Question

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.

Answer 1

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