Victory company uses weighted average process costing to account for its production costs. Conversion costs is added evenly throughout the process. Direct material are added at the begining of the process. During november, the company transfered 700,000 units of production to finished goods. At the end of november, the work in progess inventory consists of 180,000 units that are 30% complete with respect to conversion. Begining inventory had $420,000 of direct materials and $139,000 of conversion costs. The direct material cost added in november is $2,220,000 and the conversion costs added is $3,254,000. Beginning work in progess consisted of $60,000 units that were 100% complete with respect to direct materials and 80% complete with respect to conversion. Of the units completed, 60,000 were from beginning work in progess and 640,000 units were started and completed during period. Problem 16-2A

Requirement 1: Determine the equivalent units of production with respect to (a) direct materials and (b) direct labor.

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Direct Materials

Direct Labor

Goods completed and transferred

Goods in ending goods in process

Total Equivalent Units

Requirement 2: Compute both the direct material cost and direct labor cost per equivalent unit.

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Direct Materials

Direct Labor

Costs of beginning goods in process

Costs incurred this period

Total costs

Equivalent Units

(Hint: from your answer in requirement 1)

Cost per Equivalent Units

Requirement 3: Compute the direct materials and direct labor cost assigned to (a) units completed and transferred out and (b) ending goods in process inventory.

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Costs of units completed and transferred out

Direct Materials

Direct Labor

Total Costs of units completed and transferred out

Costs of units in ending work in process

Direct Materials

Direct Labor

Total Costs of units in ending work in process inventory