Question

6-47 Weighted-Average Method:Two Departments: BDB Company manufactures its one product by a process that requires two departments. The production starts in Department A and is completed in Department B. Materials are added at the beginning of the process in Department A. Additional materials are added when the process is 50% complete in Department B. Conversion costs are incurred proportionally throughout the produciton processes in both departments .

On April 1, Department A had 500 units in work in process estimated to be 30% complete for conversion; Department B had 300 units in work in process estimated to be 40% complete for conversion . During April , department A started 2,000 units and completed 2,100 units; Department B completed 2,000 units. The work in process ending inventory on april 30 in Department A is estimated to be 50% complete for conversion, and the work in process ending inventory in Department B is estimated to be 70% complete for conversion.

The cost sheet for department A shows that the units in the work in process beginning inventory had 2,750 in direct materials costs and 1,494 in conversion costs. The production costs incurred in April were 18,000 for direct materials and 21,000 for conversion. Department B work in process beginning inventory on April 1 was 6,100 of which 4,200 was transferred in costs ; it incurred 38,000 in direct materials costs and 24,350 in conversion costs in April. BDB company uses the weighted average method for departments A and B.

Required:

1. Prepare a production cost report for department A

2. Prepare a production cost report for department B

Answer 1

Solution 1:

Computation of Equivalent unit of Production - Department A
Particulars	Physical Units	Material	Conversion
Unit completed & Transferred out	2100	2100	2100
Closing WIP: (500 + 2000 - 2100)	400
Material (100%)		400
Conversion (50%)			200
Equivalent units of production	2500	2500	2300

Computation of Cost per equivalent unit of Production - Department A
Particulars	Material	Conversion
Opening WIP	$2,750.00	$1,494.00
Cost Added during April	$18,000.00	$21,000.00
Total cost to be accounted for	$20,750.00	$22,494.00
Equivalent units of production	2500	2300
Cost per Equivalent unit	8.30	9.78

Computation of Cost of ending WIP and units completed & transferred out - Department A
Particulars	Material	Conversion	Total
Equivalent unit of Ending WIP	400	200
Cost per equivalent unit	$8.30000	$9.78000
Cost of Ending WIP (Equivalent unit * Cost per equivalent unit)	$3,320	$1,956	$5,276
Units completed and transferred	2100	2100
Cost of units completed & Transferred (Unit completed * cost per equivalent unit)	$17,430	$20,538	$37,968

Production Cost Report - Department A
Particulars	Amount
Costs to be accounted for:
Cost of beginning WIP inventory ($2,750 + $1,494)	$4,244.00
Cost added to production ($18,000 + $21,000)	$39,000.00
Total Cost to be accounted for	$43,244.00
Costs accounted for as follows:
Cost of unit transferred out	$37,968
WIP April 30:
Material	$3,320
Converison	$1,956
Total cost accounted for	$43,244

Solution 2:

Computation of Equivalent unit of Production - Department B
Particulars	Physical Units	Prior Department Cost	Material	Conversion
Unit completed & Transferred out	2000	2000	2000	2000
Closing WIP: (300 + 2100 - 2000)	400
Prior deparment cost (100%)		400
Material (100%)			400
Conversion (70%)				280
Equivalent units of production	2400	2400	2400	2280

Computation of Cost per equivalent unit of Production - Department B
Particulars	Prior Department Cost	Material	Conversion
Opening WIP	$4,200.00	$0.00	$1,900.00
Cost Added during April	$37,968.00	$38,000.00	$24,350.00
Total cost to be accounted for	$42,168.00	$38,000.00	$26,250.00
Equivalent units of production	2400	2400	2280
Cost per Equivalent unit	17.57	15.8333	11.5132

Computation of Cost of ending WIP and units completed & transferred out - Department B
Particulars	Prior Department Cost	Material	Conversion	Total
Equivalent unit of Ending WIP	400	400	280
Cost per equivalent unit	$17.57	$15.83	$11.51
Cost of Ending WIP (Equivalent unit * Cost per equivalent unit)	$7,028	$6,333	$3,224	$16,585
Units completed and transferred	2000	2000	2000
Cost of units completed & Transferred (Unit completed * cost per equivalent unit)	$35,140	$31,667	$23,026	$89,833

Production Cost Report - Department B
Particulars	Amount
Costs to be accounted for:
Cost of beginning WIP inventory ($4,200 + $1,900)	$6,100.00
Prior department cost transferred In	$37,968.00
Cost added to production ($38,000 + $24,350)	$62,350.00
Total Cost to be accounted for	$106,418.00
Costs accounted for as follows:
Cost of unit completed	$89,833
WIP April 30:
Prior Department Cost	$7,028
Material	$6,333
Converison	$3,224
Total cost accounted for	$106,418