8.

16 calculating equivalent units: the weighted average method

clean corporation produces window glass cleaner. The following information is related to goods in
process owned by the company.

 Initial inventory, 12000 gallons, some of which have been completed

 63,000 gallons have been transferred out
 ending inventory (completion rate of raw materials is 20%, completion rate of conversion costs is
10%)
 72,000 gallons have begun work this month

requested:

a. calculate equivalent units for raw materials using the weighted average method

b. calculate the equivalent unit for conversion costs using the weighted average method

8.17 calculates the equivalent unit: the FIFO method

use the data in exercise 8.16. assume that the initial inventory has been completed with a completion
rate of 50% for raw materials and 30% for conversion costs.

requested:

a. calculate equivalent units for raw materials using the FIFO method

b. calculate the equivalent unit for conversion costs using the FIFO method

9.31 cost calculations based on activity vs. cost calculations commonly used isadore's implements, inc.
producing mechanical pens and pencils that are often used as gifts. overhead is currently allocated using
direct labor hours, but the controller recommends a cost calculation system based on activity using the
following data:

Volume of cost triggers

Activity cost driver cost pencil pen

Settings ……………………….. number of settings…………… 72.000 20 30
Examination……………….. number of spare parts………… 21.600 4 6
Packaging and shipping …number of shipping boxes….. 43.200 45.000 75.000
Total overhead
requested:

a. calculate the amount of overhead that will be allocated to each product using an activity based cost
calculation

b. calculate the amount of overhead that will be allocated for each product using direct labor hours as a
basis for allocations. assume that the direct labor hours needed to assemble each box are 0.1 for pencils
and 0.2 for pens. during that period, the company produced 45,000 pencil boxes and 75,000 pen boxes

c. should the company follow the controller recommendations

answer:

8.16
Material Conversion
63.000 63.000
Material (20% x 21.000) 4.200
Conversion (10% x 21.000) 2.100
Total 67.200 67.200

Information : 12.000 + 72.000 – 63.000 = 21.000

8.17

Material Conversion
Material (50% x 12.000) 6000
Conversion (70% x 12.000) 8000
Information :
50% = 100% - 50%
70% = 100% - 30%
63.000 – 12.000 = 51.000

Material Conversion
Ending inventory 51.000 51.000
Material (20% x 21.000) 4.200
Conversion (10% x 21.000) 2.100
Total 61.200 61.200
9.31

Cost driver rate pencil pena

Setting up 72.000 28.800 43.200
Inspecting 21.600 8.640 12.960
Packing & stepping 43.200 16.200 27.000
Total overhead 53.640 83.160