Question

Using the Microsoft Excel, kindly prepare a cost production report for Department I and Department II using the Weighted Average Method.

Paper Needs Inc, has the following production data for the month of June 20xx.

			DEPARTMENT I		DEPARTMENT II
QUANTITY SCHEDULE			Units	Percentage of completion	Units	Percentage of completion
Work-in process, beginning			15,000	2/3 complete	9,000	1/3 complete
Transferred to next department			30,000		?
Work-in process, end			5,000	2/5 complete	8,000	7/8 complete
COST ANALYSIS			DEPARTMENT I		DEPARTMENT II
Work-in process, beginning
	Cost from preceding department
	Costs from this department
		Materials	₱16,290		₱7,992
		Labor	6,630		3,996
		Overhead	2,100		2,664
Costs added this month
		Materials	₱21,720		₱61,272
		Labor	14,618		46,620
		Overhead	5,068		31,080

In Department I, all materials are added at the start of the process, while labor and overhead are applied evenly throughout the process.

In Department II, 50% of materials are added at the start of the process and the balance is added when the process is ¾ completed. Conversion costs are applied uniformly to the process.

Answer 1

1. Determination of the equivalent units for June for DEPARTMENT II :-
Paper Needs Inc
DEPARTMENT II
Cost of Production Report- DEPARTMENT II
For the Month Ended June 20xx
UNITS		Equivalent Units
	Physical Units	% complete	Direct materials	% complete	Conversion
Units to be accounted for:
Work in process, beginning	9000
Transferred from Department II	30000
Total units	39000
Units accounted for:
Units transferred to Finished Goods Inventory (Bal. fig)	31000	100%	31000	100%	31000
Work in process, Ending	8000	100%	8000	87.50%	7000	7/8 =87.5%
Total units to be assigned costs	39000		39000		38000
Note:- Materials is taken as 100% since 50% of materials are added at the start of the process and the balance is added when the process is 3/4 i.e. 75% completed. The ending work in process of June is 7/8 i.e. 87.5% complete i.e. more than 75%. So, materials is taken as 100%.
2. Compute the costs per equivalent unit for for June for DEPARTMENT II
COSTS	Costs
	Direct materials	Conversion	Total
Unit Costs
Cost of beginning Work in process	$          7,992	$          6,660	$           14,652
Total Costs added during June	$        61,272	$        77,700	$         138,972
Total Cost to be accounted for	$        69,264	$        84,360	$         153,624
	÷	÷
Equivalent units	39000	38000
Cost per equivalent unit	$1.78	$2.22	$4.00
Costs to be accounted for
Conversion Costs in Beginning work in process     =	Labor +	Overhead   =	3996+2664 =	6660
Conversion Costs added during June                      =	Labor +	Overhead   =	46620+31080 =	77700
3. Determine the total cost of ending work in process inventory and the total cost of units transferred to the Finished Goods Inventory in June
	Equivalent units	Cost per equivalent unit		Total
Cost of Ending Work in proces inventory
Direct materials	8000	$1.78	$14,208
Conversion Costs	7000	$2.22	$15,540	$29,748
Cost of units units transferred to the Department II in June	31000	$4.00		$123,876
Total costs accounted for				$153,624
4. Prepare a cost reconciliation report for the Department II for June
Paper Needs Inc
Cost Reconciliation Schedule
	Total
Total Cost to be accounted for:
Cost of beginning Work in process	$        14,652
Costs added into production during june	$      138,972
Total Cost to be accounted for	$      153,624
Cost accounted for as follows:
Cost of Ending Work in proces inventory	$29,748
Cost of units completed Transferred out	$123,876
Total costs accounted for	$153,624

Feel free to ask any clarification, if required. Please provide feedback by thumbs up, if satisfied. It will be highly appreciated. Thank you.