Basil Manufacturing uses a weighted-average process-costing system. The following figures pertain to July:?Physical unitsEquivalent unitsMaterialsEquivalent units ConversionUnits completed120,000120,000120,000Ending work in process40,00040,00018,000All materials are introduced at the start of the process, and conversion cost is incurred evenly throughout production. The company used direct materials that cost $640,000; conversion amounted to $8 per equivalent unit.Required:A. Calculate the direct materials cost per equivalent unit.B. Calculate the cost of units completed and transferred.C. What percentage of conversion work will be performed on the 40,000-unit ending work-in-process inventory during August?D. In all likelihood, were all of the 120,000 completed units begun in July?
Explain.
What will be an ideal response?
A. $640,000 ÷ (120,000 + 40,000) = $4
B. 120,000 × ($4 + $8) = $1,440,000
C. Forty-five percent (18,000 ÷ 40,000) of the work was performed in July, leaving 55% for August.
D. No. In a continuous processing environment, the beginning work-in-process inventory is often the first batch of goods to be completed. These units entered production in a previous month.
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