Problem 16-1B

Weighted average: Cost per equivalent unit; costs assigned to products P1

Abraham Company uses weighted average process costing to account for its production costs. The company has two production processes. Conversion is added evenly throughout each process. Direct materials are added at the beginning of the first process. Additional information for the first process follows.

Check (2) Conversion cost per equivalent unit, $25.20

Required

1.Compute the equivalent units of production for both direct materials and conversion.

2.Compute cost per equivalent unit of production for both direct materials and conversion.

3.Assign costs to the departments outputspecifically, to the units transferred out and to the units in ending work in process inventory.

Analysis Component

4.Assume that an error is made in determining the percent complete for units in ending inventory in the first process. Instead of being 25% complete for conversion, they are actually 75% complete. Write a one-half-page memo to the plant manager describing how this error affects this periods financial statements.

Direct Materials Conversion Percent Complete Percent Complete 100% 85% Beginning wark in process inventary... Units started this period... Units completed and transferred aut... Ending work in process inventory.... Units 2,000 86,000 80,000 8.000 Beginning work in process inventory Direct materials S 58.000 Conversion... 86,400 $ 144,400 Costs added this period Direct materials 712.000 Conversion...... 1,980,000 2,692.000 Tatal costs to account for..... $2,836,400 100% 25%