Cameron Chemicals uses the weighted-average method in its process costing system. During January, the Assembly Department completed its processing of 25,100 units and transferred them to the next department. The cost of beginning work in process inventory and the costs added during January amounted to $691,870 in total. The ending work in process inventory in January consisted of 3,800 units, which were 80% complete with respect to materials and 60% complete with respect to labor and overhead. The costs per equivalent unit for the month were as follows: Materials Labor Overhead
Cost per equivalent unit $14.40 $4.50 $7.90

Required:

a. Compute the equivalent units of materials, labor, and overhead in the ending inventory for the month.
b. Compute the cost of ending inventory and of the units transferred to the next department for January.
c. Prepare a cost reconciliation for January.

Cameron Chemicals

Assembly Department:

a. Equivalent units:                        Materials     Labor    Overhead

Ending Work-in-Process (3,800)     3,040         2,280      2,280

b. Costs of ending inventory and the units transferred out:

Ending WIP:

                                                       Materials    Labor    Overhead

Cost per equivalent unit                 $14.40       $4.50     $7.90

Ending Work-in-Process (3,800)     3,040         2,280      2,280

Ending WIP = (3,040*$14.40 + 2,280*$4.50 + 2,280*$7.90) = $72,048

Units transferred out:

                                                       Materials    Labor    Overhead

Cost per equivalent unit                 $14.40       $4.50     $7.90

Completed and transferred out    25,100        25,100    25,100

Cost of units transferred out = 25,100*$14.40 + 25,100*$4.50 + 25,100*$7.90) = $672,680

c. Cost Reconciliation for January:

                                    Materials      Labor     Overhead      Total

Ending WIP =                $43,776     $10,260     $18,012     $72,048

Units transferred out   361,440      112,950    198,290   $672,680

Total costs =              $405,216    $123,210  $216,302   $744,728

Explanation:

a) Data and Calculations:

Total costs of beginning WIP and Units added = $691,870

Ending WIP 3,800 units, 80% complete (materials) and 60% complete (conversion)

Cost per equivalent unit:

                                          Materials    Labor    Overhead

Cost per equivalent unit   $14.40       $4.50     $7.90

Equivalent units:                             Materials     Labor    Overhead

Completed and transferred out    25,100        25,100    25,100

Ending Work-in-Process (3,800)     3,040         2,280      2,280

Total equivalent units =                  28,140       27,380    27,380