In: Accounting
The Fields Company has two manufacturing departments, forming and
painting. The company uses the weighted-average method of process
costing. At the beginning of the month, the forming department has
37,000 units in inventory, 80% complete as to materials and 20%
complete as to conversion costs. The beginning inventory cost of
$84,100 consisted of $59,200 of direct materials costs and $24,900
of conversion costs.
During the month, the forming department started 540,000 units. At
the end of the month, the forming department had 40,000 units in
ending inventory, 80% complete as to materials and 30% complete as
to conversion. Units completed in the forming department are
transferred to the painting department.
Cost information for the forming department is as follows:
Beginning work in process inventory | $ | 84,100 |
Direct materials added during the month | 1,949,370 | |
Conversion added during the month | 1,254,270 | |
Part 1. Calculate the equivalent units of production for the forming department.
Part 2. Calculate the costs per equivalent unit of production for the forming department.
Part 3. Using the weighted-average method, assign costs to the forming department’s output—specifically, its units transferred to painting and its ending work in process inventory.
|
Requirement 1 : | |||||||
UNITS TO ACCOUNT FOR: | |||||||
Beginning Work in Process units | 37,000 | ||||||
Add: Units Started in Process | 540,000 | ||||||
Total Units to account for: | 577,000 | ||||||
UNITS TO BE ACCOUNTED FOR: | |||||||
Units started and completed | 537,000 | ||||||
Ending Work in Process | 40,000 | ||||||
Total Units to be accounted for: | 577,000 | ||||||
Equivalent Units: | |||||||
Material Cost | Conversion | ||||||
% Completion | Units | % Completion | Units | ||||
Units started and completed | 100% | 537,000 | 100% | 537,000 | |||
Ending Work in Process | 80% | 32,000 | 30% | 12,000 | |||
Total Equivalent units | 569,000 | 549,000 | |||||
Equivalent units | |||||||
Material | 569,000 | ||||||
Conversion | 549,000 | ||||||
Requirement 2 : | |||||||
TOTAL COST TO ACCOUNT FOR: | |||||||
Material | Conversion | ||||||
Beginning work in Process | 59,200 | 24,900 | |||||
Cost Added during May | 1,949,370 | 1,254,270 | |||||
Total Cost to account for: | 2,008,570 | 1,279,170 | |||||
Total Cost to account for: | 3,287,740 | ||||||
COST PER EQUIVALENT UNIT: | |||||||
Material | Conversion | ||||||
Total cost added during the year | 2,008,570 | 1,279,170 | |||||
Equivalent Units | 569,000 | 549,000 | |||||
Cost per Equivalent unit | 3.53 | 2.33 | |||||
Cost per unit | |||||||
Material | 3.53 | ||||||
Conversion | 2.33 | ||||||
Requirement 3 : | |||||||
TOTAL COST ACCOUNTED FOR: | |||||||
Units started and Transferred out (537000 units) | |||||||
Equivalent unit | Cost per EU | Total Cost | |||||
Material | 537,000 | 3.53 | 1895610 | ||||
Conversion Cost | 537,000 | 2.33 | 1251210 | ||||
Total Cost of Units completed and transferred out: | 3146820 | ||||||
Ending Work in process (40000 units) | |||||||
Equivalent unit | Cost per EU | Total Cost | |||||
Material | 32,000 | 3.53 | 112960 | ||||
Conversion Cost | 12,000 | 2.33 | 27960 | ||||
Total cost of Ending Work in process: | 140,920 |