Question

Wallace, Inc., produces a product tha goes through three departments: Machining, Assembly, and Polishing. Materials are added at the beginning of the machining operation; labor and overhead are added uniformly throughout the process. The Machining department had work in process at the beginning and end of 1998 as follows:

	Percentage of Completion
	Materials	Conversion Costs
Januarty 1, 1998, 2,500 units	100	60
December 31, 1998, 4,000 units	100	50

The company completed 42,500 units during the year and incurred the folowing manufacturing costs:

Direct Materials	$158,000
Direct Labor	$98,750
Overhead	$79,000

The inventory at the beginning of the year was carried at the following costs:

Direct Materials	$9,750
Direct Labor	$6,125
Overhead	$4,950

REQUIRED:

Prepare a Cost of Production report using the Weighted Average Method

Answer 1

• All Working forms part of the answer
• Working

Reconciliation of Units
Opening WIP	2500
Introduced	44000
TOTAL	46500
Transferred	42500
Closing WIP	4000
Statement of Equivalent Units
		Material			Conversion Cost
	Units	Complete %	Equivalent units		Complete %		Equivalent units
Transferred	42500	100%	42500		100%		42500
Closing WIP	4000	100%	4000		50%		2000
Total	46500 Units	Total	46500		Total		44500
Cost per Equivalent Units
COST		Material cost		Conversion cost		TOTAL
Opening + Current cost		$                            1,67,750.00		$           1,88,825.00		$            3,56,575.00
Total Equivalent Units		46500		44500
Cost per Equivalent Units		$                                          3.61		$                         4.24		#DIV/0!
Statement of cost
Cost	Cost/unit	Closing WIP				Transferred
		Units		Cost Allocated		Units		Cost Allocated	TOTAL
Material	$                             3.61	4000		$              14,430.11		42500		$           1,53,319.89	$                 1,67,750.00
Conversion cost	$                             4.24	2000		$                 8,486.52		42500		$           1,80,338.48	$                 1,88,825.00
Total	$                             7.85	TOTAL		$              22,916.62		TOTAL		$           3,33,658.38	$                 3,56,575.00

• Figures are not rounded Off
• Cost Report

Cost Incurred:
Mixing	$                          -
Material	$       1,67,750.00
Conversion Cost	$       1,88,825.00
Total		$        3,56,575.00
Cost Accounted:
Ending WIP:
Mixing	$                          -
Material	$           14,430.11
Conversion Cost	$             8,486.52	$           22,916.62
Units completed and transferred:
Mixing	$                          -
Material	$       1,53,319.89
Conversion Cost	$       1,80,338.48	$        3,33,658.38
Total cost accounted for		$        3,56,575.00

• There’s no difference between Cost to be accounted for and cost accounted for BECAUSE the cost per unit is not rounded off (only shown as rounded off) in calculation cost assigned to WIP and Units transferred.