Cost Management: A Strategic Emphasis 5th Edition by David Stout, Edward Blocher, Gary Cokins

Exercise 44

Weighted-Average Method China Pacific Company manufactures a variety of natural fabrics for the clothing industry in a suburb of Shanghai. The following data in Chinese currency called yuan pertain to the month of October.

Work-in-process inventory, October 1	25,000 units
Direct materials: 60 percent complete	57,000 yuan
Conversion: 30 percent complete	45,000 yuan
Cost incurred during October
Direct materials	736,000 yuan
Conversion	1,094,950 yuan

During October, 175,000 units were completed and transferred out. At the end of the month, 30,000 units (direct materials 80 percent and conversion 40 percent complete) remain in work-in- process inventory.

Required Calculate each of the following amounts using weighted-average process costing.

1. Equivalent units of direct materials and conversion.

2. Unit costs of direct materials and conversion.

3. Cost of goods completed and transferred out during October.

4. Cost of the work-in-process inventory at October 31.

5. Check the most recent issue of The Wall Street Journal or go to http://www.federalreserve.gov/releases/ H10/hist/ to learn the exchange rate between the U.S. dollar and the Chinese yuan.

Step 1 of 16

Weighted Average Method:

Weighted Average Method is a method to determine inventory unit number which in the production from the prior period and fresh units in the current period. It is appropriate only when there is no major in the manufacturing cost per unit in opening and closing inventories count.