CHECK FIGURES

(1) Labour: $2.63 (rounded) per EU

(2) December 31 WIP: $933,750

(4) COGS: $3,582,000 (600K units @ $5.97)

Work in process, December 31 (50% complete as to labour and overhead)

Earth Company is a manufacturer of circuit boards. The company's chief financial officer is trying to verify the accuracy of

the ending work-in-process and finished goods inventories prior to closing the books for the year. You have been asked to

assist in this verification. The year-end balances shown on Earth Company's books are as follows:

Work in process, December 31 (50% complete as to labour and overhead) units 250,000 cost $ 700,000

Finished goods, December 31 units 150,000 cost $ 1,000,000

Materials are added to production at the beginning of the manufacturing process, and overhead is applied to each product at

the rate of 70% of direct labour cost. There was no finished goods inventory at the beginning of the year. A review of Earth

Company's inventory and cost records has disclosed the following data, all of which are accurate:

Work in process, January 1 (80% complete as to labour and overhead) units 100,000 cost material 200,000 labour cost 315,000

Units started into production units 900,000

Cost added during the year:

Materials cost 1,300,000

Labour cost : 1,985,000

Units completed during the year : 750,000

Cost added during the year:

Materials cost 130000

Labour cost1985000

Units completed during the year750000

The company uses the weighted average cost method.

Required:

1. Determine the equivalent units and costs per equivalent unit for materials, labour, and

overhead for the year.

2. Determine the amount of cost that should be assigned to the ending work-in-process and

finished goods inventories.

3. Prepare the necessary correcting journal entry to adjust the work-in-process and finished

goods inventories to the correct balances as of December 31.

4. Determine the cost of goods sold for the year assuming there is no under- or overapplied

overhead.