Question 2

Weighted-average method, equivalent units.

Consider the following data for the assembly division of Fenton Watches, Inc.:

The assembly division uses the weighted-average method of process costing.

Physical Units

(Watches)

Direct

Materials

Conversion

Costs

Beginning work in

process (May 1) a

80 $493,360 $91,040

Started in May 2012 500

Completed during

May 2012

460

Ending work in

process (May 31)b

120

Total costs added

during May 2012

$3,220,000 $1,392,000

a Degree of completion: direct materials, 90%; conversion costs, 40%.

b Degree of completion: direct materials, 60%; conversion costs, 30%.

Required:

1. Compute equivalent units for direct materials and conversion costs. Show physical
   

units in the first column of your schedule.

(16 Marks)

1. Summarize total costs to account for, calculate cost per equivalent unit for direct
   

materials and conversion costs, and assign total costs to units completed (and

transferred out) and to units in ending work in process.

(17 Marks)

1. Suppose the assembly division at Fenton Watches, Inc., uses the FIFO method of
   

process costing instead of the weighted-average method. Compute equivalent units

for direct materials and conversion costs. Show physical units in the first column of

your schedule.

(17 Marks)