Question

The Joan Company uses the process cost system and average cost method. The following production data are for the month of July, 20--. Production Costs Work in process, beginning of month: Materials $18,500 Labor 8,750 Factory overhead 4,850 $ 32,100 Costs incurred during month: Materials $93,500 Labor 42,450 Factory overhead 33,550 169,500 Total $201,600 Production Report Units In process, beginning of month 4,000 Finished and transferred during month 28,000 Work in process, end of month 10,000 Stage of completion 40% (a) Prepare a cost of production summary for the month. (b) Prepare the journal entries to record production for the month

Answer 1

Weighted average cost
Beggining units	4000	Transferred out	28,000
Started intro production	34000	Ending units	10,000
Units accounted for	38000		38000
Equivalent units	Material	Conversion cost
Units transferred                      A	28000	28000
Ending Units	10,000	10,000
Completion	40%	40%
B	4000	4000
Total units	32000	32000
Cost per equivalent units
Particulars	Material	Conversion cost	total
As at beginning	18500	13600	32100
Added during the month	93500	76000	169500
Cost to be accounted for	112000	89600	201600
Total eqivalent units	32000	32000
Cost per equivalent unit	3.50	2.80	6.30
Cost per equivalent unit = Cost to be accounted for / Total equivalent units

Cost of ending work in progress
		Conversion cost
Particulars	Material		Total
Ending units	10,000	10,000
Cost per equivalent units	3.50	2.80
Completion	40%	40%
Total cost	14000	11200	25200
Cost of goods transferred		Conversion cost
Particulars	Material		Total
Number of units	28000	28000
Cost per equivalent units	3.50	2.80	6.30
Total amount	98000	78400	176400

Journal entries

Finished goods inventory debit $176400

Work in process inventory credit $176400