calculate cost or equivalent units the given work

Question

Calculate Cost or Equivalent Units

The given work in progress account concerns to the blending department of a company, a soft-drinks company for the month of January in 1999.  Raw materials were introduced at the start of the work whereas overheads and labour were incurred during the blending process.

Blending Department:  W.I.P Account

Particulars	Shs	Particulars	Sh
Bal b/f = 5,000L (4/5) =	65,000	Completed and transferred out: 29,000L	-
Raw materials added (30,000L)	125,000	Ending W.I.P (2/3)                      6,000L	-
Direct Labour	145,000
Factor Overheads	201,000

Additional Information

1.  Beginning W.I.P. consists of the given as:

    -  Raw materials                            shs.15,000

    -  Direct Labor                               shs.20,000

    -  Factory Overheads                      shs.30,000.

Required

Calculate cost/equivalent units utilizing as:

1. Weighted average
2. FIFO

 Weighted Average  

	Total Physical Units	Materials	Conversion
Completed Transferred Out:	29,000	29,000	29,999
Ending W.I.P	6,000	6,000	4,000
	______	______	(2/3 X 6,000)
	35,000	35,000	33,000
Process Costs:  In beginning Inventory:	15,000	50,000
Current Costs:	125,000	346,000
		140,000	396,000
Cost per equivalent Unit:		Shs.140,000	Shs.396,000
		35,000	33,000
		= Shs.4	Shs.12
Total Cost per equivalent Unit:  4 + 12 = Shs.16

 

            FIFO

	Total Physical Units	Materials	Conversion
Beginning W.I.P	5,000		1,000 = (1/5 X 500)
Units started and completed during
The current period = (2,900 - 5,000)	24,000	24,000	24,000
Ending W.I.P	6,000	6,000	4,000 = (2/3 x 6,000)
	35,000
Equivalent Units		30,000	29,000
Current Costs:		125,000	346,000
Cost/Equivalent Units		125,000	346,000
		30,000	29,000
Total Cost Per Equivalent Unit:	Shs,16.10	= Shs.4.20	Shs.11.90

 * Equivalent Units of 5,000 x (1 - 4/5) = 1,000 units was the work done in the period or duration to complete the beginning W.I.P.

Notice that the previous period or duration costs in the beginning W.I.P or Materials. shs.15,000 and converting - shs.50,000 have been excluded in *