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5 July, 06:27

Tamar Co. manufactures a single product in one department. All direct materials are added at the beginning of the manufacturing process. Conversion costs are added evenly throughout the process. During May, the company completed and transferred 22,200 units of product to finished goods inventory. Its 3,000 units of beginning work in process consisted of $19,800 of direct materials and $221,940 of conversion costs. It has 2,400 units (100% complete with respect to direct materials and 80% complete with respect to conversion) in process at month-end. During the month, $496,800 of direct material costs and $2,165,940 of conversion costs were charged to production.

Prepare the company's process cost summary for May using the weighted-average method.

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  1. 5 July, 08:44
    0
    Valuation of output

    $

    Completed units = 2,544,000.

    Closing WIP = 240,480

    Explanation:

    Equivalent unit for conversion cost

    Item units equivalent unit

    Completed 22,200 100% * 22,200 22,200

    Closing WIP 2,2400 80% * 2,400 1,920

    Total equivalent unit 24,120

    Cost per equivalent unit for conversion cost =

    (221,940 + 2,165,940) / =24,120 = $99

    Equivalent unit for material cost

    Equivalent unit for Material = 22,200 + 2,400 = 24,600

    Cost per equivalent unit for material cost

    = 19800+496800/24,600 = $21

    Valuation of output $

    Completed units = (21+99) * 21,200 = 2,544,000.

    Closing WIP = 99 * 1920 + (21 * 2,400) = 240,480
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