Question

Alpaca Knitwear, Inc., is a manufacturer of fine alpaca sweaters. It has a knitting department and a finishing department. This exercise focuses on the knitting department. Direct materials are added at the beginning of the process. Conversion costs are added evenly during the process. Alpaca uses the weighted- average method of process costing. The following information for June 2013 is available.


aDegree of completion: direct materials, 100%; conversion costs, 40%.
bDegree of completion: direct materials, 100%; conversion costs, 30%.

1. Calculate equivalent units of direct materials and conversion costs.
2. What issues should the manager focus on when reviewing the equivalent units calculation?
3. Summarize total costs to account for, and calculate the cost per equivalent unit for direct materials and conversion costs.
4. Assign total costs to units completed (and transferred out) and to units in ending work inprocess.


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  • CreatedJanuary 15, 2015
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