Question

In the Assembly Department, all materials are added at the beginning of the process. Labor and overhead (conversion resources) are added evenly throughout the process. The following information pertains to the Assembly Department for the month of August.

Physical Units    Materials Conversion

Beg work in process Inventory 1,000 units (90%) complete $4,600 $2,340

Units started in August 6,000 units

Ending work in process inventory 800 unit (30% complete)

Costs added in August $40,200 $49,800

a. How many units were completed and transferred out?

b. Using the weighted average method, what is the cost assigned to the ending work in process inventory?

c. Using the FIFO method, what is the cost assigned to the ending work in process inventory?

Refer to question c. Assume that the Assembly Department transfers units that it completes to the Packaging Department to do the final work in the production process. Provide the journal entry to record the transfer of units out of the Assembly Department and to the Packaging Department.

Answer 1

a. Units completed and transferred out: 6200

	Physical Units
Units to be accounted for:
Beginning work in process	1000
Started into production	6000
Total units	7000
Units accounted for:
Completed and transferred out	6200
Ending work in process	800
Total units	7000

b. Cost assigned to ending work in process inventory: $7064

	Physical Units	Equivalent Units
		Materials	Conversion
Completed and transferred out	6200	6200	6200
Ending work in process (30% x 800)	800	800	240
Equivalent units		7000	6440
	Materials	Conversion	Total
Cost of beginning work in process	4600	2340	6940
Costs added in August	40200	49800	90000
Total costs incurred	44800	52140	96940
÷ Equivalent units	7000	6440
Cost per equivalent unit	6.40	8.10	14.50
Cost assigned to ending work in process:
Materials (800 x $6.40)	5120		5120
Conversion (240 x $8.10)		1944	1944
Total $			7064

c.

	Physical Units	Equivalent Units
		Materials	Conversion
Completed and transferred out:
Beginning work in process inventory (1000 x 10%)	1000	0	100
Started and completed	5200	5200	5200
Total completed and transferred out	6200	5200	5300
Ending work in process inventory (800 x 30%)	800	800	240
Equivalent units		6000	5540
	Materials	Conversion	Total
Costs added in August	40200	49800	90000
÷ Equivalent units	6000	5540
Cost per equivalent unit	6.70	8.99	15.69
Cost assigned to ending work in process:
Materials (800 x $6.70)	5360		5360
Conversion (240 x $8.99)		2158	2158
Total $			7518

Journal entry:

Account Titles and Explanation	Debit	Credit
Work in process-Packaging	89427
Work in process-Assembly		89427
(To record cost transferred from Assembly to Packaging)

Working:

Costs transferred:
Beginning work in process	6940
Materials (5200 x $6.70)	34840
Conversion (5300 x $8.99)	47647
Total $	89427

Note: Difference due to rounding off of cost per equivalent unit to two decimal places.