Question

Problem 20-3A Weighted Average: Process cost summary; equivalent units LO C2, C3, P4

Fast Co. produces its product through a single processing department. Direct materials are added at the start of production, and conversion costs are added evenly throughout the process. The company uses monthly reporting periods for its weighted-average process costing system. The Work in Process Inventory account has a balance of $98,100 as of October 1, which consists of $21,000 of direct materials and $77,100 of conversion costs.

During the month the company incurred the following costs:

Direct materials	$149,550
Conversion	1,120,200

During October, the company started 153,000 units and transferred 163,000 units to finished goods. At the end of the month, the work in process inventory consisted of 26,500 units that were 80% complete with respect to conversion costs.

Required:
1. Prepare the company’s process cost summary for October using the weighted-average method.
2. Prepare the journal entry dated October 31 to transfer the cost of the completed units to finished goods inventory.

Answer 1

• All working forms part of the answer
• Requirement 1

Units Reconciliation
Units to account for:
Beginning WIP	36,500
Units started this period	153,000
Total Units to account for	189,500
Total Units accounted for:
Completed & Transferred out	163,000
Ending WIP	26,500
Total Units accounted for	189,500

EUP - Weighted Average Method	Units	% Material	EUP Materials	% Conversion	EUP - Conversion
Units TRANSFERRED	163,000	100%	163,000	100%	163,000
Units of ENDING WIP	26,500	100%	26,500	80%	21,200
Equivalent Units of Production			189,500		184,200

COST per EUP			Material		Conversion
Cost of Beginning WIP			$          21,000.00		$                                  77,100.00
Cost incurred during the period			$        149,550.00		$                            1,120,200.00
Total Costs		Costs	$        170,550.00	Costs	$                            1,197,300.00
Equivalent units of production		EUP	189,500	EUP	184,200
Cost per EUP			$              0.90000		$                                      6.50000

TOTAL COST ACCOUNTED FOR
Cost of Units Transferred Out	EUP	Cost per EUP	Total Cost
- Direct Materials	163,000	$               0.90	$        146,700.00
- Conversion	163,000	$               6.50	$    1,059,500.00
Total Cost transferred Out				$        1,206,200.00
Cost of ending WIP	EUP	Cost per EUP	Total Cost
- Direct Materials	26,500	$               0.90	$          23,850.00
- Conversion	21,200	$               6.50	$        137,800.00
Total cost of ending WIP				$            161,650.00
Total costs accounted for					$                            1,367,850.00

• Requirement 2

Accounts title	Debit	Credit
Finished Goods Inventory	$ 1,206,200.00
Work In Process Inventory		$       1,206,200.00
(to record transfer of cost from WIP to Finsihed Goods)