Exam 4: Process Costing and Hybrid Product-Costing Systems

Colonial Products employs a process-costing system for its manufacturing operations. All materials are added at the beginning of the process, and conversion costs are incurred uniformly throughout production. The information that follows relates to September. Required: A. Calculate equivalent units of direct material for September. B. Calculate equivalent units of conversion activity for September.

Equivalent-unit calculations are necessary to allocate manufacturing costs between units sold and ending work in process.

Edge Company had a beginning work-in-process inventory of 30,000 units on June 1. These units contained $120,000 of direct materials and $272,000 of conversion cost. The following data relate to activity during June: $\begin{array} { l r } \text { Production completed (units) } & 70,000 \\\text { Ending work in process, } 60 \% \text { complete (units) } & 20,000 \\\text { Direct materials used (\$) } & 258,000 \\\text { Conversion cost (\$) } & 695,600\end{array}$ Edge uses a weighted-average process-costing system. All materials are added at the start of manufacturing; in contrast, conversion cost is incurred evenly throughout production. Required: A. Compute the total equivalent units for direct material and conversion cost. B. Compute the cost per equivalent unit of direct material and conversion cost. C. Determine the cost of completed production. D. Determine the cost of the June 30 work in process.

Equivalent-unit calculations are necessary to allocate manufacturing costs between: