 # Question & Answer: Calculate Equivalent Units, Unit Costs, and Transferred Costs—Weighted Average Method…..

Calculate Equivalent Units, Unit Costs, and Transferred Costs—Weighted Average Method

Godfrey Manufacturing, Inc., operates a plant that produces its own regionally-marketed Spicy Steak Sauce. The sauce is produced in two processes, blending and bottling. In the Blending
Department, all materials are added at the start of the process, and labor and overhead are incurred evenly throughout the process. Godfrey uses the weighted average method. The following data from the Work in Process—Blending Department account for January 2016 is missing a few items:

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Work in Process-Blending Department
January 1 inventory (5,000 gallons, 60% processed)
Direct material \$18,000
Conversion costs 8,850
Transferred to Bottling Department (60,000 gallons)
January charges:
Direct material (61,000 gallons) 228,750
Direct labor 110,400
January 31 inventory [ ? gallons, 70% processed]

Required

Assuming Godfrey uses the weighted average method in process costing, calculate the following amounts for the Blending Department:

Number of units in the January 31 inventory.

Equivalent units for materials and conversion costs.

January cost per equivalent unit for materials and conversion costs.

Cost of the units transferred to the Bottling Department.

Cost of the incomplete units in the January 31 inventory.

Round average cost per equivalent unit to four decimal places. Use rounded answers for subsequent calculations. Round other answers to the nearest whole number.

Godfrey Manufacturing,Inc. Blending Department
Flow of Units and Equivalent Units Calculation, January 2016
Equivalent Units
% Work
done
Direct
Materials
% Work
Done
Conversion
Costs
Product Cost Report
Direct
Materials
Conversion
Costs
Average cost / Equivalent unit (round four decimal places) \$Answer c. \$Answer c.
Complete / Transferred:
Cost of Goods Manufactured \$Answer d.
Ending Inventory:
Cost of Ending Inventory \$Answer e.

1. No of ending units work in process= (5000+61000-60000)=6000 Units

2. CALCULATE EQUIVALENT UNIT :

 WHOLE UNIT % MATERIAL % CONVERSION COST Unit completed and transfered out 60000 100% 60000 100% 60000 Ending work in process 6000 100% 6000 70% 4200 Total 66000 64200

CALCULATE COST PER EQUIVALENT UNIT :

 MATERIAL CONVERSION COST Beginning work in process 18000 8850 Cost added during period 228750 183600 Total cost 246750 192450 Equivalent unit 66000 64200 Cost per equivalent unit 3.7386 2.9977

Cost of units transfered to bottling department and ending unit :

 Completed and transfered Direct material 224316 Conversion cost 179862 Cost of goods manufactured 404178 Ending inventory Direct material 22432 Conversion cost 12590 Cost of ending inventory 35022 Total cost allocated 439200