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Production Cost Report - Equivalent Units

Analysis of Work in Process Account - Weighted Average Method

Dillion Corporation manufactures an industrial cleaning compound that goes through three processing departments-Grinding, mixing, and Cooking. All raw materials are introduced at the start of work in the Grinding Department. The Work in Process T-Account for a recent month is given below.

Work in Process- Grinding Department
Inventory, March 1 (4,500 units; Conversion 60% Completed and transferred to mixing (? Units)...... ?
Complete).......................................................... 12,365
March costs added:
Raw material (56,800 units)............................................................. 113,475
Labor and overhead ........................ 75,319
Inventory, March 31 (2,900 units;
Conversion 70% complete).................... ?

The March 1 work in process inventory consists of $9,125 in materials cost and $3,240 in conversion cost. The company uses the weighted-average method.

Required.
1. Determine the equivalent units of production for March.
2. Determine the costs per equivalent unit for March
3. Determine the total cost of the units completed and transferred to the next department during March and the total cost of ending work in process inventory.
4. What criticism can be made of the unit costs that you have computed if they are used to evaluate how well costs have been control?

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We can answer the questions by making a quantity schedule and a cost schedule.
The quantity schedule reconciles the physical units and the cost schedule reconciles the costs

DILLON CORPORATION
Quantity Schedule and Equivalent Units

Quantity
Schedule
Pounds to be accounted for:
Work in process, March 1 4,500 This is given
Started into production 56,800 This is given
Total pounds 61,300 This is the total units to account for

Equivalent Units
Labor &
Materials Overhead
Pounds accounted for as follows:
Transferred to mixing 58,400 58,400 58,400 The total ...

Solution Summary

The solution explains how to prepare a production cost report and use it to calculate the equivalent units and cost

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