Question

Rigby Ltd accumulates costs for its single product using process costing. Direct material is added at the beginning of the production process, and conversion activity occurs uniformly throughout the process. The following is a partially completed production report for May.
Production report, May
Physical
units
Percentage of
completion with respect
to conversion
Equivalent units
Direct materials
Conversion
Work in process, 1 May
25,000
40%
Units started during May
30,000
55,000
Units completed and transferred out during May
35,000
35,000
35,000
Work in process, 31 May
20,000
80%
20,000
16,000
Total units accounted for
55,000
Direct material
Conversion
Total
Work in process, 1 May
$143,000
$474,700
$617,700
Costs incurred during May
$165,000
$2,009,000
$2,174,000
Total costs to account for
$308,000
$2,483,700
$2,791,700
Required:
a) Complete the following process costing steps using the weighted average method:
i Calculation of equivalent units.
ii Calculation of unit costs.
iii Analysis of total costs.
b) Prepare a journal entry to record the transfer of the cost of goods completed and transferred out during May. (1 mark)

Answer 1

UNITS TO ACCOUNT FOR:
Beginning Work in Process units			25,000
Add: Units Started in Process			30,000
Total Units to account for:			55,000
UNITS TO BE ACCOUNTED FOR:
Units completed and transferred out		35,000
Ending Work in Process			20,000
Total Units to be accounted for:		55,000
Equivalent Units:
			UNITS	Material Cost	Conversion
				% Completion	Units	% Completion	Units
Units complted		35000	100%	35,000	100%	35,000
Ending Work in Process	20000	100%	20,000	80%	16,000
Total Equivalent units	55000		55,000		51,000
TOTAL COST TO ACCOUNT FOR:
				Material		Conversion
Beginning work in Process		1,43,000		4,74,700
Cost Added during May		1,65,000		20,09,000
Total Cost to account for:		3,08,000		24,83,700
Equivalent Units			55,000		51,000
Cost per Equivalent unit		5.6		48.7
TOTAL COST ACCOUNTED FOR:
Units completed and transferred out (35000 units)
				Equivalent unit	Cost per EU	Total Cost
Material				35,000	5.6	196000
Conversison Cost			35,000	48.7	1704500
Total cost of Ending Work in process:			19,00,500
Ending Work in process (20000 units)
				Equivalent unit	Cost per EU	Total Cost
Material				20,000	5.6	112000
Conversison Cost			16,000	48.7	779200
Total cost of Ending Work in process:			8,91,200
Journal
S.no.	Accounts title and explanations		Debit $	Credit $
a.	Finished goods inventory		19,00,500
	Work in process inventory			19,00,500
	(for goods completed and transfrred out)