Question

The Hershey Company uses the weighted-average method in its process costing system. The following data concern the operations of the company's first processing department for a recent month.
Work in process, beginning:
Units in process 3,750
Percent complete with respect to materials 80%
Percent complete with respect to conversion 20%
Costs in the beginning inventory:
Materials cost $6,711.00
Conversion cost $2,885.00
Units started into production during the month 21,400
Units completed and transferred out
Costs added to production during the month:
Materials cost $61,906
Conversion cost CA I Costs added to production during the month:
Materials cost $61,906
Conversion cost $543,602
Work in process, ending:
Units in process 900
Percent complete with respect to materials 66%
Percent complete with respect to conversion 48%
Required:
a. Determine the equivalent units of production for material and conversion.
b. Determine the costs per equivalent unit for material and conversion.
c. Determine the cost of ending work in process inventory.
d. Determine the cost of the units transferred to the next department.

Answer 1

Answer:

The Hershey Company

                                                               Materials       Conversion

a. The equivalent units of production     24,844             24,632

b. Costs per equivalent unit                   $2.762           $22.186

c. The cost of ending work in process inventory is:

= $11,224.98

d. The cost of the units transferred to the next department is:

= $604,989

Explanation:

a) Data and Calculations:

                                                      Units     Materials       Conversion

Beginning work in process          3,750          80%                20%

Units started in the month         21,400

Units to be accounted for          25,150

Ending work in process                 900          66%                48%

Units completed/transferred   24,250         100%               100%

Equivalent units of production:

                                                      Units     Materials       Conversion

Units completed/transferred   24,250       24,250          24,250

Ending work in process                900             594                432

Total equivalent units                                  24,844           24,632

Costs of production               Materials         Conversion     Total

Costs of beginning WIP            $6,711              $2,885        $9,586

Costs added during month     61,906           543,602      605,508

Total costs of production      $68,617         $546,487     $615,094

Cost per equivalent unit:

Total costs of production      $68,617         $546,487

Total equivalent units             24,844             24,632

Cost per equivalent unit        $2.762           $22.186

Costs assigned to:

                                                      Materials       Conversion             Total

Units completed/transferred      $66,978.50     $538,010.50      $604,989

                                                (24,250 *$2.762)  (24,250 * $22.186)

Ending work in process                   1,640.63      $9,584.35         $11,224.98

                                                (594 * $2.762)           (432 * $22.186)