Question

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 34,000 units in inventory, 75% complete as to materials and 25% complete as to conversion costs. The beginning inventory cost of $78,100 consisted of $55,600 of direct materials costs and $22,500 of conversion costs. During the month, the forming department started 480,000 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 $ 78,100 Direct materials added during the month 1,771,060 Conversion added during the month 1,163,340 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.

Answer 1

Requirement 1
The equivalent units of production for the forming department.
Particulars	Direct Materials				Conversion				Total Cost
	Units	% completion	Equivalent Units	Cost	Units	% completion	Equivalent Units	Cost
Begining Work in Process inventory	34,000	75%	25,500	55,600	34,000	25%	8,500	22,500
Processed During the month:
Units Started	4,80,000
Begining Work in Process inventory	34,000	25%	8,500		34,000	75%	25,500
Units Started & Completed in current month	4,40,000	100%	4,40,000		4,40,000	100%	4,40,000
Units Started & not Complete in current month	40,000	80%	32,000		40,000	30%	12,000
Total Equivalent Units processed during the month			4,80,500	17,71,060			4,77,500	11,63,340
Total Equivalent Units			5,06,000				4,86,000
Total Cost of Production				18,26,660				11,85,840	30,12,500
Costs per equivalent unit of production	(1,826,660/506,000)			3.61	(1,185,840/486,000)			2.44
Requirement 2
Total Cost per equivalent unit (3.61 +2.44)	$ 6.05 per unit
Requirement 3
	Materials	Conversion	Total
Total cost of units transferred out	17,11,140	11,56,560	28,67,700
	(474,000X3.61)	(474,000X2.44)
Cost of ending work in process inventory	1,15,520	29,280	1,44,800
	(32000X3.61)	(12000X2.44)