Question

CASE 2 – COST OF PRODUCTION SUMMARY: WEIGHTED AVERAGE AND FIFO METHODS

The Company uses a single department production process. Materials are added at the start of the production process and labor and overhead are added as indicated. For January 2018, the Company records have the following information:

UNITS:
Beginning WIP:                                                                                                          10,000 units

100% complete for materials, 50% complete for labor; 3% complete for overhead

Units started in process                                                                                               50,000 units

Units completed                                                                                                          49,000 units

Ending WIP:                                                                                                             11,000 units

100% complete for materials, 60% complete for labor; 20% complete for overhead

PRODUCTION COSTS:

Work in Process, Beginning of the Month:
Materials                                          $ 22,000
Labor                                                   18,000
Overhead                                            11,000             51,000

Current Month Costs:
Materials                                          $ 320,000
Labor                                                   180,160
Overhead                                            152,840           653,000

                                    Total Costs:                        $   704,000

1.Prepare a Cost of Production Summary using the weighted average method (calculations for equivalent units of production, cost per equivalent unit of production, total cost for units completed and WIP, ending). Prepare your calculations for Materials, Labor, and Overhead separately.
Prepare the appropriate journal entries at month end

2.Prepare a Cost of Production Summary using the FIFO method (calculations for equivalent units of production, cost per equivalent unit of production, total cost for WIP, beginning, units started and completed and WIP, ending). Prepare your calculations for Materials, Labor, and Overhead separately. Prepare the appropriate journal entries at month end

Answer 1

cost of units completed under Weighted average method: material - 279300, labour - 174440, overhead - 156800, Total 6,10,800

cost of ending WIP under Weighted average method: material - 62700, labour - 23496, overhead - 7040, Total 93236

cost of unitsbegining WIP under FIFO: material - 0, labour - 17800, overhead - 22190, Total 39990

cost of units completed under FIFO: material - 249600, labour - 138840, overhead - 123630, Total 512070

cost of ending WIP under FIFO : material - 70400, labour - 23496, overhead - 6974, Total 100870