Question

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

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 29,200 units of product to finished goods inventory. Its 4,400 units of beginning work in process consisted of $21,200 of direct materials and $284,940 of conversion costs. It has 3,100 units (100% complete with respect to direct materials and 80% complete with respect to conversion) in process at month-end. During the month, $592,500 of direct material costs and $2,788,020 of conversion costs were charged to production.

Problem 20-4A Part 2

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

• Journal Entry will be based on following Working for Weighted Average method

Workings

Units Reconciliation
Units to account for:
Beginning WIP	4,400
Units started this period	27,900
Total Units to account for	32,300
Total Units accounted for:
Completed & Transferred out	29,200
Ending WIP	3,100
Total Units accounted for	32,300

EUP - Weighted Average Method	Units	% Material	EUP Materials	% Conversion	EUP - Conversion
Units TRANSFERRED	29,200	100%	29,200	100%	29,200
Units of ENDING WIP	3,100	100%	3,100	80%	2,480
Equivalent Units of Production			32,300		31,680

COST per EUP			Material		Conversion
Cost of Beginning WIP			$          21,200.00		$                                284,940.00
Cost incurred during the period			$        592,500.00		$                            2,788,020.00
Total Costs		Costs	$        613,700.00	Costs	$                            3,072,960.00
Equivalent units of production		EUP	32,300	EUP	31,680
Cost per EUP			$            19.00		$                                   97.00

• Amount for Journal Entry

Cost of Units Transferred Out	EUP	Cost per EUP	Total Cost
- Direct Materials	29,200	$            19.00	$        554,800.00
- Conversion	29,200	$            97.00	$    2,832,400.00
Total Cost transferred Out				$        3,387,200.00 [Amount to be used in Journal Entry]

• Journal Entry: on May 31

Accounts title	Debit	Credit
Finished Goods Inventory	$ 3,387,200.00
Work In Process Inventory		$       3,387,200.00
(to record transfer of cost from WIP to Finsihed Goods)