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Weighted Average Process Costing

Created 2008 By Michael Worthington Elizabeth City State University

Equivalent Units
If the unfinished Work-In-_________ units were disassembled, how many complete units could be constructed from the parts? Finished Good (4 parts = 1 unit) 1 2 3 4 Work-in-Process (incomplete units) (3 units with total of 6 parts) 1 2 3 4 5 6

Equivalent Units = 1.5 units

6 WIP Parts ÷ 4 Finished Goods parts = 1.5 Eq Units

Four Sections of Cost Report
1. Physical _________ 2. Equivalent Units 3. Cost per Equivalent Unit 4. Cost Allocation

1

Beginning WIP (5,000 units) $10,808 Direct Materials $15,100 Conversion Costs Current Period Costs: $49,000 Direct Materials $74,000 Conversion Costs

Example Problem

50,000 units started into production Ending WIP (4,000 units) Direct Materials 60% ____________ Conversion Costs 75% complete

Input:

1. Physical Units
5,000 units 50,000 units 55,000 units

Beginning Inventory Units Started into Production Total Input Units Output: __________________ Units Ending Inventory Units Total Output Units

? units 4,000 units ? units

Input:

1. Physical Units
5,000 units 50,000 units 55,000 units

Beginning ____________ Units Started into Production Total Input Units Output: Completed Units Ending Inventory Units Total Output Units

51,000 units 4,000 units 55,000 units

Total Input = Total Output Completed Units = 55,000 – 4,000

2

2. Equivalent Units
Equivalent Units = Physical Units x % of Completion Weighted Average Method only uses “Output Units” Physical __________ Units Materials Completed Units Ending Inventory Total Units 51,000 51,000x100% 4,000 55,000 Conversion Costs 51,000x100%

Completed Units are automatically 100% complete

2. Equivalent Units
Equivalent Units = Physical Units x % of Completion Weighted Average Method only uses “Output Units” Physical Direct Units Materials Completed ________ 51,000 Ending Inventory 4,000 Total Units 55,000...