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Cost Accounting: Weighted-Average Method

Bio Doc Corporation is a biotech company based in Milpitas. It makes a cancer-treatment drug in a single processing department. Direct materials are added at the start of the process. Conversion costs are added evenly during the process. Bio Doc uses the weighted-average method of process costing. The following information for July 2011 is available.

Physical Direct Conversion
Units Materials Costs
Work in process, July 1 8,500a 8,500 1,700
Started during July 35,000
Completed and transferred out during July
33,000 33,000 33,000
Work in process, July 31 10,500b 10,500 6,300

Degree of completion: direct materials, 100%; conversion costs, 20%.
Degree of completion: direct materials, 100%; conversion costs, 60%.

Total Costs for July 2008
Work in process, beginning $63,100
Direct materials 45,510
Conversion costs $108,610
Direct materials added during July 284,900
Conversion costs added during July 485,040
Total costs to account for $878,550

1. Calculate cost per equivalent unit for direct materials and conversion costs.
2. Summarize total costs to account for, and assign total costs to units completed (and transferred out) and to units in ending work in process.

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1. Analysis of physical flow of units
IN OUT
OPENING WORK IN PROGRESS 8500 COMPLETED PRODUCTION 33000
UNITS INTRODUCED 35000 CLOSING WORK IN PROGRESS 10500
43500 43500

2. Calculation of equivalent units
MATERIAL conversion ...

Solution Summary

The expert examines cost accounting for the weighted-average method.

$2.19