Question

Fast Co. produces its product through a single processing department. Direct materials are added at the start of production, and conversion costs are added evenly throughout the process. The company uses monthly reporting periods for its weighted-average process costing system. The Work in Process Inventory account has a balance of $92,300 as of October 1, which consists of $19,500 of direct materials and $72,800 of conversion costs.

During the month the company incurred the following costs:

Direct materials	$171,600
Conversion	990,400

During October, the company started 148,000 units and transferred 158,000 units to finished goods. At the end of the month, the work in process inventory consisted of 24,000 units that were 80% complete with respect to conversion costs.

Required:
1. Prepare the company’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 completed units to finished goods inventory.

Answer 1

Cost Summary
Total costs to account for
Beginning Material			$      19,500.00
Beginning Conversion			$      72,800.00
Current Material			$    171,600.00
Current Conversion			$    990,400.00
Total costs to account for							$ 1,254,300.00
Cost Assignment and Reconciliation
Cost of units transferred out				EUP	Cost/ EUP	Total Cost
Direct Materials				158000	$      1.05	$    165,900.00
Conversion				158000	$      6.00	$    948,000.00
Total costs transferred out						$ 1,113,900.00
Cost of ending work in process				EUP	Cost/ EUP	Total Cost
Direct Materials				24000	$      1.05	$      25,200.00
Conversion				19200	$      6.00	$    115,200.00
Total cost of ending work in process						$    140,400.00
Total costs accounted for							$ 1,254,300.00

Journal Entry
Particulars			Debit	Credit
Finished Goods Inventory			$ 1,113,900.00
To WIP				$ 1,113,900.00

Workings:

Equivalent Units of Production (EUP) - Weighted Average Method
				Units	% Mat.	EUP- Mat.	% Conv.	EUP- Conv.
Units completed and transferred out				158000	100%	158000	100%	158000
Units in ending inventory				24000	100%	24000	80%	19200
Equivalent units of production						182000		177200

Cost per Equivalent Unit of Production
					Materials		Conversion
Beginning costs					$      19,500.00		$      72,800.00
During the month costs					$    171,600.00		$    990,400.00
Total cost				Costs	$    191,100.00	Costs	$ 1,063,200.00
÷	Equivalent units of production			EUP	182000	EUP	177200
Cost per equivalent unit of production					$                1.05		$                6.00