Question

3. (9 points) Anchor Inc. uses the weighted average method in its process system. The following data concern the operations of the company's processing department for a recent month. Work in process, beginning: SUnits in process 5,000 Costs in the beginning inventory: Materials cost............ Conversion cost....... $281,250 $50,000 Units started into production during the month ......... Units completed and transferred out.... 130,000 110,000 Costs added to production during the month: Materials cost. Conversion cost............ $500,000 $400,000 Work in process, ending: Units in process............ % of completion with respect to materials.. % of completion with respect to conversion... 25,000 60% 40% Required: Prepare a process costing departmental production report (calculation of equivalent units, cost per equivalent unit, and cost reconciliation for the artment using the weighted average method. Round the cost per unit to the nearest cent.

Answer 1

Solution

Reconciliation and Cost report (weighted average)
Cost to be accounted for
Beginning Work In Progress:
Material	$ 281,250
Conversion cost	$ 50,000	$ 331,250
Cost incurred during period:
Material	$ 500,000
Conversion cost	$ 400,000	$ 900,000
Total Cost to be accounted for				$ 1,231,250
Cost accounted for
Cost of Units transferred	Equivalent Units	Cost per Equivalent Units	Cost accounted for
Material	110,000	$ 6.25	$ 687,500
Conversion cost	110,000	$ 3.75	$ 412,500
				$ 1,100,000
Cost of ending WIP	Equivalent Units	Cost per Equivalent Units	Cost accounted for
Material	15,000	$ 6.25	$ 93,750
Conversion cost	10,000	$ 3.75	$ 37,500
				$ 131,250
Total Cost accounted for				$ 1,231,250

Working

Reconciliation of Units
A	Beginning WIP	5,000
B	Introduced	130,000
C=A+B	TOTAL	135,000
D	Transferred out	110,000
E=C-D	Ending WIP	25,000

.

Statement of Equivalent Units(Weighted average)
				Material		Conversion cost
	Units			Complete %	Equivalent units	Complete %	Equivalent units
Transferred out	110,000			100%	110,000	100%	110,000
Ending WIP	25,000			60%	15,000	40%	10,000
Total	135,000			Total	125,000	Total	120,000

.

Cost per Equivalent Units (Weighted average)
COST		Material	Conversion cost	TOTAL
Beginning WIP Inventory Cost		$ 281,250	$ 50,000	$ 331,250
Cost incurred during period		$ 500,000	$ 400,000	$ 900,000
Total Cost to be accounted for		$ 781,250	$ 450,000	$ 1,231,250
Total Equivalent Units		125,000	120,000
Cost per Equivalent Units		$                   6.25	$                     3.75	$             10.00

.

Statement of cost (Weighted average)
Cost	Equivalent Cost/unit	Ending WIP		Transferred
		Units	Cost Allocated	Units	Cost Allocated
Material	$ 6.25	15,000	$          93,750.00	110,000	$        687,500.00
Conversion cost	$ 3.75	10,000	$          37,500.00	110,000	$        412,500.00
TOTAL	$ 1,231,250	TOTAL	$ 131,250	TOTAL	$ 1,100,000

.

Cost Reconciliation
Costs to be accounted for:
Beginning Wip cost	$ 331,250
Cost incurred during period	$ 900,000
Total cost to be accounted for	$ 1,231,250
Costs accounted for as follows:
Cost of Units Transferred Out	$ 1,100,000
Cost of Ending Wip	$ 131,250
Total cost accounted for	$ 1,231,250