Question

Fast Co. produces its product through two processing departments. Direct materials are added at the start of production in the Cutting department, and conversion costs are added evenly throughout each process. The company uses monthly reporting periods for its weighted-average process costing system. The Work in Process Inventory-Cutting account has a balance of $99,300 as of October 1, which consists of $21,600 of direct materials and $77,700 of conversion costs.

During the month, the Cutting department incurred the following costs:

Direct materials	$	170,900
Conversion		763,800

At the beginning of the month, 37,500 units were in process. During October, the company started 155,000 units and transferred 165,000 units to the Assembly department. At the end of the month, the Cutting department's work in process inventory consisted of 27,500 units that were 80% complete with respect to conversion costs.

Required:
1. Prepare the Cutting department's process cost summary for October using the weighted-average method.
2. Prepare the journal entry dated October 31 to transfer the cost of the partially completed units to Assembly.

Answer 1

1
Total costs to account for:
Costs of beginning work in process	99300
Costs incurred this period	934700
Total costs to account for	1034000
Total costs accounted for	1034000
Difference due to rounding cost/unit	0
Unit reconciliation:
Units to account for:
Beginning work in process inventory	37500
Units started this period	155000
Total units to account for	192500
Total units accounted for:
Units completed and transferred out	165000
Ending work in process	27500
Total units accounted for	192500
Equivalent units of production (EUP)- weighted average method
	Units	%Materials	EUP-Materials	%Conversion	EUP-Conversion
Units completed and transferred out	165000	100%	165000	100%	165000
Ending work in process	27500	100%	27500	80%	22000
Total units	192500		192500		187000
Cost per equivalent unit of production			Materials		Conversion
Cost of beginning work in process			21600		77700
Costs incurred this period			170900		763800
Total costs		Costs	192500	Costs	841500
÷ Equivalent units of production		EUP	192500	EUP	187000
Cost per equivalent unit of production			1.00		4.50
Total cost accounted for:
Cost of units transferred out	EUP	Cost per EUP	Total cost
Direct materials	165000	1.00	165000
Conversion	165000	4.50	742500
Total cost transferred out				907500
	EUP	Cost per EUP	Total cost
Cost of ending work in Process
Direct materials	27500	1.00	27500
Conversion	22000	4.50	99000
Total Cost of ending work in Process				126500
Total cost accounted for				1034000
2
General Journal	Debit	Credit
Work in process-Assembly	907500
Work in process-Cutting		907500