McAbee Company uses the weighted-average method in its process costing system. T
ID: 2418116 • Letter: M
Question
McAbee Company uses the weighted-average method in its process costing system. The company adds materials at the beginning of the process in Department M. Conversion costs were 75% complete with respect to the 4,000 units in work in process at May 1 and 50% complete with respect to the 6,000 units in work in process at May 31. During May 12,000 units were completed and transferred to the next department. An analysis of the costs relating to work in process at May 1 and to production activity for May follows:
The total cost per equivalent unit for May was:
Materials Conversion Work in process 5/1 $13,800 $3,740 Costs added during May $42,000 $36,260Explanation / Answer
Calculation of cost assigned to units transferred to next department during May Particulars No.of Units % of Completion for Material Equivalent Units of Production % of Completion for Coversion cost Equivalent Units of Production Units Completed & trf. 12000 100% 12000 100% 12000 Closing WIP 6000 100% 6000 50% 3000 Total 18000 15000 Total Cost Incurred in May Particulars Material Conversion Opening WIP 13800 3740 During the month 42000 36260 Total Cost 55800 40000 Cost per Unit of Equivalent Units of production = Total cost incurred / Equivalent Units of Production Material Cost per Unit of Equivalent Units of production = 55800 / 18000 = $3.10 Conversion Cost per Unit of Equivalent Units of production = 40000 / 15000 = $2.67 Total cost per equivalent unit - $3.10 + $2.67 = $5.77 per unit