Question

Audio Accessories Ltd manufactures a model of compact disc holders which is produced in three separate departments: Molding, Assembly, and Finishing. It uses the weighted-average process-costing method to account for the cost of production. The following information was obtained for the Assembly Department for the month of April.
Amount Percentage complete

WIP, 1 April (5,000 units)
Prior department costs transferred in from the Molding Department $7,000 100%
Costs added by the Assembly Department
Direct materials $3,500 100%

Direct labour 4,500 60%
Manufacturing overhead 2,000 50%
10,000
Total WIP, 1 April $17,000
During the month of April, the Molding Department transferred into the Assembly Department 25,000 units at a prior department cost of $38,000. The Assembly Department added the following $51,700 of costs:
Direct materials $19,700
Direct labour 22,500
Manufacturing overhead 9,500
$51,700
The Assembly Department completed and transferred out 20,000 units to the Finishing Department. The balance was still in WIP in the Assembly Department. The degree of completion of WIP at 30 April was as follows:
Direct materials 90%
Direct labour 70%
Manufacturing overhead 30%
Required:
(a) Prepare a report to show the physical flow of units, the equivalent units, unit costs of transferred in cost, direct materials, direct labour and manufacturing overheads.
(b) Prepare a report to show the cost of goods completed and the cost of ending work in process for the month.
Explain why process costing system is best suited to Audio Accessories Ltd?

Answer 1

	Weighted average cost
	Beggining units	5000	Transferred out	20,000
	Started intro production	25000	Ending units	10,000
		30000		30000
	Equivalent units	Trasferred in	Material	Labor	Manufacturing overheads
	Units transferred                      A	20000	20000	20,000	20,000
	Ending Units	10,000	10,000	10,000	10,000
	Completion	100%	90%	70%	30%
	B	10000	9000	7000	3000
	Total units	30000	29000	27000	23000
	Cost per equivalent units
					Manufacturing overheads
	Particulars	Trasferred in	Material	Labor		Total
	As at beginning	7000	3500	4500	2000	17000
	Added during the month	38000	19700	22500	9500	89700
	Cost to be accounted for	45000	23200	27000	11500	106700
	Total eqivalent units	30000	29000	27000	23000
	Cost per equivalent unit	1.50	0.80	1.00	0.50	3.8
	Cost per equivalent unit = Cost to be accounted for / Total equivalent units

Particulars	Trasferred in	Material	Labor	Manufacturing overheads
Ending units	10,000	10,000	10,000	10,000
Cost per equivalent units	1.50	0.80	1.00	0.50
Completion	100%	90%	70%	30%
Total cost	15000	7200	7000	1500
Total cost	30700
Cost of goods transferred
Particulars	Trasferred in	Material	Labor	Manufacturing overheads
Number of units	20000	20000	20000	20000
Cost per equivalent units	1.50	0.80	1.00	0.50
Total amount	30000.00	16000.00	20000	10000
Total cost	76000

Reconciliation report
Cost of goods transferred		76000
AddWork in proress ending
Transferred In	15000
Material	7200.00
Labor	7000.00
Overheads	1500.00	30700
Total cost accounted for		106700