Fundamentals of Cost Accounting 3rd Edition by William N. Lanen, Shannon W. Anderson, Michael Maher

Exercise 21

Compute Costs per Equivalent Unit: Weighted-Average Method

The following information pertains to the Davenport plant for the month of May (all materials are added at the beginning of the process):

	Units	Material Costs
Beginning work in process	270,000	$ 99,000
Started in May	720,000	316,800
Units completed	765,000
Ending work in process	225,000

Required

Compute the cost per equivalent unit for materials using the weighted-average method.

Step 1 of 2

All units cannot be wholly completed at the end of a specific period. Some units may be partially complete. Expenses (Material cost and conversion costs) might have been incurred on such units to the extent of their completion. Hence, in order to determine the actual production in a process, the concept of equivalent units is used. The partially completed units are multiplied with their percentage of completion and the resultant figure is considered as whole units produced.

Table showing calculation of equivalent units for material cost using weighted average method

Particulars	Units (a)	Materials
		% of completion in the period (b)	Equivalent Units (c)=(a) x (b)
Work completed and transferred during the period	765,000	100%	765,000
Work in process at the end	225,000	100%	225,000
Total	990,000		990,000