McElroy, Inc., produces a single model of a popular cell phone in large quantities. A single cell phone moves through two departments, assembly and testing. The manufacturing costs in the assembly department during March follow: Direct materials $187,500
Conversion costs 163,800
$351,300

The assembly department has no beginning Work-in-Process Inventory. During the month, it started 30,000 cell phones, but only 26,000 were fully completed and transferred to the testing department. All parts had been made and placed in the remaining 4,000 cell phones, but only 50% of the conversion had been completed. The company uses the weighted-average method of process costing to accumulate product costs.

Required:
a. Compute the equivalent units and cost per equivalent unit for March in the assembly department.
b. Compute the costs of units completed and transferred to the testing department.
c. Compute the costs of the ending work-in-process.

Part a.

Equivalent units : Materials = 30,000 units ,Conversion Costs = 28,000 units

Cost per equivalent unit : Materials = $6.25 Conversion Costs = $5.85

Part b.

$314,600

Part c.

$36,700

Explanation:

Step 1  : Equivalent units

Materials

Units Completed and Transferred (26,000 x 100 %)  26,000

Units in Ending Work in Process (4,000 x 100%)          4,000

Equivalent units with respect to Materials                  30,000

Conversion Costs

Units Completed and Transferred (26,000 x 100 %)  26,000

Units in Ending Work in Process (4,000 x 50%)           2,000

Equivalent units with respect to Materials                  28,000

Step 2 : Cost per equivalent unit

Materials = $187,500 ÷  30,000 = $6.25

Conversion Costs = $163,800 ÷ 28,000 = $5.85

Total unit cost = $6.25 + $5.85 = $12.10

Step 3 : Costs of units completed and transferred to the testing department

Costs of units completed and transferred = 26,000 x $12.10 = $314,600

Step 4 : Costs of the ending work-in-process

Costs of the ending work-in-process = 4,000 x $6.25 + 2,000 x $5.85 = $36,700

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