Question

Victory Company uses weighted-average process costing to account for its production costs. Conversion cost is added evenly throughout the process. Direct materials are added at the beginning of the first process. During November, the first process transferred 800,000 units of product to the second process. Additional information for the first process follows. At the end of November, work in process inventory consists of 185,000 units that are 50% complete with respect to conversion. Beginning work in process inventory had $384,150 of direct materials and $133,875 of conversion cost. The direct material cost added in November is $2,570,850, and the conversion cost added is $2,543,625. Beginning work in process consisted of 67,000 units that were 100% complete with respect to direct materials and 80% complete with respect to conversion. Of the units completed, 67,000 were from beginning work in process and 733,000 units were started and completed during the period. Required: For the first process: 1. Determine the equivalent units of production with respect to direct materials and conversion.

Answer 1

Victory Company

Materials Conversion

Equivalent units 985,000 892,500

Step-by-step explanation:

a) Data and Calculations:

Materials Conversion

Units transferred out 800,000 800,000

Ending WIP 185,000 92,500 (185,000 * 50%)

Equivalent units 985,000 892,500

Costs of production:

Materials Conversion

Beginning WIP $384,150 $133,875

Added in November 2,570,850 2,543,625

Total costs $2,955,000 $2,677,500

Cost per equivalent units:

Total costs $2,955,000 $2,677,500

Equivalent units 985,000 892,500

Cost per equivalent unit $3.00 $3.00