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
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Particulars
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Shs
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Particulars
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Sh
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Bal b/f = 5,000L (4/5) =
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65,000
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Completed and transferred out: 29,000L
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-
|
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Raw materials added (30,000L)
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125,000
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Ending W.I.P (2/3) 6,000L
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-
|
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Direct Labour
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145,000
|
|
|
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Factor Overheads
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201,000
|
|
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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:
- Weighted average
- FIFO
Weighted Average
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Total Physical Units
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Materials
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Conversion
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Completed Transferred Out:
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29,000
|
29,000
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29,999
|
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Ending W.I.P
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6,000
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6,000
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4,000
|
|
|
______
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______
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(2/3 X 6,000)
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|
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35,000
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35,000
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33,000
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Process Costs: In beginning Inventory:
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15,000
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50,000
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|
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Current Costs:
|
125,000
|
346,000
|
|
|
|
|
140,000
|
396,000
|
|
Cost per equivalent Unit:
|
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Shs.140,000
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Shs.396,000
|
|
|
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35,000
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33,000
|
|
|
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= Shs.4
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Shs.12
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Total Cost per equivalent Unit: 4 + 12 = Shs.16
|
|
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FIFO
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Total Physical Units
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Materials
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Conversion
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Beginning W.I.P
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5,000
|
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1,000 = (1/5 X 500)
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|
Units started and completed during
|
|
|
|
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The current period
= (2,900 - 5,000)
|
24,000
|
24,000
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24,000
|
|
Ending W.I.P
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6,000
|
6,000
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4,000 = (2/3 x 6,000)
|
|
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35,000
|
|
|
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Equivalent Units
|
|
30,000
|
29,000
|
|
Current Costs:
|
|
125,000
|
346,000
|
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Cost/Equivalent Units
|
|
125,000
|
346,000
|
|
|
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30,000
|
29,000
|
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Total Cost Per Equivalent Unit:
|
Shs,16.10
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= Shs.4.20
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Shs.11.90
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* 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 *