Question

ABC Company manufactures a product through three process departments. In the first process, all direct materials are added at the beginning of the process. The following information pertains to the month of September.

Production units:

In process, September 1 (20% complete)

1,000 units

Started during September

5,000 units

In process, September 30 (60% complete) 1,500 units Manufacturing costs:

Work in process, beginning $14,730

Direct materials $45,000

Conversion costs $154,440

Assume the beginning balance of work in process includes direct materials $1,770.

(1) Prepare production report for September using FIFO process costing.

(2) Prepare all necessary journal entries for the first process using FIFO.

(3) Determine the ending balance of work in process using weighted average.

Answer 1

UNITS TO ACCOUNT FOR:
Beginning Work in Process units				1,000
Add: Units Started in Process				5,000
Total Units to account for:				6,000
UNITS TO BE ACCOUNTED FOR:
Units completed from Beginning WIP				1000
Units started and completed				3,500
Ending Work in Process				1,500
Total Units to be accounted for:				6,000
Equivalent Units:
			Material Cost		Conversion
			% Completion	Units	% Completion	Units
Units completed from Beg. WIP			0%	0	80%	800
Units started and completed			100%	3,500	100%	3,500
Ending Work in Process			100%	1,500	80%	900
Total Equivalent units				5,000		5,200
COST PER EQUIVALENT UNIT:
			Material		Conversion
Total cost added during the year			45,000		154,440
Equivalent Units			5,000		5,200
Cost per Equivalent unit			9		29.7
TOTAL COST ACCOUNTED FOR:
Units Completed from Beginning WIP (1000 units)
			Equivalent unit	Cost per EU	Total Cost
Beginning Cost					14730
Material			0	9	0
Conversion Cost			800	29.7	23760
Cost of units completed from Beg WIP					38490
Units started and Transferred out (3500 units)
			Equivalent unit	Cost per EU	Total Cost
Material			3,500	9	31500
Conversion Cost			3,500	29.7	103950
Total Cost of Units completed and transferred out:					135450
Ending Work in process (1500 units)
			Equivalent unit	Cost per EU	Total Cost
Material			1,500	9	13500
Conversison Cost			900	29.7	26730
Total cost of Ending Work in process:					40,230
Cost of Goods completed					173940
Journal entries:
S.no.	Accounts title and explanation				Debit $	Credit $
a.	Work in process Inventory Dr.				45000
	Raw material inventory					45000
b.	Work in process inventory Dr.				154440
	Manufacturing wages and overheads account					154440
c.	Work in process Inventory-Second process Dr.				173940
	Work in process inventory					173940
UNITS TO ACCOUNT FOR:
Beginning Work in Process units				1,000
Add: Units Started in Process				5,000
Total Units to account for:				6,000
UNITS TO BE ACCOUNTED FOR:
Units started and completed				4,500
Ending Work in Process				1,500
Total Units to be accounted for:				6,000
Equivalent Units:
			Material Cost		Conversion
			% Completion	Units	% Completion	Units
Units started and completed			100%	4,500	100%	4,500
Ending Work in Process			100%	1,500	80%	900
Total Equivalent units				6,000		5,400
TOTAL COST TO ACCOUNT FOR:
			Material		Conversion
Beginning work in Process			1,770		12,960
Cost Added during May			45,000		154,440
Total Cost to account for:			46,770		167,400
Total Cost to account for:					214,170
COST PER EQUIVALENT UNIT:
			Material		Conversion
Total cost added during the year			46,770		167,400
Equivalent Units			6,000		5,400
Cost per Equivalent unit			7.795		31
TOTAL COST ACCOUNTED FOR:
Ending Work in process (1500 units)
			Equivalent unit	Cost per EU	Total Cost
Material			1,500	7.795	11692.5
Conversison Cost			900	31	27900
Total cost of Ending Work in process:					39,593