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Equivalent units
You are employed by Spirit Company, a manufacturer of digital watches. The company's chief financial officer is trying to verify the accuracy of the ending work in process and finished goods inventories prior to closing the books for the year. You have been asked to assist in the verification. The year-end balances shown on Spirit company's books are as follows:
Units Costs Work in process, December 31 (labor and overhead 50% complete)... 300,000 $660,000 Finished goods, December 31... 200,000 $1,009,800 Materials are added to production at the beginning of the manufacturing process, and overhead is applied to each product at the rate of 60% of direct labor cost. There was no finished goods inventory at the beginning of the year. A review of Spirit's Company's inventory and cost records has disclosed the following data. Costs Units Materials Labor Work in process, January 1 (labor and overhead 80% Complete) 200,000 200,000 315,000 Units started into production 1,000,000 Cost added during the year: Materials cost... 1,300,000 Labor cost... 1,995,000 Units completed during the year 900,000 The company used the weighted-average method. Required: 1. Determine the equivalent units and costs per equivalent unit for materials, labor and overhead for the year. |
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