Question

Fields Company has two manufacturing departments, forming and painting. The company uses the weighted-average method of process costing. At the beginning of the month, the forming department has 31,500 units in inventory, 75% complete as to materials and 25% complete as to conversion costs. The beginning inventory cost of $73,100 consisted of $52,600 of direct materials costs and $20,500 of conversion costs.

During the month, the forming department started 430,000 units. At the end of the month, the forming department had 30,000 units in ending inventory, 85% complete as to materials and 35% complete as to conversion. Units completed in the forming department are transferred to the painting department.

Cost information for the forming department follows.

Beginning work in process inventory	$	73,100
Direct materials added during the month		1,615,450
Conversion added during the month		1,088,920

1. Calculate the equivalent units of production for the forming department.
2. Calculate the costs per equivalent unit of production for the forming department.
3. Using the weighted-average method, assign costs to the forming department’s output—specifically, its units transferred to painting and its ending work in process inventory.

Answer 1

1)	Equivalent Units of Production (EUP) - Weighted Average Method
					Units	% Mat.	EUP- Mat.	% Conv.	EUP- Conv.
	Units completed and transferred out				431500	100%	431500	100%	431500
	Units in ending inventory				30000	85%	25500	35%	10500
	Equivalent units of production						457000		442000

2)	Cost per Equivalent Unit of Production
						Materials		Conversion
	Beginning costs					$      52,600.00		$      20,500.00
	During the month costs					$ 16,15,450.00		$ 10,88,920.00
	Total cost				Costs	$ 16,68,050.00	Costs	$ 11,09,420.00
	÷	Equivalent units of production			EUP	457000	EUP	442000
	Cost per equivalent unit of production					$                3.65		$                2.51

3)	Cost Assignment and Reconciliation
	Cost of units transferred out				EUP	Cost/ EUP	Total Cost
	Direct Materials				431500	$      3.65	$ 15,74,975.00
	Conversion				431500	$      2.51	$ 10,83,065.00
	Total costs transferred out						$ 26,58,040.00
	Cost of ending work in process				EUP	Cost/ EUP	Total Cost
	Direct Materials				25500	$      3.65	$      93,075.00
	Conversion				10500	$      2.51	$      26,355.00
	Total cost of ending work in process						$   1,19,430.00
	Total costs accounted for							$ 27,77,470.00