Question

In its Department R, Recyclers, Inc., processes donated scrap cloth into towels for sale in local thrift shops. It sells the products at cost. The direct materials costs are zero, but the operation requires the use of direct labor and overhead. The company uses a process costing system and tracks the processing volume and costs incurred in each period. At the start of the current period, 500 towels were in process and were 60 percent complete. The costs incurred were $1,780.

During the month, costs of $20,150 were incurred, 3,100 towels were started, and 250 towels were still in process at the end of the month. At the end of the month, the towels were 20 percent complete.

Required:

a. Prepare a production cost report; the company uses weighted-average process costing.

b. Show the flow of costs through T-accounts. Assume that current period conversion costs are credited to various payables.

Prepare a production cost report; the company uses weighted-average process costing

C. Production Cost Report—Weighted Average Physical Units Total Costs Conversion Costs Flow of Production Units Units to be accounted for: Beginning WIP inventory Units started this period Total units to be accounted for Units accounted for: Units completed and transferred out: Units in ending WIP inventory Total units accounted for Costs to be accounted for: Costs in beginning WIP inventory Current period costs Total costs to be accounted for Cost per equivalent unit: Conversion costs Costs accounted for: Costs assigned to units transferred out: Conversion costs Costs assigned to ending WIP inventory: Conversion costs Total costs accounted for

Work in Process Various Payables Beginning inventory       Beg.bal.       This period's costs: End.bal. Ending inventory Finished Goods Inventory Beg.bal. End.bal.

Answer 1

a.		Production cost report-Weighted average
					Physical units	Total costs	Conversion costs
	Flow of production units
	Units to be accounted for:
	Beginning WIP inventory				500
	Units started this period				3100
	Total units to be accounted for				3600
	Units accounted for:
	Units completed and transferred out (Note:1)				3350		3350
							(3350*100%)
	Units in ending WIP inventory				250		50
							(250*20%)
	Total units accounted for				3600		3400
	Costs to be accounted for:
	Costs in beginning WIP inventory					1780
	Current period costs					20150
	Total costs to be accounted for					21930
	Cost per equivalent unit
	Conversion costs			(21930/3400)		6.45
	Costs accounted for:
	Costs assigned to units transferred out:
	Conversion costs			(3350*6.45)		21607.5
	Costs assigned to ending WIP inventory
	Conversion costs			(50*6.45)		322.5
	Total costs accounted for					21930
	Note:1
	Units completed and transferred out=Total units to be accounted for-Units in ending WIP inventory=3600-250= 3350
b.			Work in process
	Particulars		Debit	Particulars		Credit
	Bal.		1780	Transferred to FG		21607.5
	Various payables		20150
			21930			21607.5
	Bal.		322.5
			Finished goods
	Particulars		Debit	Particulars		Credit
	From WIP		21607.5