Question

The Company uses a single department production process. Materials are added at the start of the production process and labor and overhead are added as indicated. For January 2018, the Company records have the following information:

UNITS:
Beginning WIP:                                                                                                          10,000 units

100% complete for materials, 50% complete for labor; 3% complete for overhead

Units started in process                                                                                               50,000 units

Units completed                                                                                                          49,000 units

Ending WIP:                                                                                                             11,000 units

100% complete for materials, 60% complete for labor; 20% complete for overhead

PRODUCTION COSTS:

Work in Process, Beginning of the Month:
Materials                                          $ 22,000
Labor                                                   18,000
Overhead                                             11,000                                                          51,000

Current Month Costs:
Materials                                          $ 320,000
Labor                                                   180,160
Overhead                                             152,840                                    653,000

                                    Total Costs:                        $                                  704,000

REQUIRED:

Prepare a Cost of Production Summary using the weighted average method (calculations for equivalent units of production, cost per equivalent unit of production, total cost for units completed and WIP, ending). Prepare your calculations for Materials, Labor, and Overhead separately.

Prepare the appropriate journal entries at month end.

Answer 1

		Units	Material Completion	Labor Completion	Overhead Completion
	Beginning WIP	10000	100%	50%	3%
	Units Completed	49000	100%	100%	100%
	Closing WIP	11000	100%	60%	20%
	Equivalent Units:= Units Completed & Transferred + Closing Units*% of Completion (Respective)
			Material Completion	Labor Completion	Overhead Completion
	Units Completed	49000	49000	49000	49000	(49000* Respective Completion %)
	Closing WIP	11000	11000	6600	2200	(11000* Respective Completion %)
	Total		60000	55600	51200
		Material	Labor	Overhead	Total
	Opening WIP Cost	22000	18000	11000	51000
	Added Cost	320000	180160	152840	653000
	Total Cost	342000	198160	163840	704000
	Equivalent Units	60000	55600	51200
	Cost per Equivalent Units	5.70	3.56	3.20	(Total Cost/E Units)
	Allocation of Costs:	Material	Labor	Overhead	Total
	To Unis Completed & Transferred	279300	174637	156800	610737
	To Closing Stock	62700	23523	7040	93263
	Total Cost	342000	198160	163840	704000
	Material Account Dr.	279300
	Labor Account Dr.	174637
	Overhead Dr.	156800
	To WIP Account		610737
	(Being Cost transferred recorded)