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# Miller Company manufactures a product for which materials are added at the beginning of the manufact

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Miller Company manufactures a product for which materials are added at the beginning of the
manufacturing process. A review of the company's inventory and cost records for the most recently
completed year revealed the following information:
Units Materials Conversion
Work in process. Jan. 1 (80%
complete with respect to
conversion costs)
100,000 \$100,000 \$157,500
Units started into production 500,000
Materials
\$650,000
Conversion
\$997,500
Units completed during the year 450,000
The company uses the weighted-average cost method in its process costing system. The ending
inventory is 50% complete with respect to conversion costs.
Required:
i. Compute the equivalent units of production and the cost per equivalent units for materials and
for conversion costs.
Solution
Equivalent units of material = 450,000 + 150,000 x 100% = 600,000
Equivalent units of conversion costs = 450,000 + 150,000 x 50% = 525,000
Cost per equivalent units for materials = [(\$100,000+\$650,000) / 600,000] = \$1.25 per unit
Cost per equivalent units for conversion costs = [(\$157,500+\$997,500) / 525,000] = \$2.20 per unit
ii. Determine the cost transferred to finished goods.
Solution

Cost transferred to finished goods = (\$1.25 per unit +\$2.20 per unit) x 450,000 = \$1,552,500
iii. Determine the amount of cost that should be assigned to the ending work in process
inventory. (Points : 15)
Solution
Ending work in process inventory = [(\$1.25 per unit x150,000 ) + (\$2.20 per unit x 150,000 x 50%) ]
= \$3,52,500

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