Victory Company uses weighted-average process costing to account for its production costs. Conversion costs are added evenly throughout the process.
Direct materials are added at the beginning of the process.
During November, the company transferred 800,000 units of product to finished goods.
At the end of November, the work in process inventory consists of 187,000 units that are 60% complete with respect to conversion.
Beginning inventory had $192,465 of direct materials and $159,635 of conversion cost.
The direct material cost added in November is $1,288,035 and the conversion cost added is $3,033,065.
Beginning work in process consisted of 74,000 units that were 100% complete with respect to direct materials and 80% complete with respect to conversion.
Of the units completed, 74,000 were from beginning work in process and 726,000 units were started and completed during the period.
Required:1. Determine the equivalent units of production with respect to direct labor and direct materials.2. Compute both the direct labor cost and the direct materials cost per equivalent unit. (Round "Cost per EUP" to 2 decimal places.)3. Compute both direct labor cost and direct materials cost assigned to units completed and transferred out and ending goods in process inventory. (Round "Cost per EUP" to 2 decimal places.)

1. Direct Materials = 987,000 units , Direct Labor = 912,200 units

2.Direct Materials = $1.50 , Direct Labor = $3.50

3.

Units Completed and Transferred Costs

Direct Materials = $ 1,200,000

Direct Labor =  $ 2,800,000

Ending goods in process inventory cost

Direct Materials = $ 280,500

Direct Labor = $ 392,700

Explanation:

First step is to determine the equivalent units of production with respect to direct labor and direct materials

Direct Materials

Note : Materials are added at beginning of the process hence, they are 100 % complete for both units categories

Units Completed and Transferred (800,000 × 100%) =  800,000

Units of Ending Work In Process (187,000 × 100%)     =   187,000

Equivalent units of production                                      =   987,000

Direct Labor

Note : Conversion costs are added evenly throughout the process, hence we need to establish units to the extent of work done.

Units Completed and Transferred (800,000 × 100%) =  800,000

Units of Ending Work In Process (187,000 × 60%)     =      112,200

Equivalent units of production                                      =    912,200

The next step is to Calculate the Total Cost of Production with respect to direct labor and direct materials incurred during the period.

Direct Materials

Cost in Opening Work In Process =    $192,465

Cost added during the period       = $1,288,035

Total Costs                                      = $1,480,500

Conversion

Cost in Opening Work In Process =     $159,635

Cost added during the period       = $3,033,065

Total Costs                                      =  $3,192,700

Then use the above data to calculate the cost per equivalent unit for direct labor and direct materials.

Cost per equivalent unit. = Total Cost / Total Equivalent units

Direct Materials = $1,480,500 / 987,000 = $1.50

Direct Labor = $3,192,700 / 912,200 = $3.50

CONCLUSION :

Units Completed and Transferred Costs

Direct Materials = (800,000 ×  $1.50) = $ 1,200,000

Direct Labor = (800,000 ×  $3.50) = $ 2,800,000

Ending goods in process inventory cost

Direct Materials = (187,000 ×  $1.50) = $ 280,500

Direct Labor = (112,200 ×  $3.50) = $ 392,700

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