Question

Production Cost Report

Fall Semester

Because most of the parts for its irrigation systems are standard, Northern Illinois Manufacturing handles the majority of its manufacturing as a process cost system. There are multiple process departments. Three of these departments are the Molding, Welding, and Assembly departments. All items eventually end up in the Package department which prepares items for sale in kits or individually.

The following information is available for the Molding department for January:

Work in process beginning:
Units in process	22,000
Stage of completion for materials	80%
Stage of completion for labor and overhead	30%
Costs in work in process inventory:
Materials	$168,360
Labor	67,564
Overhead	17,270
Total costs in beginning work in process	$253,194
Units started into production in January	60,000
Costs added to production:
Materials	$264,940
Labor	289,468
Overhead	60,578
Total cots added into production in January	$614,986
Work in process ending
Units in process	24,000
Stage of completion for materials	50%
Stage of completion for labor and overhead	10%

Instructions:

a. Prepare a production cost report for Northern Illinois Manufacturing using the weighted-average method

b. Prepare the journal entry for transferring the units from Molding to the Welding Department

Answer 1

Part a)

The production cost report for Northern Illinois Manufacturing using the weighted-average method is prepared as below:

_____

Notes:

1) The value of units transferred out is determined as below:

Units Transferred Out = Total Units - Ending Work in Process Inventory = 82,000 - 24,000 = 58,000 units

2) The value of costs (total and unit) in January is arrived as follow:

Materials = Costs in Work in Process Inventory (Materials) + Costs Added to Production (Materials) = 168,360 + 264,940 = $433,300

Conversion Costs =  Costs in Work in Process Inventory (Labor) +  Costs in Work in Process Inventory (Overhead) + Costs Added to Production (Labor) + Costs Added to Production (Overhead) = 67,564 + 17,270 + 289,468 + 60,578 = $434,880

Unit Costs (Materials) = Total Costs in January (Materials)/Equivalent Units (Materials) = 433,300/70,000 = $6.19

Unit Costs (Conversion Costs) = Total Costs in January (Conversion Costs)/Equivalent Units (Conversion Costs) = 434,880/60,400 = $7.20

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Part b)

The journal entry is given as follows: