Question

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Fields Company has two manufacturing departments, forming and painting. The company uses the weighted-average method of...

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 33,000 units in inventory, 65% complete as to materials and 35% complete as to conversion costs. The beginning inventory cost of $76,100 consisted of $54,400 of direct materials costs and $21,700 of conversion costs. During the month, the forming department started 460,000 units. At the end of the month, the forming department had 40,000 units in ending inventory, 85% complete as to materials and 45% complete as to conversion. Units completed in the forming department are transferred to the painting department. Cost information for the forming department follows. Beginning work in process inventory $ 76,100 Direct materials added during the month 1,708,540 Conversion added during the month 1,132,250 1. Calculate the equivalent units of production for the forming department. 2. Calculate the costs per equivalent unit of production for the forming department. 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.

Solutions

Expert Solution

Requirement 1:

Equivalent units
Materials Conversion
Units transferred out* 453,000 453,000
Ending work in process
40,000 x 85% 34,000
40,000 x 45% 18,000
Total equivalent units 487,000 471,000

Requirement 2:

Costs
Materials Conversion Total
Beginning work in process $54,400 $21,700 $76,100
Costs added during the period $1,708,540 $1,132,250 $2,840,790
Total costs $1,762,940 $1,153,950 $2,916,890
÷ Total equivalent units 487,000 471,000
= Cost per equivalent unit $3.62 $2.45 $6.07

Requirement 3:

Costs Reconciliation Schedule
Costs accounted for:
Transferred out [453,000 x $6.07] $2,749,710
Ending Work in process
   Materials [34,000 x $3.62] $123,080
   Conversion costs [ 18,000 x $2.45] $44,100 $167,180
    Total costs $2,916,890

*Calculations:

Beginning work in process 33,000
Units started during the period 460,000
Ending work in process -40,000
Units transferred out 453,000

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