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Problem 6.33 - Weighted Average Method, Single Department Analysis, Uniform Costs Hatch Company produces a product...

Problem 6.33 - Weighted Average Method, Single Department Analysis, Uniform Costs
Hatch Company produces a product that passes through three processes: Fabrication, Assembly, and Finishing. All manufacturing costs are added uniformly for all processes. The following information was obtained for the Fabrication Department for December:
Work in process, June 1, had 90,000 units (40 percent completed) and the following costs:
Direct materials $           72,720
Direct labor $         108,000
Overhead $           36,000
During the month of June, 180,000 units were completed and transferred to the Assembly Department, and the following costs were added to production:
Direct materials $         216,000
Direct labor $         144,000
Overhead $         162,000
On June 30, there were 45,000 partially completed units in process. These units were 80 percent complete.
Required:
Prepare a cost of production report for the Fabrication Department for June using the weighted average method of costing. The report should disclose the physical flow of units, equivalent units, and unit costs and should track the disposition of manufacturing costs.
Problem 6.34 - FIFO Method, Single Department Analysis, One Cost Category
Refer to the data in Problem 6.33.
Required:
Prepare a cost of production report for the Fabrication Department for December using the FIFO method of costing.

Solutions

Expert Solution

Solution 6.33:

Computation of Equivalent unit of Production - Weighted Average (Fabrication Department)

Particulars Physical Units Material Conversion
Unit completed & Transferred out 180000 180000 180000
Closing WIP: 45000
Material (80%) 36000
Conversion (80%) 36000
Equivalent units of production 225000 216000

216000

Computation of Cost per equivalent unit of Production - Weighted Average (Fabrication Department)
Particulars Material Conversion
Opening WIP $72,720.00 $154,000.00
Cost Added during June $216,000.00 $306,000.00
Total cost to be accounted for $288,720.00 $460,000.00
Equivalent units of production 216000 216000
Cost per Equivalent unit $1.3367 $2.1296
Computation of Cost of ending WIP and units completed & transferred out - Weighted Average (Fabrication Department)
Particulars Material Conversion Total
Equivalent unit of Ending WIP 36000 36000
Cost per equivalent unit $1.3367 $2.1296
Cost of Ending WIP (Equivalent unit * Cost per equivalent unit) $48,120 $76,667 $124,787
Units completed and transferred 180000 180000
Cost of units completed & Transferred (Unit completed * cost per equivalent unit) $240,600 $383,333

$623,933

Cost Reconciliation - Weighted Average - Fabrication Department
Particulars Amount
Costs to be accounted for:
Cost of beginning WIP inventory ($72,720 + $154,000) $226,720.00
Cost added to production ($216,000 + $306,000) $522,000.00
Total Cost to be accounted for $748,720.00
Costs accounted for as follows:
Cost of unit transferred out $623,933
Ending WIP:
Material $48,120
Converison $76,667
Total cost accounted for $748,720

Solution 6.34:

Hatch Company
Fabrication Department
Computation of Equivalent unit (FIFO)
Particulars Physical units Direct Material Conversion
Units to be accounted for:
Beginning WIP Inventory 90000
Units started this period (180000+45000-90000) 135000
Total unit to be accounted for 225000
Units Accounted for:
Units completed and transferred out
From beginning inventory
Direct material - 60%
Conversion - 60%
90000 54000 54000
Started and completed currently 90000 90000 90000
Units in ending WIP
Material - 80%
Conversion - 80%
45000 36000 36000

Total units accounted for

225000 180000

180000

Hatch Company

Fabrication Department
Computation of Cost per Equivalent unit
Particulars Total cost Material Conversion
Current period cost $522,000.00 $216,000.00 $306,000.00
Equivalent units 180000 180000
Cost per equivalent unit $1.20 $1.70
Hatch Company
Fabrication Department
Producton cost report - FIFO
Particulars Total cost Direct Material Conversion
Cost Accounted for :
Cost assigned to unit transferred out:
Cost from beginning WIP Inventory $226,720.00 $72,720.00 $154,000.00
Current cost added to complete beginning WIP:
Material $64,800.00 $64,800.00
Conversion (3050*5.30) $91,800.00 $91,800.00
Total Cost from beginning inventory $383,320.00 $137,520.00 $245,800.00
Current cost of unit started and completed:
Direct Material (90000*1.20) $108,000.00 $108,000.00
Conversion (90000*1.70) $153,000.00 $153,000.00
Total cost of unit started and completed $261,000.00 $108,000.00 $153,000.00
Total cost of unit transferred out $644,320.00 $245,520.00 $398,800.00
Cost assigned to ending WIP:
Direct Material (36000*1.20) $43,200.00 $43,200.00
Conversion (36000*1.70) $61,200.00 $61,200.00
Total ending WIP inventory $104,400.00 $43,200.00 $61,200.00
Total cost accounted for $748,720.00 $288,720.00 $460,000.00

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