Question

Problem 20-4A Weighted average: Process cost summary, equivalent units, cost estimates LO C2, C3, P4

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Tamar Co. manufactures a single product in one department. All direct materials are added at the beginning of the manufacturing process. Conversion costs are added evenly throughout the process. During May, the company completed and transferred 23,200 units of product to finished goods inventory. Its 3,200 units of beginning work in process consisted of $20,000 of direct materials and $230,940 of conversion costs. It has 2,500 units (100% complete with respect to direct materials and 80% complete with respect to conversion) in process at month-end. During the month, $519,700 of direct material costs and $2,062,260 of conversion costs were charged to production.

Problem 20-4A Part 1

1. Prepare the company’s process cost summary for May using the weighted-average method.

2. Prepare the journal entry dated May 31 to transfer the cost of completed units to finished goods inventory. (Do not round intermediate calculations. Round your final answers to the nearest whole dollar.)

Answer 1

• All working forms part of the answer
• Requirement 1

Since no format of Cost Summary is available, I’m providing every detail required for such summary report in a Report Format.

Units Reconciliation
Units to account for:
Beginning WIP	3,200
Units started this period	22,500
Total Units to account for	25,700
Total Units accounted for:
Completed & Transferred out	23,200
Ending WIP	2,500
Total Units accounted for	25,700

EUP - Weighted Average Method	Units	% Material	EUP Materials	% Conversion	EUP - Conversion
Units TRANSFERRED	23,200	100%	23,200	100%	23,200
Units of ENDING WIP	2,500	100%	2,500	80%	2,000
Equivalent Units of Production			25,700		25,200
COST per EUP			Material		Conversion
Cost of Beginning WIP			$          20,000.00		$                                230,940.00
Cost incurred during the period			$        519,700.00		$                            2,062,260.00
Total Costs		Costs	$        539,700.00	Costs	$                            2,293,200.00
Equivalent units of production		EUP	25,700	EUP	25,200
Cost per EUP			$            21.00000		$                                   91.00000
TOTAL COST ACCOUNTED FOR
Cost of Units Transferred Out	EUP	Cost per EUP	Total Cost
- Direct Materials	23,200	$            21.00	$        487,200.00
- Conversion	23,200	$            91.00	$    2,111,200.00
Total Cost transferred Out				$        2,598,400.00
Cost of ending WIP	EUP	Cost per EUP	Total Cost
- Direct Materials	2,500	$            21.00	$          52,500.00
- Conversion	2,000	$            91.00	$        182,000.00
Total cost of ending WIP				$            234,500.00
Total costs accounted for					$                            2,832,900.00

• Requirement 2

Accounts title	Debit	Credit
Finsihed Goods Inventory	$ 2,598,400.00
Work In Process Inventory		$       2,598,400.00
(to record transfer of cost from WIP to Finsihed Goods)