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Matz, Chapter # 7, Exercise # 7, Page # 167Weighted Average MethodData:
1 5,000 units in process at start, ( Labour 500, FOH 50 )2 70,000 units received from preceding department at 2.641 per unit3 Cost incurred during period:Labour14,200FOH 3,4504 68,000 units completed during period5 60,000 units transferred to next department6 8,000 units finished & in hand at the end of the period7 4,000 units in process at end & 50% completed/ converted
Cost of normal loss is to be absorbed by all finish & unfinish productionSolution :Process accountUnits Rate Cost Units
Balance b/f 5,000 13,680 Transferred 60,000Received 70,000 2.64 184,870 On Hand 8,000Cost incurred: Lost 3,000Material -Labour 14,200 Balance c/d 4,000FOH 3,450
75,000 216,200 75,000Calculation of Equivalent Production Units:Conversion
Units completed and transferred out 60,000Add: Units on Hand (completed) 8,000Add: Work in process (at end) ( 4,000 units x 50 % ) 2,000EPU 70,000
Calculation of per unit cost:
 
Cost Units (EPU) Rate
Per unit cost from Dep 1:Units received from previous dept 184,870 70,000Cost incured on Work in process (at start) 13,130 5,000TOTAL 198,000 75,000 2.64Labour cost incurred:On work in process at start 500During current period 14,200Total material 14,700 70,000 0.21FOH cost incurred:On work in process at start 50During current period 3,450Total Conversion 3,500 70,000 0.05
TOTAL PER UNIT COST 2.90
3,000 units lost (normal)( 3,000 units x 2.64 )79207,920=0.11( per unit cost contribution to go72,000
Cost of Work in Process (at end)
Preceding dep cost (4,000 units x 2.64) 10,560Labour cost (4,000 units x 1/2 x 0.21) 420FOH (4,000 units x 1/2 x 0.05) 100Share of Normal loss (4,000 units x 0.11) 440
Cost of Work in Process (at end) 11,520Cost of units transferred to next department:
( 60,000 units x 2.90 ) 174,000Add: Share of Normal Loss( 60,000 units x 0.11 ) 6,600
Total Cost of 60,000 units completed 180,600Cost of Finish goods on hand at end:
( 8,000 units x 2.90 ) 23,200
Cost of Normal Loss : ( we assume that inspection take place in start of process )
 
Add: Share of Normal Loss( 8,000 units x 0.11 ) 880
Total Cost of 8,000 units completed 24,080
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