Question

Smith Electronic Company’s chip-mounting production department had 300 units of unfinished product, each 50% completed on September 30. During October of the same year, this department put another 800 units into production and completed 900 units and transferred them to the next production department. At the end of October, 200 units of unfinished product, 70% completed, were recorded in the ending Work-in-Process Inventory. Smith Electronic introduces all direct materials when the production process is 50% complete. Direct labor and factory overhead (i.e., conversion) costs are added uniformly throughout the process.

Following is a summary of production costs incurred during October:

	Direct Materials				Conversion Costs
Beginning work-in-process					$	3,750
Costs added in October	$	8,300				5,300
Total costs	$	8,300			$	9,050

Required:

1. Calculate each of the following amounts using weighted-average process costing:
a. Equivalent units of direct materials and conversion.
b. Equivalent unit costs of direct materials and conversion.
c. Cost of goods completed and transferred out during the period.
d. Cost of Work-in-Process Inventory at the end of the period.

2. Prepare a production cost report for October using the weighted-average method.

3. Repeat requirement 1 using the FIFO method.

4. Repeat requirement 2 using the FIFO method.

Answer 1

Answer to the question no 1.

Data Given for the month of October are:-

1. Units begining Work in progress = 300 Units (50% Complete to each Direct Materials and Conversion).

2. Units started for production = 800 units.

3. Units Completed and Transferred to the next production department = 900 units.

4. Units in Ending Work in Progress = 200 units

1 (a) :- Equivalent units of DIrect Matarial and Conversion

Equivalent units of Direct Material and Conversion Calculation during October
Particulars	Direct Material	Conversion
1. Beginning Work In Progress	0	150
( 100% of Direct Material and 50% Conversion Completed in September and balance 50% of Conversion completed in October of 300 Units)
2. Units Completed and Transferred to next Production Department
( 100% Completed units of 900)	900	900
3. Ending Work in Progress
( Direct material 100% Completed and Conversion Completed 70% only of 200 units)	200	140
Total Equivalent Unit of Direct Material and Conversion	1100	1190

1 (b):- Equivalent Units Cost of Direct Material and Conversion

Equivalent units cost of Direct Material and Conversion Calculation during October
Particulars	Direct Material ($)	Conversion ($)
1. Cost of Begining Work In Progress	0	3750
( 100% of Direct Matarial and 50% Conversion Completed in September and balance 50% of Conversion completed in October of 300 Units)
2. Cost added during October	8300	5300
3. Total Cost	8300	9050
4. Total Equivalent Units	1100	1190
5. Cost Per Equivalent Units	7.55	7.61
( Total Cost divided by Total Equivalent Units)

1 (C) :- Cost of Goods Completed and Transferred during October

Cost of goods completed and transferred of 900 units during October
Particulars	Cost in ($)
1. Direct Material Cost
( 900 Units X $ 7.55)	6795
2. Conversion Cost
( 900 Units X $ 7.61)	6849
Total Cost of Goods Completed and Trnasferred	13644

1 (d) :- Cost of Work in Progress Inventory at the end of October

Cost of Ending Work in Progress of 200 units at the end of October
Particulars	Cost in ($)
1. Direct Material Cost (100% Material Completed)
( 200 Units X $ 7.55)	1510
2. Conversion Cost (70% Conversion Completed)
( 140 Units X $ 7.61)	1065.4
Total Cost of Ending work in progress	2575.4

Note: All fraction are converted in to next $ for calculation