Tamar Co. manufactures a single product in one department. All direct materials are added at the beginning of the manufacturing process. Conversion costs are added evenly throughout the process. During May, the company completed and transferred 22,200 units of product to finished goods inventory. Its 3,000 units of beginning work in process consisted of $19,800 of direct materials and $221,940 of conversion costs. It has 2,400 units (100% complete with respect to direct materials and 80% complete with respect to conversion) in process at month-end. During the month, $496,800 of direct material costs and $2,165,940 of conversion costs were charged to production.

Prepare the company's process cost summary for May using the weighted-average method.

Valuation of output                

                                   $

Completed units =  2,544,000.  

Closing WIP =          240,480

Explanation:

Equivalent unit for conversion cost

Item            units                                                      equivalent unit

Completed     22,200            100%× 22,200            22,200

Closing WIP    2,2400            80%×  2,400             1,920

Total equivalent unit                                                24,120

Cost per equivalent unit  for conversion cost =

(221,940 + 2,165,940)/=24,120= $99

Equivalent unit for material cost

Equivalent unit for Material = 22,200 + 2,400 =24,600

Cost per equivalent unit  for material  cost

= 19800+496800/24,600= $21

Valuation of output                                                     $

Completed units = (21+99)× 21,200 =                   2,544,000.  

Closing WIP = 99× 1920   + (21 × 2,400) =              240,480

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