1

Homework #4 Chapter 4
All Answers Must Be Completed Using Word or Excel

Problem 1: Weighted-Average Method (30 Minutes)

Firenze, Inc., manufactures a product that goes through two departments prior to completion
the Mixing Department followed by the Packaging Department. The following information is
available about work in the first department, the Mixing Department, during June.

Percent Completed
Units Materials Conversion
Work in process, beginning 80,000 70% 40%
Started into production 392,500
Completed and transferred out 382,500
Work in process, ending 90,000 75% 25%
Work in process, beginning $31,500 $11,300
Cost added during June $337,500 $239,800

Required:
Assume that the company uses the weighted-average method.
1. Determine the equivalent units for June for the Mixing Department.
2. Compute the costs per equivalent unit for June for the Mixing Department.
3. Determine the total cost of ending work in process inventory and the total cost of units
transferred to the Packaging Department.
4. Prepare a cost reconciliation report for the Mixing Department for June.
2

Problem 1: Weighted-Average Method Solution

Weighted-Average Method

1. Equivalent Units of Production
Materials Conversion
Transferred to next department ........................................... 382,500 382,500
Ending work in process:
Materials: 90,000 units x 75% complete ........................... 67,500
Conversion: 90,000 units x 25% complete ....................... 22,500
Equivalent units of production ............................................. 450,000 405,000

2. Cost per Equivalent Unit
Materials Conversion
Cost of beginning work in process ................................... $ 31,500 $ 11,300
Cost added during the period ........................................... 337,500 239,800
Total cost (a) ....................................................................... $369,000 $251,100
Equivalent units of production (b) ................................... 450,000 405,000
Cost per equivalent unit, (a) (b) .................................... $0.82 $0.62

3. Applying Costs to Units
Materials Conversion Total
Ending work in process inventory:
Equivalent units of production ....... 67,500 22,500
Cost per equivalent unit ................... $0.82 $0.62
Cost of ending work in process
inventory ......................................... $55,350 $13,950 $69,300
Units completed and transferred out:
Units transferred to the next
department...................................... 382,500 382,500
Cost per equivalent unit ................... $0.82 $0.62
Cost of units completed and
transferred out ............................... $313,650 $237,150 $550,800

4. Cost Reconciliation
Costs to be accounted for:
Cost of beginning work in process inventory
($31,500 + $11,300) .......................................................... $ 42,800
Costs added to production during the period
($337,500 + $239,800) ...................................................... 577,300
3

Total cost to be accounted for ........................................... $620,100
Costs accounted for as follows:
Cost of ending work in process inventory ....................... $ 69,300
Cost of units completed and transferred out ................... 550,800
Total cost accounted for .................................................... $620,100
4

Problem 2: Analysis of Work in Process T-accountWeighted-Average Method (20
Minutes)

Hooghly Products manufactures a silicone paste wax that goes through three processing
departmentsCracking, Blending, and Packing. All raw materials are introduced at the start of
work in the Cracking Department.The Work in Process T-account for the Cracking Department
for a recent month is given below:

Work in ProcessCracking Department
Inventory, May 1 307,000 Completed and transferred
Materials 709,250 to the Blending Department ?
Conversion 280,600
Inventory, May 31 ?

The May 1 work in process inventory consisted of 100,000 pounds with $219,000 in materials
cost and $88,000 in conversion cost. The May 1 work in process inventory was 100% complete
with respect to materials and 80% complete with respect to conversion. During May, 295,000
pounds were started into production. The May 31 inventory consisted of 88,000 pounds that were
100% complete with respect to materials and 70% complete with respect to conversion. The
company uses the weighted-average method to account for units and costs.

Required:
1. Determine the equivalent units of production for May.
2. Determine the costs per equivalent unit for May.
3. Determine the cost of the units completed and transferred to the Blending Department during
May
5

Problem 2: Analysis of Work in Process T-accountWeighted-Average Method Solution

Weighted-Average Method

1. Equivalent units of production
Materials Conversion
Transferred to next department* ......................................... 307,000 307,000
Ending work in process:
Materials: 88,000 units x 100% complete ......................... 88,000
Conversion: 88,000 units x 70% complete ....................... 61,600
Equivalent units of production ............................................. 395,000 368,600

* Units transferred to the next department = Units in beginning work in process + Units
started into production Units in ending work in process = 100,000 + 295,000 88,000
= 307,000

