Question

Company A manufactures a high quality plastic pipe I two departments, cooking and molding. Materials are introduced at various points during the work in the cooking department. After the cooking is completed, the materials are transferred into the molding department, in which pipe is formed. Materials are accounted for in the cooking department on a pound basis. Conversion cost are incurred evenly during the cooking process.

                Production data:

                                Pounds in process, May 1: 100% complete as to materials,

                                90% complete as to conversion costs……………………………………..70,000

                                Pounds started into production during May……………………………..350,000

                                Pounds completed and transferred to molding……………………………….?

                                Pounds in process, May 31: 75% complete as to materials, 25% complete as to

                                Conversion costs……………………………………………………………………….40,000

                Cost data:

                                Work in process inventory, May 1:

                                Materials cost………………………………………………………………………86,000

                                Conversion cost………………………………………………………………………..36,000

                                Cost added during May:

                                Materials cost……………………………………………………………………………447,000

                                Conversion cost……………………………………………………………………….198,000

The company uses the weighted-average method to account for units and costs.

                                Following the steps in doing the process costing for the “Cooking dept”

                                First fill in the T-Account for May: WORK IN PROCESS-COOKING

Steps:

1. Determine the “units to account for”
2. Find the “units to account for”
3. Summarize the cost to account for
4. Get the equivalent units and the unit costs
5. Assign the costs and get the cost accounted for
6. Prepare the journal entry at the end of May for completed unites

Answer 1

Step for solution
Step 1	Equivalent Units of production = Physical units multiplied by % of the competition
Step 2	Calculate the total cost to be accounted for
Step 3	Cost per Equivalent Unit = total cost to be accounted for / Equivalent Units of production
Step 4	Cost assigned to units transferred out = units completed and transferred out * Cost per Equivalent Unit
Step 5	Cost assigned to units ending work in progress = equivalent units in ending WIP inventory * Cost per Equivalent Unit

Company A
Cooking Department production Report
Weighted average Method
Month ended May 31
Summary of Physical units
Units in beginning WIP inventory			70000
Units started during the month			350000
Total unit to be accounted for			420000
Units completed and transferred out to molding (420000-40000)			380000
Units in ending WIP inventory			40000
Total unit accounted for			420000
Equivalent Units of production
Particulars	Physical units	Direct material		Conversion Cost
		%	units	%	units
units in beginning WIP inventory	70000	100%	70000	100%	70000
Units in Started and completed (380000-70000)	310000	100%	310000	100%	310000
units in ending WIP inventory	40000	75%	30000	25%	10000
Equivalent Units of production			410000		390000
Summary of cost to be accounted
	Direct material	Conversion Cost	Total
Cost in beginning WIP	$          86,000	$          36,000	$        122,000
Cost incurred during Month (Add)	$        447,000	$        198,000	$        645,000
total cost to be accounted for	$        533,000	$        234,000	$        767,000
cost per Equivalent Unit
total cost to be accounted for	$        533,000	$        234,000
Divided by: Equivalent Units of production	410000	390000
Cost per Equivalent Unit	$               1.30	$               0.60	$               1.90
Assign costs to units transferred out and units in ending WIP inventory
cost assigned to units transferred out
units completed and transferred out	380000	380000
Cost per Equivalent Unit	1.30	0.60
cost assigned to units transferred out	$        494,000	$        228,000	$        722,000
cost assigned to units ending work in progress
equivalent units in ending WIP inventory	30000	10000
Cost per Equivalent Unit	1.30	0.60
cost assigned to units ending work in progress	$          39,000	$            6,000	$          45,000
Total cost assigned			$        767,000

Company A
Journal entries
Date	Account title	Debit	Credit
May 31	Work in progress - Molding Department	722,000
	Work in progress - Cooking Department		722,000
	(To record the cost of unit transferred to the next process.)

WORK IN PROCESS-COOKING
Beginning Bal.	$        122,000	$        722,000	Cost Transfer to Molding department
Direct Material	$        447,000
Conversion Cost	$        198,000
Total	$        767,000	$        722,000
Ending Bal.	$          45,000