Question & Answer: Equivalent Units and Product Cost Report—Weighted Average Method…..

Equivalent Units and Product Cost Report—Weighted Average Method

The following data (and annotations) for March 2016 are for the work in process account of the first of Olympus Company’s four departments used in manufacturing its only product.

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Work in Process-Department 1
Beginning balance (3,000 units, 40% complete)
Direct material	$25,200
Conversion costs	8,400
Transferred to department 2 (23,000 units)	(a)
Direct material (24,000 units)	192,000
Direct labor	115,950
Manufacturing overhead	73,400
Ending balance [ (b) units, 25% complete]	(c)

Assuming that Olympus uses the weighted average method and that materials are added at the beginning of the process and conversion costs are incurred evenly throughout, solve for the three missing numbers

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

Olympus Company Department 1 Equivalent Units Calculations, March 2016
		Equivalent Units
		% Work done	Direct Materials	% Work Done	Conversion Costs
Complete/Transferred	Answer	Answer %	Answer	Answer %	Answer
Ending Inventory b.	Answer	Answer %	Answer	Answer %	Answer
Total	Answer		Answer		Answer

Product Cost Report
			Direct Materials	Conversion Costs
Beginning Inventory	$Answer		$Answer	$Answer
Current	Answer		Answer	Answer
Total Costs to Account For	$Answer		$Answer	$Answer
÷ Total Equivalent Units			Answer	Answer
Average cost / Equivalent unit (round four decimal places)			$Answer	$Answer

Complete / Transferred:
Direct Materials	$Answer
Conversion costs	Answer
Cost of Goods Manufactured	$Answer	a.
Ending Inventory:
Direct Materials	$Answer
Conversion costs	Answer
Cost of Ending Inventory	$Answer	c.
Total Costs Allocated	$Answer

Expert Answer

Statement of Equivalent production
Particulars	Direct Materials	%completion	Equivalent mat	Conversion	%completion	Equivalent Conv	Total
Opening WIP	3,000.00	100%	3,000.00	3,000.00	100%	3,000.00
Units started and completed=23000 – 3000	20,000.00	100%	20,000.00	20,000.00	100%	20,000.00
ending WIP = 24000 – 20000	4,000.00	100%	4,000.00	4,000.00	25%	1,000.00
Equivalent Units			27,000.00			24,000.00
Opening WIP Costs			25,200.00			8,400.00	33,600.00
Current Month Costs			192,000.00			189,350.00	381,350.00
Total costs			217,200.00			197,750.00	414,950.00
Cost per Equivalent units			8.04			8.24
Ending WIP Units			4,000.00			1,000.00
Cost of Ending WIP			32,177.78			8,239.58	40,417.36
Units completed and transferred out			23,000.00			23,000.00
Cost of Units completed and transferred out			185,022.22			189,510.42	374,532.64

Product Cost Report
		Direct	Conversion
		Materials	Costs
Beginning Inventory	3,000.00	25,200.00	8,400.00
Current	24,000.00	192,000.00	189,350.00
Total Costs to Account For		217,200.00	197,750.00
÷ Total Equivalent Units		27,000.00	24,000.00
Average cost / Equivalent unit (round four decimal places)		8.04	8.24

Complete / Transferred:
Direct Materials		185,022.22
Conversion costs		189,510.42
Cost of Goods Manufactured		374,532.64
Ending Inventory:
Direct Materials		32,177.78
Conversion costs		8,239.58
Cost of Ending Inventory		40,417.36
Total Costs Allocated		414,950.00

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