Question

McCallum Tool Company has two departments, assembly and finishing. The assembly department takes purchased parts and assembles the final product. The finishing department performs testing and adds other materials and packages the product. Direct materials are added at the end of the process in the finishing department. The following summarizes the finishing department’s operations for the month of July.

	Number of Units
Work-in-process, July 1, 50% complete for conversion costs		5,000
Transferred in during July		26,000
Completed during July		25,000
Work-in-process, July 31, 50% complete for conversion costs		6,000

	Costs
Work-in-process, July 1 (transferred-in costs, $30,000; conversion costs, $31,180)	$	61,180
Transferred in from assembly department during July		210,250
Direct materials added during July		118,750
Conversion added during July		108,820
Total to account for	$	499,000

Required:

Calculate each of the following amounts for the finishing department using the weighted-average process costing method, and then prepare the requested journal entries.

1. Equivalent units of transferred-in, direct materials, and conversion.

2. Equivalent unit costs for transferred-in costs, direct materials, and conversion.

3. Cost of goods completed and transferred out during July.

4. Cost of Work-in-process inventory at July 31.

5. Prepare the journal entries for direct materials, direct labor, overhead, and finished product for July, assuming that direct labor is 50% of conversion cost.

Answer 1

Weighted average cost
Beginning units	5000	Transferred out	25,000
Units received from preceeding	26000	Ending units	6,000
	31000		31000
Equivalent units	Trasferred in	Material	Conversion cost
Units transferred                      A	25000	25000	25,000
Ending Units	6,000	6,000	6,000
Completion	100%	0%	50%
B	6000	0	3000
Total units	31000	25000	28000
Cost per equivalent units
Particulars	Trasferred in	Material	Conversion cost
As at beginning	30000	0	31180	61180
Added during the month	210250	118750	108820	437820
Cost to be accounted for	240250	118750	140000	499000
Total eqivalent units	31000	25000	28000
Cost per equivalent unit	7.75	4.75	5.00	17.50
Cost per equivalent unit = Cost to be accounted for / Total equivalent units

Cost of ending work in progress
Particulars	Trasferred in	Material	Conversion cost
Ending units	6,000	6,000	6,000
Cost per equivalent units	7.75	4.75	5.00
Completion	100%	0%	50%
Total cost	46500.00	0.00	15000
Total cost	61500
Cost of goods transferred
Particulars	Trasferred in	Material	Conversion cost
Number of units	25000	25000	25000
Cost per equivalent units	7.75	4.75	5.00
Total amount	193750.00	118750.00	125000
Total cost	437500

		Debit	Credit
a	Work in process finishing department	118750
	Material inventory		118750
b	Work in process finishing department	54410
	Wages payable		54410
c	Work in process finishing department	54410
	Manufacturing overheads		54410
d	Finished goods inventory	437500
	Work in process finishing department		437500