferred Out Units
$21,160
Cost of Ending Inventory
Equivalent Units
Cost per Equivalent Unit
Total Costs
Direct Materials
8,000
$0.40
$3,200
Conversion
2,000
$0.10
$200
Total Cost assigned to Ending Inventory
$3,400
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Cost of Completed and Transferred Out Production
Equivalent Units
Cost per Equivalent Unit
Total Costs
Direct Materials
42,000
$0.40
$16,800
Conversion
43,600
$0.10
$4,360
Total Cost assigned to Completed and Transferred Out Units
$21,160
Cost of Ending Inventory
Equivalent Units
Cost per Equivalent Unit
Total Costs
Direct Materials
8,000
$0.40
$3,200
Conversion
2,000
$0.10
$200
Total Cost assigned to Ending Inventory
$3,400