Question

Fast Co. produces its product through a single processing department. Direct materials are added at the start of production, and conversion costs are added evenly throughout the process. The company uses monthly reporting periods for its weighted-average process costing system. The Work in Process Inventory account has a balance of $93,300 as of October 1, which consists of $19,800 of direct materials and $73,500 of conversion costs.

During the month the company incurred the following costs:

Direct materials	$	182,050
Conversion		1,015,960

During October, the company started 149,000 units and transferred 159,000 units to finished goods. At the end of the month, the work in process inventory consisted of 24,500 units that were 80% complete with respect to conversion costs.

Required:
1. Prepare the company’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 completed units to finished goods inventory.

Answer 1

• Requirement 1

Total Cost to account for:
Cost of beginning WIP	$                      93,300.00
Costs incurred this period	$                1,198,010.00
Total Cost to account for	$                1,291,310.00
Total costs accounted for	$                1,291,310.00
Difference due to rounding cost/unit	$                                      -
Units Reconciliation
Units to account for:
Beginning WIP	34,500
Units started this period	149,000
Total Units to account for	183,500
Total Units accounted for:
Completed & Transferred out	159,000
Ending WIP	24,500
Total Units accounted for	183,500

EUP - Weighted Average Method	Units	% Material	EUP Materials	% Conversion	EUP - Conversion
Units TRANSFERRED	159,000	100%	159,000	100%	159,000
Units of ENDING WIP	24,500	100%	24,500	80%	19,600
Equivalent Units of Production			183,500		178,600
COST per EUP			Material		Conversion
Cost of Beginning WIP			$          19,800.00		$                                  73,500.00
Cost incurred during the period			$        182,050.00		$                            1,015,960.00
Total Costs		Costs	$        201,850.00	Costs	$                            1,089,460.00
Equivalent units of production		EUP	183,500	EUP	178,600
Cost per EUP			$              1.10000		$                                      6.10000

TOTAL COST ACCOUNTED FOR
Cost of Units Transferred Out	EUP	Cost per EUP	Total Cost
- Direct Materials	159,000	$                      1.10	$        174,900.00
- Conversion	159,000	$                      6.10	$        969,900.00
Total Cost transferred Out				$        1,144,800.00
Cost of ending WIP	EUP	Cost per EUP	Total Cost
- Direct Materials	24,500	$                      1.10	$          26,950.00
- Conversion	19,600	$                      6.10	$        119,560.00
Total cost of ending WIP				$            146,510.00
Total costs accounted for					$                            1,291,310.00

• Requirement 2

	Accounts title	Debit	Credit
Oct-31	Finished Goods Inventory	$               1,144,800.00
	Work In Process Inventory		$       1,144,800.00
	(to record transfer of cost from WIP to Finished Goods)