You are employed by Spirit, a manufacturer company of digital watches. The CFO 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 Spirit Company's books are as follows:

Units

Costs

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

253,000

$

663,840

Finished goods, December 31

152,400

1,018,800

Materials are added to production at the beginning of the manufacturing process, and overhead is applied to each product at the rate of 60% of direct labor cost. There was no finished goods inventory at the beginning of the year. A review of Spirit Company's inventory and cost records has disclosed the following data, all of which are accurate:

Costs

Units

Materials

Labor

Work in process, January 1 (80% complete as to labor and overhead)

102,400

$

202,400

$

318,000

Units started into production

903,000

Cost added during the year:

Materials cost

1,315,000

Labour cost

2,010,000

Units completed during the year

752,400

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