Problem 1 - Lindex Company uses a process costing system. The following data are available for one department for October:
Percent Completed
Units Materials Conversion
Work in process, October 1 . . . . . . . . . . . . . . . . 50,000 90% 60%
Work in process, October 31 . . . . . . . . . . . . . . . 30,000 70% 50%
The department started 390,000 units into production during the month and transferred 410,000 completed units to the next department.
Required: Compute the equivalent units of production for October, assuming that the company uses the weighted-average method of accounting for units and costs.
Problem 2 - Kalox, Inc., manufactures an antacid product that passes through two departments. Data for May for the first department follow: Materials Conversion
Equivalent units of production in ending work in process . . . . . . . . . . 300 100
Cost per equivalent unit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $31.56 $9.32
Gallons Materials Labor Overhead
Work in process, May 1 . . . . . . 80,000 $68,600 $30,000 $48,000
Gallons started in process . . . . 760,000
Gallons transferred out . . . . . . . 790,000
Work in process, May 31 . . . . . 50,000
Cost added during May . . . . . . $907,200 $370,000 $592,000
The beginning work in process inventory was 80% complete with respect to materials and 75% complete with respect to labor and overhead. The ending work in process inventory was 60% complete with respect to materials and 20% complete with respect to labor and overhead.
Required: Assume that the company uses the weighted-average method of accounting for units and costs.
1. Compute the equivalent units for May's activity for the first department.
2. Determine the costs per equivalent unit for May.