Question

Because most of the parts for its irrigation systems are standard, Waterways handles the majority of its manufacturing as a process cost system. There are multiple process departments. Three of these departments are the Molding, Cutting, and Welding departments. All items eventually end up in the Package department which prepares items for sale in kits or individually.

The following information is available for the Molding department for January:

Work in process beginning:
Units in process	24,000
Stage of completion for materials	80%
Stage of completion for labor and overhead	30%
Costs in work in process inventory:
Materials	$172,460
Labor	68,900
Overhead	141,300
Total costs in beginning work in process	$382,660
Units started into production in January	71,000
Units completed and transferred in January	74,000
Costs added to production:
Materials	$378,605
Labor	690,080
Overhead	1,383,160
Total cots added into production in January	$2,451,845
Work in process ending
Units in process	21,000
Stage of completion for materials	75%
Stage of completion for labor and overhead	20%

Instructions:

Prepare a production cost report for Waterways using the weighted-average method.

Answer 1

Solution:

Computation of Equivalent unit of Production - Weighted Average (Molding Department)
Particulars	Physical Units	Material	Conversion (Labor + Overhead)
Unit completed & Transferred out (24000 + 71000 - 21000)	74000	74000	74000
Closing WIP:	21000
Material (75%)		15750
Conversion (20%)			4200
Equivalent units of production	95000	89750	78200

Computation of Cost per equivalent unit of Production - Weighted Average (Molding Department)
Particulars	Material	Conversion (Labor + Overhead)
Opening WIP	$172,460.00	$210,200.00
Cost Added during January	$378,605.00	$2,073,240.00
Total cost to be accounted for	$551,065.00	$2,283,440.00
Equivalent units of production	89750	78200
Cost per Equivalent unit	$6.14	$29.20

Computation of Cost of ending WIP and units completed & transferred out - Weighted Average (Molding Department)
Particulars	Material	Conversion (Labor + Overhead)	Total
Equivalent unit of Ending WIP	15750	4200
Cost per equivalent unit	$6.14	$29.20
Cost of Ending WIP (Equivalent unit * Cost per equivalent unit)	$96,705	$122,640	$219,345
Units completed and transferred	74000	74000
Cost of units completed & Transferred (Unit completed * cost per equivalent unit)	$454,360	$2,160,800	$2,615,160

Cost reconciliation - Weighted Average - Molding Department
Particulars	Amount
Costs to be accounted for:
Cost of beginning WIP inventory	$382,660.00
Cost added to production	$2,451,845.00
Total Cost to be accounted for	$2,834,505.00
Costs accounted for as follows:
Cost of unit transferred out	$2,615,160
Ending WIP:
Material	$96,705
Converison	$122,640
Total cost accounted for	$2,834,505