Question

The following partially completed process cost summary describes the July production activities of Ashad Company. Its production output is sent to its warehouse for shipping. All direct materials are added to products when processing begins. Beginning work in process inventory is 20% complete with respect to conversion. Prepare its process cost summary using the weighted-average method.

Equivalent units of production	Direct material	Conversion
Units transferred out	32,000 EUP	32,000 EUP
Units of ending work-in-process	2,500 EUP	1,500 EUP
Equivalent units of production	34,500 EUP	33,500 EUP
Cost per EUP	Direct material	Conversion
Cost of beginning work-in-process	\(18,550	\)2,280
Cost incurred in this period	357,500	188,670
Total costs	\(376,050	\)190,950
Units in beginning work-in-process (all completed during July)		2,000
Units started this period		32,500
Units completed and transferred out		32,000
Units in ending work-in-process		2,500

Short answer

Cost per equivalent unit:

Material:$10.9

Conversion:$5.7

Step-by-step solution

Definition of Equivalent Units of Production

Equivalent units of production can be defined as the metric that calculates the work done by the business entity on the goods that are not completed during the period. In this metric, the finished and semi-finished goods are represented in terms of finished goods.

Process cost summary

1. Cost charged to production:

Particular	Amount $	Amount $
Cost of beginning work-in-process inventory
Direct material	$18,550
Conversion	2,280	$20,830
Cost incurred this period
Direct material	357,500
Conversion	$188,670	546,170
Total cost to account for		$567,000

2. Unit information:

Units to account for	Units accounted for
Beginning work-in-process	2,000	Transferred out	32,000
Units started this period.	32,500	Ending work-in-process	2,500
Total units to account for	34,500	Total units accounted for	34,500

Equivalent units of production:

Particular	Direct material	Conversion
Units completed and transferred out
Direct material	32,000
Conversion		32,000
Equivalent units in ending work-in-process
Direct material	2,500
Conversion		1,500
Equivalent units	34,500	33,500

Cost per equivalent unit:

Particular	Direct material	Conversion
Beginning work-in-process	$18,550	$2,280
Cost incurred this period	357,500	188,670
Total cost incurred	$376,050	$190,950
Divided by: Equivalent units of production	34,500	33,500
Cost per equivalent units	10.9	$5.7

Cost assignment and reconciliation:

Particular	Equivalent units	Cost per Equivalent unit	Total cost
Cost transferred out (cost of goods manufactured)
Direct material	32,000	$10.9	$348,800
Conversion	32,000	$5.7	182,400
Cost of ending work-in-process
Direct material	2,500	$10.9	27,250
Conversion	1,500	$5.7	8,550
Total cost to account for			$567,000