Question

Fast Co. produces its product through two processing departments. Direct materials are added at the start of production in the Cutting department, and conversion costs are added evenly throughout each process. The company uses monthly reporting periods for its weighted-average process costing system. The Work in Process Inventory-Cutting account has a balance of $91,300 as of October 1, which consists of $19,200 of direct materials and $72,100 of conversion costs.

During the month, the Cutting department incurred the following costs:

Direct materials	$	161,300
Conversion		965,120

At the beginning of the month, 33,500 units were in process. During October, the company started 147,000 units and transferred 157,000 units to the Assembly department. At the end of the month, the Cutting department's work in process inventory consisted of 23,500 units that were 80% complete with respect to conversion costs.

Required:
1. Prepare the Cutting department's process cost summary for October using the weighted-average method.
2. Prepare the journal entry dated October 31 to transfer the cost of the partially completed units to Assembly.

Answer 1

• Requirement 1

Elements of cost summary

Total Cost to account for:
Cost of beginning WIP	$                      91,300.00
Costs incurred this period	$                1,126,420.00
Total Cost to account for	$                1,217,720.00
Total costs accounted for	$                1,217,720.00
Difference due to rounding cost/unit	$                                      -
Units Reconciliation
Units to account for:
Beginning WIP	33,500
Units started this period	147,000
Total Units to account for	180,500
Total Units accounted for:
Completed & Transferred out	157,000
Ending WIP	23,500
Total Units accounted for	180,500

EUP - Weighted Average Method	Units	% Material	EUP Materials	% Conversion	EUP - Conversion
Units TRANSFERRED	157,000	100%	157,000	100%	157,000
Units of ENDING WIP	23,500	100%	23,500	80%	18,800
Equivalent Units of Production			180,500		175,800
COST per EUP			Material		Conversion
Cost of Beginning WIP			$          19,200.00		$                                  72,100.00
Cost incurred during the period			$        161,300.00		$                                965,120.00
Total Costs		Costs	$        180,500.00	Costs	$                            1,037,220.00
Equivalent units of production		EUP	180,500	EUP	175,800
Cost per EUP			$              1.00000		$                                      5.90000
TOTAL COST ACCOUNTED FOR
Cost of Units Transferred Out	EUP	Cost per EUP	Total Cost
- Direct Materials	157,000	$                      1.00	$        157,000.00
- Conversion	157,000	$                      5.90	$        926,300.00
Total Cost transferred Out				$        1,083,300.00
Cost of ending WIP	EUP	Cost per EUP	Total Cost
- Direct Materials	23,500	$                      1.00	$          23,500.00
- Conversion	18,800	$                      5.90	$        110,920.00
Total cost of ending WIP				$            134,420.00
Total costs accounted for					$                            1,217,720.00

• Requirement 2

	Accounts title	Debit	Credit
Oct-31	Work in Proces - Assembly	$               1,083,300.00
	Work In Process Inventory - Cutting		$       1,083,300.00