Southwest uses the weighted average method for its process costing system. The Assembly department at Southwest began the month of April with 6,000 units in work-in-process inventory, all of which were completed and transferred out during April. An additional 8,000 units were started during the month, 3,000 of which were completed and transferred out during April. A total of 5,000 units remained in work-in-process inventory at the end of April and were at varying levels of completion, as shown in the following.
Direct materials ¦¦¦¦¦¦¦.. 40 percent complete
Direct labor¦¦¦¦¦¦¦¦¦¦. 30 percent complete
Overhead¦¦¦¦¦¦¦¦¦¦¦. 50 percent complete
The following cost information is for the Assembly department at Southwest for the month of April.
Required:
a. Determine the units to be accounted for and units accounted for; then calculate the equivalent units for direct materials, direct labor, and overhead.
b.Calculate the cost per equivalent unit for direct materials, direct labor, and overhead.
c. Assign costs to units transferred out and to units in ending WIP inventory.
d. Confirm that total costs to be accounted for (from step 2) equals total costs accounted for (from step 4). Note that minor differences may occur due to rounding the cost per equivalent unit in step 3.
e. Explain the meaning of equivalent units.
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