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6 July, 21:16

PA12.

LO 5.4Complete this production cost report:

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  1. 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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