Question

Transferred-in costs, weighted-average method. Publish, Inc. has two departments: Printing and Binding. Each department has one direct-cost category (direct materials) and one indirect-cost category (conversion costs). This problem focuses on the Binding Department Books that have undergone the printing process are immediately transferred to the Binding Department Direct material is added when the binding process is 80% complete. Conversion costs are added evenly during binding operations. When those operations are done, the books are immediately transferred to Finished Goods. Publish Inc. uses the weighted-average method of process costing. The following is a summary of the April 2009 operations of the Binding Department.

1. Summarize total Binding Department costs for April 2009, and assign these costs to units completed (and transferred out) and to units in ending work in process.

2. Prepare journal entries for April transfers from the Printing Department to the Binding Department and from the Binding Department to Finished Goods.

 

 

Answer 1

Transferred-in costs, weighted average.

 

1.         

Solution Exhibit 17-38A computes the equivalent units of work done to date in the Binding Department for transferred-in costs, direct materials, and conversion costs.

 

Solution Exhibit 17-38B summarizes total Binding Department costs for April 2009, calculates the cost per equivalent unit of work done to date in the Binding Department for transferred-in costs, direct materials, and conversion costs, and assigns these costs to units completed and transferred out and to units in ending work in process using the weighted-average method.

2.         Journal entries:

a.   Work in Process–– Binding Department                                     144,000

            Work in Process––Printing Department                                                    144,000

      Cost of goods completed and transferred out

            during April from the Printing Department

            to the Binding Department

b.   Finished Goods                                                                            249,012

            Work in Process–– Binding Department                                                  249,012

            Cost of goods completed and transferred out

            during April from the Binding Department

            to Finished Goods inventory

 

SOLUTION EXHIBIT 17-38A

Steps 1 and 2: Summarize Output in Physical Units and Compute Output in Equivalent Units;

Weighted-Average Method of Process Costing,

Binding Department of Publish, Inc. for April 2009.

 

SOLUTION EXHIBIT 17-38B

Steps 3, 4, and 5: Summarize Total Costs to Account For, Compute Cost per Equivalent Unit, and Assign Total Costs to Units Completed and to Units in Ending Work in Process;

Weighted-Average Method of Process Costing,

Binding Department of Publish, Inc. for April 2009.

Steps 3, 4, and 5: Summarize Total Costs to Account For, Compute Cost per Equivalent Unit, and Assign Total Costs to Units Completed and to Units in Ending Work in Process;

Weighted-Average Method of Process Costing,

Binding Department of Publish, Inc. for April 2009.