Question

Smith Electronic Company’s chip-mounting production department had 300 units of unfinished product, each 50% completed on September 30. During October of the same year, this department put another 800 units into production and completed 900 units and transferred them to the next production department. At the end of October, 200 units of unfinished product, 70% completed, were recorded in the ending Work-in-Process Inventory. Smith Electronic introduces all direct materials when the production process is 50% complete. Direct labor and factory overhead (i.e., conversion) costs are added uniformly throughout the process.

Following is a summary of production costs incurred during October:

	Direct Materials				Conversion Costs
Beginning work-in-process					$	3,750
Costs added in October	$	9,600				4,200
Total costs	$	9,600			$	7,950

Required:

1. Calculate each of the following amounts using weighted-average process costing:
a. Equivalent units of direct materials and conversion.
b. Equivalent unit costs of direct materials and conversion.
c. Cost of goods completed and transferred out during the period.
d. Cost of Work-in-Process Inventory at the end of the period.

Answer 1

Solution

	Material	Conversion
Equivalent Units of Production	1,100	1,040

.

	Material	Conversion
Cost per equivalent Unit	$                    8.73	$                   7.64

.

Cost of units transferred out

$                14,734

.

Work in process

$                  2,816

Working

Reconciliation of Units
A	Beginning WIP	300
B	Introduced	800
C=A+B	TOTAL	1,100
D	Transferred out	900
E=C-D	Ending WIP	200

.

Statement of Equivalent Units(Weighted average)
				Material		Conversion cost
	Units			Complete %	Equivalent units	Complete %	Equivalent units
Transferred out	900			100%	900	100%	900
Ending WIP	200			100%	200	70%	140
Total	1,100			Total	1,100	Total	1,040

.

Cost per Equivalent Units (Weighted average)
COST		Material	Conversion cost	TOTAL
Beginning WIP Inventory Cost		$ 0	$ 3,750	$ 3,750
Cost incurred during period		$ 9,600	$ 4,200	$ 13,800
Total Cost to be accounted for		$ 9,600	$ 7,950	$ 17,550
Total Equivalent Units		1,100	1,040
Cost per Equivalent Units		$                   8.73	$                     7.64	$             16.37

.

Statement of cost (Weighted average)
Cost	Equivalent Cost/unit	Ending WIP		Transferred
		Units	Cost Allocated	Units	Cost Allocated
Material	$ 8.73	200	$             1,745.45	900	$            7,854.55
Conversion cost	$ 7.64	140	$             1,070.19	900	$            6,879.81
TOTAL	$ 17,550	TOTAL	$ 2,816	TOTAL	$ 14,734