Question

Floridyne, Inc. manufactures mouthwash. They had no finished goods inventory at the beginning of 2019. They have only one processing department for this product. A review of the company’s inventory records shows the following: At the beginning of January 2019, Floridyne has 4,500 gallons of mouthwash in process. (costs $8,410 for materials, 1,663 for labor and 4,990 for overhead) During 2019, Floridyne finishes/transfers 162,000 gallons of mouthwash. On December 31, 2019, Floridyne has 6,200 gallons of mouthwash that is 70% complete. Direct materials are added half at the beginning of the process and half after the process is 60% complete. During 2019 $349,000 of direct materials and $92,500 of direct labor were added. Using the weighted average approach to process costing, Floridyne would use what number of equivalent units in 2019 to calculate the cost per equivalent unit for direct labor?

Answer 1

Answer:

equivalent untis Labor: 166,340

Explanation:

Under weighted average we don't make distinction between started and finished and just finished. Thus we work with finished and ending WIP only:

finished         162,000

ending   WIP    6,200 ending at 70% complete

Equivalent units for labor:

finished + percentage of completion ending units

162,000 + 6,200 x 70% = 166,340