2. Cost per equivalent unit
Materials Conversion
Cost of beginning work in process ................................... $219,000 $ 88,000
Cost added during the period ........................................... 709,250 280,600
Total cost (a) ....................................................................... $928,250 $368,600
Equivalent units of production (b) ................................... 395,000 368,600
Cost per equivalent unit, (a) (b) .................................... $2.35 $1.00

3. Cost of ending work in process inventory and units transferred out
Materials Conversion Total
Ending work in process inventory:
Equivalent units of production ............. 88,000 61,600
Cost per equivalent unit ........................ $2.35 $1.00
Cost of ending work in process
inventory .............................................. $206,800 $61,600 $268,400
Units completed and transferred out:
Units transferred to the next
department........................................... 307,000 307,000
Cost per equivalent unit ........................ $2.35 $1.00
Cost of units completed and
transferred out .................................... $721,450 $307,000 $1,028,450
6

Problem 3: Interpreting a ReportWeighted-Average Method (30 Minutes)

Chester Computers, Ltd., located in Bristol, England, assembles a standardized personal
computer from parts it purchases from various suppliers. The production process consists of
several steps, starting with assembly of the mother circuit board, which contains the central
processing unit. This assembly takes place in the CPU Assembly Department. The company
recently hired a new accountant who prepared the following report for the department for May
using the weighted-average method:

Units to be accounted for:
Work in process, May 1: materials 90% complete;
conversion 80% complete
11,500
Started into production 38,000
Total units 49,500
Units accounted for as follows:
Transferred to next department 41,900
Work in process, May 31: materials 75% complete;
conversion 50% complete
7,600
Total units 49,500

Cost Reconciliation
Cost to be accounted for:
Work in process, May 1
35,765
Cost added in the department 129,812
Total cost to be accounted for
165,577
Cost accounted for as follows:
Work in process, May 31
17,670
Transferred to next department 147,907
Total cost accounted for
165,577

The companys management would like some additional information about Mays operation in
the CPU Assembly Department. (The currency in England is the pound, which is denoted by the
symbol .)

Required:
1. How many units were started and completed during May?
2. What were the equivalent units for May for materials and conversion costs?
3. What were the costs per equivalent unit for May? The following additional data are available
concerning the departments costs:

Materials Conversion Total
Work in process, May 1
23,460 12,305 35,765
Costs added during May
83,164 46,648 129,812
7

4. Verify the accountants ending work in process inventory figure (17,670) given in the report.
5. The new manager of the CPU Assembly Department was asked to estimate the incremental
cost of processing an additional 1,000 units through the department. He took the unit cost for
an equivalent whole unit you computed in (3) above and multiplied this figure by 1,000. Will
this method yield a valid estimate of incremental cost? Explain.









































8

Problem 3: Interpreting a ReportWeighted-Average Method - Solution

Weighted-Average Method

1. Total units transferred to the next department .................... 41,900
Less units in the May 1 inventory .......................................... 11,500
Units started and completed in May ...................................... 30,400

2. The equivalent units were:
Materials Conversion
Transferred to next department .................................... 41,900 41,900
Ending work in process:
Materials: 7,600 units x 75% complete ...................... 5,700
Conversion: 7,600 units x 50% complete .................. 3,800
Equivalent units of production ......................................
47,600 45,700

3. The costs per equivalent unit were:
Materials Conversion
Cost of beginning work in process ................................... 23,460 12,305
Cost added during the period ........................................... 83,164 46,648
Total cost (a) ....................................................................... 106,624 58,953
Equivalent units of production (b) ................................... 47,600 45,700
Cost per equivalent unit, (a) (b) .................................... 2.24 1.29

4. The ending work in process figure is verified as follows:
Materials Conversion Total
Ending work in process inventory:
Equivalent units of production
(see above) ..................................................... 5,700 3,800
Cost per equivalent unit ................................. 2.24 1.29
Cost of ending work in process
inventory ....................................................... 12,768 4,902 17,670

5. Multiplying the unit cost figure of 3.53 per unit by 1,000 units does not provide a valid
estimate of the incremental cost of processing an additional 1,000 units through the
department. If there is sufficient idle capacity to process an additional 1,000 units, the
incremental cost per unit is almost certainly less than 3.53 per unit because the
conversion costs are likely to include fixed costs.