Cornerstone Exercise 6.10 (Algorithmic) Cost Information and the Weighted Averag

Question

Cornerstone Exercise 6.10 (Algorithmic)
Cost Information and the Weighted Average Method

Morrison Company had the equivalent units schedule and cost information for its Sewing Department for the month of December, as shown below.

Required:

1. Calculate the unit cost for December, using the weighted average method. Do NOT round interim calculations and, if required, round your answer to the nearest cent.
$ per equivalent unit

2. Calculate the cost of goods transferred out, calculate the cost of EWIP, and reconcile the costs assigned with the costs to account for.

Cost of goods transferred out:

Reconciliation
Cost to account for:

3. What if you were asked to show that the weighted average unit cost for materials is the blend of the November unit materials cost and the December unit materials cost? The November unit materials cost is $4.33 ($65,000/15,000), and the December unit materials cost is $13.49 ($580,000/43,000). The equivalent units in BWIP are 15,000, and the FIFO equivalent units are 43,000. Calculate the weighted average unit materials cost using weights defined as the proportion of total units completed from each source (BWIP output and current output). Do NOT round interim calculations and, if required, round your answer to the nearest cent.
$ per unit

Direct Materials Conversion Costs Units completed 43,000 43,000 Add: Units in ending work in process ×      Percentage complete:         15,000 × 100% direct materials 15,000 —         15,000 × 45% conversion materials — 6,750 Eqivalent units of output 58,000 49,750 Costs:         Work in process, December 1:           Direct materials $65,000           Conversion costs 12,000           Total work in process $77,000         Current costs:           Direct materials $580,000           Conversion costs 182,000           Total current costs $762,000

Explanation / Answer

Solution 1:

Solution 2:

Solution 3:

Weighted average unit material cost = $4.33 * 15000 / 58000 + $13.49 * 43000 / 58000 = $11.12 per unit

Computation of Cost per equivalent unit of Production - Weighted Average Particulars Material Conversion Opening WIP $65,000.00 $12,000.00 Cost Added during December $580,000.00 $182,000.00 Total cost to be accounted for $645,000.00 $194,000.00 Equivalent units of production 58000 49750 Cost per Equivalent unit $11.12 $3.90

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