Question

P5.34 - Weighted average process costing: manufacturer Triangle zipper company 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. A partially completed production report for May follows.

		Production report, May
		Percentage of completion with respect to conversion			Equivalent units
	Physical units				Direct materials	Conversion
Work in process, 1 May	25000	40%
Units started during May	30000
	55000
Units completed and transferred out during May	35000				35000	35000
Work in process, 31 May	20000	80%			20000	16000
Total units accounted for	55000
		Direct material	Conversion	Total
Work in process, 1 May		$143000	$474700	$617700
Costs incurred during May		165000	2009000	2174000
Total costs to account for		$308000	$2483700	2$791700

					Production report, May
			Percentage of completion with respect to conversion			Equivalent units

Required

1. Complete the following prices costing steps using the weighted average method:

a. Calculation of equivalent units

b. Calculation of unit costs

c. Analysis of total costs

2. Prepare a journal entry to record the transfer of the cost of goods completed and transferred during May.

Answer 1

Solution 1a:

Computation of Equivalent unit of Production
Particulars	Physical Units	Material	Conversion
Units to account for:
Beginning WIP	25000
Started into Production	30000
Total units to account for	55000
Units accounted for:
Unit completed & Transferred out	35000	35000	35000
Units in ending inventory:	20000
Material (100%)		20000
Conversion (80%)			16000
Equivalent units of production	55000	55000	51000

Solution 1b:

Computation of Cost per equivalent unit
Particulars	Material	Conversion	Total
Opening WIP	$143,000	$474,700	$617,700
Cost Added during Period	$165,000	$2,009,000	$2,174,000
Total cost to be accounted for	$308,000	$2,483,700	$2,791,700
Equivalent units of production	55000	51000
Cost per Equivalent unit	$5.60	$48.70

Solution 1c:

Computation of Cost of ending WIP and units completed & transferred out
Particulars	Material	Conversion	Total
Equivalent unit of Ending WIP	20000	16000
Cost per equivalent unit	$5.60	$48.70
Cost of Ending WIP (Equivalent unit * Cost per equivalent unit)	$112,000	$779,200	$891,200
Units completed and transferred	35000	35000
Cost of units completed & Transferred (Unit completed * cost per equivalent unit)	$196,000	$1,704,500	$1,900,500

Cost reconciliation
Particulars	Amount
Costs to be accounted for:
Cost of beginning WIP inventory	$617,700.00
Cost added to production	$2,174,000.00
Total Costs to be accounted for	$2,791,700.00
Costs accounted for as follows:
Cost of unit transferred out	$1,900,500
Ending WIP:
Material	$112,000
Converison	$779,200
Total Ending WIP	$891,200
Total costs accounted for	$2,791,700

Solution 2:

Journal Entries
Date	Particulars	Debit	Credit
31-May	Finished goods inventory Dr	$1,900,500.00
	To Work In Process		$1,900,500.00
	(Being units completed transferred to finished goods)