Assigning Costs to Products: Weighted Average Method.

Varian Company uses the weighted average method for its process costing system. The Molding department at Varian began the month of January with 80,000 units in work-in-process inventory, all of which were completed and transferred out during January. An additional 90,000 units were started during the month, 30,000 of which were completed and transferred out during January. A total of 60,000 units remained in work-in-process inventory at the end of January and were at varying levels of completion, as shown in the following.

Direct Materials	80% Complete
Direct Labor	90% Complete
Overhead	90% Compete

The following cost information is for the Molding department at Varian Company for the month of January.

	Direct Materials	Direct Labor	Overhead	Total
Beginning WIP Inventory	$1,400,000	$1,100,000	$1,700,000	$4,200,000
Incurred during the month	$1,210,000	$980,000	$1,450,000	$3,640,000

Required

a. Determine the units to be accounted for and units accounted for; then calculate the equivalent units for direct materials, direct labor, and overhead. (Hint: This requires performing step 1 of the four-step process.)

b. Calculate the cost per equivalent unit for direct materials, direct labor, and overhead. (Hint: This requires performing step 2 and step 3 of the four-step process.)

c. Assign costs to units transferred out and to units in ending WIP inventory. (Hint: This requires performing step 4 of the four-step process.)

d. Confirm that total costs to be accounted for (from step 2) equals total costs accounted for (from step 4). Note that minor differences may occur due to rounding the cost per equivalent unit in step 3

e. Explain the meaning of equivalent units.