Question

CloverSweet Inc. manufactures a product that goes through two departments prior to completion. The information shown in the table below is available about work in the first department, the Mixing Department, during June:

Percent Complete
Units Materials Conversion
Work in process, beginning 50,000 75 % 30 %
Started into production 430,000
Completed and transferred out 380,000
Work in process, ending 100,000 60 % 40 %
Materials

Conversion

Work in process, beginning $ 45,500 $ 25,000
Cost added during June $ 425,500 $ 145,000
Required:
Assume that the company uses the weighted-average method.
1. Determine the equivalent units for June for the first process.

2.
Compute the costs per equivalent unit for June for the first process. (Round your answers to 3 decimal places.)


3.
Determine the total cost of ending work in process inventory and the total cost of units transferred to the next process in June. (Round intermediate calculations to 3 decimal places.)


4.
Prepare a report that reconciles the total costs assigned to the ending work in process inventory and the units transferred out with the costs in beginning inventory and costs added during the period. (Round intermediate calculations to 3 decimal places.)

Answer 1

The weighted-average method is used to calculate equivalent units, cost per equivalent unit, and total costs for both materials and conversion processes in a manufacturing setting. Equivalent units for materials and conversion are determined first, and then costs per unit are calculated. These values are used to determine the total cost of ending work in process and transferred units, which then reconcile with beginning inventory and added costs.

Step-by-step explanation:

Cost Accounting and Production Process Analysis

To calculate the equivalent units of production using the weighted-average method, we need to consider both the units completed and transferred out and the units still in process at the end of the period. For materials, this would be the full amount for units completed and transferred plus the percentage complete for ending work in process. For conversion costs, it also includes a percentage based on the completion of those units.

Here's the calculation for materials:
380,000 units completed and transferred out + (100,000 units ending work in process x 60% complete) = 380,000 + 60,000 = 440,000 equivalent units of materials.

For conversion:
380,000 units completed and transferred out + (100,000 units ending work in process x 40% complete) = 380,000 + 40,000 = 420,000 equivalent units of conversion.

To determine the cost per equivalent unit, we divide the total cost (beginning inventory plus costs added during the period) by the equivalent units. For materials: ($45,500 + $425,500) / 440,000 equivalent units = $1.071 per equivalent unit of materials. For conversion costs: ($25,000 + $145,000) / 420,000 equivalent units = $0.405 per equivalent unit of conversion.

To find the total costs, we multiply the equivalent units by their respective cost per equivalent unit. For the ending work in process inventory, it is equivalent units of materials and conversion times their respective cost per equivalent unit. The total cost is then added to the cost of units transferred to find the total cost reconciled with the beginning inventory and costs added during the month.