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Managerial Accounting: The Corners...

7th Edition
Maryanne M. Mowen + 2 others
ISBN: 9781337115773

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BuyFindarrow_forward

Managerial Accounting: The Corners...

7th Edition
Maryanne M. Mowen + 2 others
ISBN: 9781337115773
Textbook Problem
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Equivalent Units, Unit Cost, Weighted Average

Refer to the information for Alfombra Inc. on the previous page.

Required:

  1. 1. Prepare a physical flow analysis for the throw rug department for August.
  2. 2. Calculate equivalent units of production for the throw rug department for August.
  3. 3. Calculate the unit cost for the throw rug department for August.
  4. 4. Show that the cost per unit calculated in Requirement 3 is a weighted average of the FIFO cost per equivalent unit in BWIP and the FIFO cost per equivalent unit for August. (Hint: The weights are in proportion to the number of units from each source.)

Use the following information for Problems 6-59 and 6-60:

Alfombra Inc. manufactures throw rugs. The throw rug department weaves cloth and yarn into throw rugs of various sizes. Alfombra uses the weighted average method. Materials are added uniformly throughout the weaving process. In August, Alfombra switched from FIFO to the weighted average method. The following data are for the throw rug department for August:

Chapter 6, Problem 59P, Equivalent Units, Unit Cost, Weighted Average Refer to the information for Alfombra Inc. on the

1.

To determine

Make a physical flow schedule for rug department of Company AI.

Explanation

Physical Flow Schedule:

The schedule which is made with the objective to determine the production of physical units is known as physical flow schedule. It considers all units in process which can be related to any completion stage.

Prepare physical flow schedule of Company AI:

Physical Flow Schedule
Units to account for:Units
Units in BWIP40,000
Units started 120,000
Total units account for160,000
  
Units accounted for: 
Units started and completed180,000
From beginning work in process40,000
Units in EWIP40,000
Total units accounted for160,000

Table (1)

Therefore, the units accounted for and units to account for are 160,000 units...

2.

To determine

Compute equivalent unit of production of Company AI.

3.

To determine

Compute unit cost of Company AI.

4.

To determine

Display that the unit cost calculated is a weighted average of the FIFO cost per equivalent unit in BWIP and the FIFO cost per equivalent unit.

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