Chapter 6, Problem 40P

1.

To determine

Calculate the number of equivalent units using the weighted-average method.

Explanation of Solution

Equivalent units: Equivalent units are the number of units that could have been performed given the amount of work actually performed, and for both partially complete units and complete units, the quantity of other production inputs used.

Calculate the number of equivalent units for direct materials using weighted-average method:

$\begin{array}{c}\text{Total equivalent units = }\left(\text{Units completed + Completed direct materials, Ending}\right)\\ \text{=}200,000\text{units +}\left(\text{30,000}\text{units}\times 8\text{0\%}\right)\\ =200,000\text{units+24,000}\text{units}\\ \text{=224,000 units}\end{array}$

Hence, the number of equivalent units for direct materials using weighted-average method is 224,000 units.

Calculate the number of equivalent units for conversion using weighted-average method:

$\begin{array}{c}\text{Total equivalent units = }\left(\text{Units completed + Completed conversion, Ending}\right)\\ \text{=}200,000\text{units +}\left(\text{30,000}\text{units}\times 5\text{0\%}\right)\\ =200,000\text{units+15,000}\text{units}\\ \text{=215,000 units}\end{array}$

Hence, the number of equivalent units for conversion using weighted-average method is 215,000 units.

2.

To determine

Calculate the costs per equivalent unit for direct materials and conversion using the weighted-average method.

Explanation of Solution

Calculate the costs per equivalent unit:

Total manufacturing costs	Direct materials	Conversion	Total
Beginning WIP	55,440 yuan	54,425 yuan	109,865 yuan
Current Costs	820,400	1,350,600	2,171,000
Total costs	875,840	1,405,025	2,280,000
Divide by: Number of equivalent units produced	224,000	215,000
Cost per equivalent unit	3.9100 yuan	6.5350 yuan	10.4450 yuan

Table (1)

Hence, the costs per equivalent unit for direct materials is 3.9100 yuan, and for conversion is 6.5350 yuan.

3.

To determine

Calculate the costs of goods completed and transferred out during October.

Explanation of Solution

Transferred-out costs:  The costs that are incurred at the time of production of the previous process. These costs are brought to the next process to calculate the total production cost. The transferred in costs include the cost of direct materials and the conversion cost of the previous process.

Calculate cost of goods completed and transferred out.

$\begin{array}{c}\begin{array}{l}\text{Cost of goods completed}\\ \text{ and transferred out}\end{array})\text{=}\text{Transferred out units }\times \text{Total cost per unit}\\ \text{=}200\text{,000 units}\times 10.445\text{yuan}\text{per unit}\\ \text{=}2,089,000\text{yuan}\end{array}$

Hence, the costs of goods completed and transferred out during October is 2,089,000 yuan.

4.

To determine

Calculate the cost of the Work-in-process inventory at October 31.

Explanation of Solution

Calculate Ending WIP inventory for direct materials.

$\begin{array}{c}\text{Ending WIP, Direct materials})\text{=}\left(\begin{array}{c}\text{Direct materials, Ending }\times \\ \text{Cost per unit }\left(\text{Requirement 2}\right)\end{array}\right)\\ \text{=}\left(\text{30,000 units}\times \text{80\%}\right)\times 3.910\text{yuan}\text{per unit}\\ \text{=}93,840\text{yuan}\end{array}$

Calculate Ending WIP inventory for conversion.

$\begin{array}{c}\text{Ending WIP, Direct materials})\text{=}\left(\begin{array}{c}\text{Conversion, Ending }\times \\ \text{Cost per unit }\left(\text{Requirement 2}\right)\end{array}\right)\\ \text{=}\left(\text{30,000 units}\times 5\text{0\%}\right)\times 6.535\text{yuan}\text{per unit}\\ \text{=}93,025\text{yuan}\end{array}$

Hence, the cost of the Work-in-process inventory at October 31 is 93,840 yuan, and for conversion is 98,025 yuan.

5.

To determine

Discuss the exchange rate between the Country U dollar and Country C yuan.

Explanation of Solution

As of November 7, 2019, 1 Country U dollar is equal to 6.99806 Yuan, a fall in the dollar over the prior 5 years. The rise of the Yuan means that, as the cheaper dollar makes exports to the Country U more expensive, and imports to Country C look more attractive, a greater competition is faced by Company C in the foreign exports.