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Donna Matthews
Business
6 July, 21:16
PA12.
LO 5.4Complete this production cost report:
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Arely Andrews
6 July, 21:40
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Using weighted average method
Statement of equivalent units
Material Conversion
Units Units
Units transferred out 70,000 70,000
Add: Closing work-in-progress 25,000 6,250
Average divisor 95,000 76,250
Computation of cost per unit
Material Conversion
$ $
Cost of beginning work-in-progress 3,500 16,000
Cost added 25,000 45,000
Total cost 28,500 61,000
Material cost per unit = $28,500
95,000 units
= $0.30 per unit
Conversion cost per unit = $61,000
76,250 units
= $0.80 per unit
Value of units transferred out
Material = 70,000 x $0.30 = $21,000
Conversion = 70,000 x $0.80 = $56,000
Value of closing work-in-progress
Material = 25,000 x $0.30 = $7,500
Conversion = 6,250 x $0.80 = $5,000
Explanation:
In this case, we will obtain the average divisor by adding the ending work-in-progress to the units transferred out. Then, we will determine the total cost of material and conversion, which is the aggregate of cost of opening work-in - progress and cost added during the year. We also need to obtain the unit cost of material and conversion, which is total cost of material and conversion divided by the average divisor.
Finally, we will value the units transferred out and ending work-in-progress at unit cost of material and conversion.
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