Equivalent unit; weighted-average method
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)... Units: 250,000 Costs: $660,960
Finished goods, December 31... Units:150,000 Costs: $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) Units:200,000
Costs: Materials 200,000 and labour 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.
