Cost Information and the Weighted Average Method

Morrison Company had the equivalent units schedule and cost information for its Sewing Department for the month of December, as shown below.

	Direct Materials				Conversion Costs
Units completed		45,000				45,000
Add: Units in ending work in process
Percentage complete:
10,000 100% direct materials		10,000
10,000 45% conversion materials						4,500
Eqivalent units of output		55,000				49,500
Costs:
Work in process, December 1:
Direct materials						$66,000
Conversion costs						14,000
Total work in process						$80,000
Current costs:
Direct materials						$550,000
Conversion costs						184,000
Total current costs						$734,000

Required:

1. Calculate the unit cost for December, using the weighted average method. Do not round interim calculations and, if required, round your answer to the nearest cent. $fill in the blank 1 per equivalent unit

2. Calculate the cost of goods transferred out, calculate the cost of EWIP, and reconcile the costs assigned with the costs to account for.

Cost of goods transferred out:

Units completed	$fill in the blank 2
Cost of EWIP	fill in the blank 3
Total costs assigned (accounted for)	$fill in the blank 4

Reconciliation Cost to account for:

BWIP	$fill in the blank 5
Current (December)	fill in the blank 6
Total	$fill in the blank 7

3. What if you were asked to show that the weighted average unit cost for materials is the blend of the November unit materials cost and the December unit materials cost? The November unit materials cost is $6.60 ($66,000 / 10,000), and the December unit materials cost is $12.22 ($550,000 / 45,000). The equivalent units in BWIP are 10,000, and the FIFO equivalent units are 45,000. Calculate the weighted average unit materials cost using weights defined as the proportion of total units completed from each source (BWIP output and current output). Do not round interim calculations and, if required, round your answer to the nearest cent. $fill in the blank 8 per unit

Feedback

1. The weighted average method counts prior-period work and costs in BWIP as if they belong to the current period; so the unit cost is obtained by dividing the sum of the costs in BWIP and the current-period costs by the weighted average equivalent output. The resulting unit cost is a blend of the prior-period unit cost and the actual current-period unit cost.

2. The valuation of cost of goods transferred out is simplified as it is the total unit cost multiplied by the units completed.