Theta Chemicals

Scenario: Analyze Process Costs

Data:

• Production Data:
  • Units Started: 20,000 units
  • Units Completed: 18,000 units
  • Ending Work in Process: 2,000 units

• Cost Information:
  • Total Manufacturing Costs: $200,000

Requirements:

1. Calculate the equivalent units of production for direct materials and conversion costs.
2. Compute the cost per equivalent unit for direct materials and conversion costs.
3. Allocate the total manufacturing costs between units completed and ending work in process.
4. Prepare a production cost report using the weighted-average method.
5. Analyze the cost per unit and its implications for Theta Chemicals' pricing decisions.