Abraham Company uses weighted average process costing to account for its production costs. The company has two production processes. Conversion is added evenly throughout each process. Direct materials are added at the beginning of the first process. Additional information for the first process follows.

Required
1. Compute the equivalent units of production for both direct materials and conversion.
2. Compute cost per equivalent unit of production for both direct materials and conversion.
3. Assign costs to the department's output-specifically, to the units transferred out and to the units in ending work in process inventory.
4. Assume that an error is made in determining the percent complete for units in ending inventory in the first process. Instead of being $25\%$ complete for conversion, they are actually $75\%$ complete. Write a one half-page memo to the plant manager describing how this error affects this period's financial statements.

Transcribed Image Text:

Beginning work in process inventory... Units started this period.. Units completed and transferred out... Ending work in process inventory.... Direct Materials Units Percent Complete 2,000 100% 86,000 80,000 8,000 100% Conversion Percent Complete 85% 25% Beginning work in process inventory Direct materials.. Conversion.... $ Costs added this period Direct materials. Conversion..... Total costs to account for..... 58,000 86,400 $ 144,400 712,000 1,980,000 2,692,000 $2,836,400