The accountant at John's Cycle Manufacturing Company uses the weighted-average costing method. The accountant reported that there
Question:
The accountant at John's Cycle Manufacturing Company uses the weighted-average costing method. The accountant reported that there were 400 equivalent units of work completed to date, and reported the following cost:
Summary of Total Costs
Beginning work in progress (direct materials, $15,000 + conversion costs $6,000) | $21,000 |
Costs added during March (direct materials, $12,000 + conversion costs $18,000 | $30,000 |
Total costs to account for in March | $51,000 |
Required:
Compute the conversion cost-per-unit using the weighted-average costing method.
Under FIFO, ending work-in-process inventory comes from units that were started but not fully completed during the current period.
The weighted-average cost is the total of all costs entering the work-in process account divided by total equivalent units of work done to date.
Managerial accountants base their choice between the weighted-average method and the first-in, first-out method based on a desired effect on taxes, operating income, performance evaluation, and debt covenants.
1
Cost Accounting A Managerial Emphasis
ISBN: 978-0133392883
6th Canadian edition
Authors: Horngren, Srikant Datar, George Foster, Madhav Rajan, Christ