Question

Problem 16-3A Weighted Average: Process cost summary; equivalent units LO C2, C3, P4

Fast Co. produces its product through two processing departments. Direct materials are added at the start of production in the Cutting department, and conversion costs are added evenly throughout each process. The company uses monthly reporting periods for its weighted-average process costing system. The Work in Process Inventory-Cutting account has a balance of $101,300 as of October 1, which consists of $22,200 of direct materials and $79,100 of conversion costs.

During the month, the Cutting department incurred the following costs:

Direct materials	$	192,850
Conversion		812,960

At the beginning of the month, 38,500 units were in process. During October, the company started 157,000 units and transferred 167,000 units to the Assembly department. At the end of the month, the Cutting department's work in process inventory consisted of 28,500 units that were 80% complete with respect to conversion costs.

Required:
1. Prepare the Cutting department's process cost summary for October using the weighted-average method.
2. Prepare the journal entry dated October 31 to transfer the cost of the partially completed units to Assembly.

Answer 1

Solution:

Total Costs to Account For
Cost of Beginning work in progress				101,300
Cost incurred this period				1,005,810
Total costs to account for:				1,107,110
Total costs accounted for				1,107,110
Difference due to rounding				0
Unit reconciliation:
Units to account for:
Units started this period				157,000
Beginning work in process inventory				38,500
Total units to account for				195,500
Total units accounted for
Units Completed and transferred out				167,000
Ending work in process units				28,500
Total units accounted for				195,500
Equivalent units of production- (EUP) -weighted average method
				units	%	EUP-	%	EUP
					materials	materials	converstion	CC
Units Completed and transferred out				167,000	100%	167,000	100%	167,000
Ending work in process units				28,500	100%	28,500	80%	22,800
Total units						195,500		189,800
Cost per Equivalent units of production						Materials		Conversion
Cost of Beginning work in process						22,200		79,100
Cost incurred this period						192,850		812,960
Total costs					costs	215,050	costs	892,060
/ equivalent units of production					EUP	195,500	EUP	189,800
Cost per Equivalent units of production						1.1		4.7
Total costs accounted for
Cost of units transferred out:				EUP	Cost per EUP	Total
Direct materials				167,000	1.1	183,700
Conversion				167,000	4.7	784,900
Total costs transferred out						968,600
Cost of ending work in process				EUP	Cost per EUP	Total
Direct materials				28,500	1.1	31,350
Conversion				22,800	4.7	107,160
Total cost of ending work in process						138,510
						1,107,110

(2)
	General Journal				Debit	Credit
	Finished goods inventory				968,600
	Work In process Inventory					968,600