Question
In: Accounting
25. Assigning Costs to Products: Weighted Average Method. Sydney, Inc., uses the weighted average method for...
25. Assigning Costs to Products: Weighted Average Method. Sydney, Inc., uses the weighted average method for its
process costing system. The Assembly department at Sydney, Inc., began April with 6,000 units in work-in-process
inventory, all of which were completed and transferred out during April. An additional 8,000 units were started during
the month, 3,000 of which were completed and transferred out during April. A total of 5,000 units remained in workin-
process inventory at the end of April and were at varying levels of completion, as shown in the following.
| Direct Materials | 40 percent complete |
| Direct Labor | 30 percent complete |
| Overhead | 50 percent complete |
26. The following cost information is for the Assembly department at Sydney, Inc., for the month of April.
| Direct Materials | Direct Labor | Overhead | Total | |
| Beginning WIP inventory | $300,000 | $350,000 | $250,000 | $900,000 |
| Incurred during the month | $180,000 | $200,000 | $170,000 | $550,000 |
236
Incurred during the month $180,000 $200,000 $170,000 $550,000
27. Required:
a. Determine the units to be accounted for and units accounted for; then calculate the equivalent units for direct
materials, direct labor, and overhead. (Hint: This requires performing step 1 of the four-step process.)
b. Calculate the cost per equivalent unit for direct materials, direct labor, and overhead. (Hint: This requires performing
step 2 and step 3 of the four-step process.)
c. Assign costs to units transferred out and to units in ending WIP inventory. (Hint: This requires performing step 4 of the
four-step process.)
d. Confirm that total costs to be accounted for (from step 2) equals total costs accounted for (from step 4). Note that
minor differences may occur due to rounding the cost per equivalent unit in step 3.
e. Explain the meaning of equivalent units.
Solutions
Expert Solution
| Step for solution | |
| Step 1 | Equivalent Units of production = Physical units multiplied by % of competition |
| Step 2 | Calculate total cost to be accounted for |
| Step 3 | Cost per Equivalent Unit = total cost to be accounted for / Equivalent Units of production |
| Step 4 | Cost assigned to units transferred out = units completed and transferred out * Cost per Equivalent Unit |
| Step 5 | Cost assigned to units ending work in progress = equivalent units in ending WIP inventory * Cost per Equivalent Unit |
Answer A to D
| Sydney, Inc. | |||||||
| Assembly Department production Report | |||||||
| Weighted average Method | |||||||
| Month ended April 30 | |||||||
| Summary of Physical units | |||||||
| Units in beginning WIP inventory | 6,000 | ||||||
| Units started during month | 8,000 | ||||||
| Total unit to be accounted for | 14,000 | ||||||
| Units completed and transferred out (6000+3000) | 9,000 | ||||||
| Units in ending WIP inventory | 5,000 | ||||||
| Total unit accounted for | 14,000 | ||||||
| Equivalent Units of production | |||||||
| Particulars | Physical units | Direct material | Direct labor | overhead | |||
| % | units | % | units | % | units | ||
| units in beginning WIP inventory | 6000 | 100% | 6,000 | 100% | 6,000 | 100% | 6,000 |
| Units in Started and completed (9000-6000) | 3000 | 100% | 3,000 | 100% | 3,000 | 100% | 3,000 |
| units in ending WIP inventory | 5000 | 40% | 2,000 | 30% | 1,500 | 50% | 2,500 |
| Equivalent Units of production (Answer A) | 11,000 | 10,500 | 11,500 | ||||
| Summary of cost to be accounted | |||||||
| Direct material | Direct labor | overhead | Total | ||||
| Cost in beginning WIP | $ 300,000 | $ 350,000 | $ 250,000 | $ 900,000 | |||
| Cost incurred during Month (Add) | $ 180,000 | $ 200,000 | $ 170,000 | $ 550,000 | |||
| Total cost to be accounted for | $ 480,000 | $ 550,000 | $ 420,000 | $ 1,450,000 | |||
|
Cost per Equivalent Unit (Rounded to 2 decimal places) |
|||||||
| total cost to be accounted for | $ 480,000 | $ 550,000 | $ 420,000 | ||||
| Equivalent Units of production | 11,000 | 10,500 | 11,500 | ||||
| Cost per Equivalent Unit (Answer B) | $ 43.64 | $ 52.38 | $ 36.52 | $ 132.54 | |||
|
Assign costs to units transferred out and units in ending WIP inventory |
|||||||
| cost assigned to units transferred out | |||||||
| units completed and transferred out | 9,000 | 9,000 | 9,000 | ||||
| Cost per Equivalent Unit | $ 43.64 | $ 52.38 | $ 36.52 | ||||
| Cost of units transferred out (Answer C) | $ 392,760 | $ 471,420 | $ 328,680 | $ 1,192,860 | |||
| cost assigned to units ending work in progress | |||||||
| equivalent units in ending WIP inventory | 2,000 | 1,500 | 2,500 | ||||
| Cost per Equivalent Unit |
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