[iduhkobe]

Hello, first time poster,

So, the question is posted below and I am struggling to understand the moving of WIP to finished (or another WIP in this case?)

Is there any way to use this structure to solve it? The solution is posted as C *81500, however the answer that is given is completely mind boggling… I would never be able to remember to add and subtract and it looks very different from the video structures.

Beginning
+Add
= Available
-Ending
=Used

A manufacturing company employs a process cost system. The company’s product passes through both Department 1 and Department 2 in order to be completed. Conversion costs are incurred uniformly throughout the process in Department 2.; The direct material is added in Department 2 when conversion is 80% complete. This direct material is a preservative that does not change the volume. Spoiled units are discovered at the final inspection and are recognized then for costing purposes. The physical flow of units for the current month is presented below.

Beginning work in process in Department 2
(90% complete with respect to conversion costs) 14,000
Transferred in from Department 1 76,000
Completed and transferred to finished goods 80,000
Spoiled units—all normal 1,500
Ending work in process in Department 2
(60% complete with respect to conversion costs) 8,500

If the manufacturing company uses the weighted-average method, the equivalent units for direct materials in Department 2 for the current month would be

67,500

80,000

81,500

90,000

[fblessed777]

@iduhkobe, Average costing takes units completed and transferred + Completed in ending inventory+ normal soilage(if given and told include same)
Therefore, 80,000(completed & transferred) + 0 (beacuse CC is completed 60%) + 1,500(spoiled units) = 81,500units.
Had conversion cost completed for 80%, the answer would have been 80,000+1,500+8500 = 90,000.
The formula you stated above applies if FIFO costing is used.
Hope this clarifies.

[iduhkobe]

@fblessed777

Thanks, helped alot.

[Author]

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