Question

Problem 20-3A Weighted Average: Process cost summary; equivalent units LO C2, C3, P4 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 $106,300 as of October 1, which consists of $23,700 of direct materials and $82,600 of conversion costs. During the month the company incurred the following costs: Direct materials $169,150 940,760 Conversion During October, the company started 162,000 units and transferred 172,000 units to finished goods. At the end of the month, the work in process inventory consisted of 31,000 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

Answers

• Requirement 1

Total Cost to account for:
Cost of beginning WIP	$                    106,300.00
Costs incurred this period	$                1,109,910.00
Total Cost to account for	$                1,216,210.00
Total costs accounted for	$                1,216,210.00
Difference due to rounding cost/unit	$                                      -
Units Reconciliation
Units to account for:
Beginning WIP	41,000
Units started this period	162,000
Total Units to account for	203,000
Total Units accounted for:
Completed & Transferred out	172,000
Ending WIP	31,000
Total Units accounted for	203,000

EUP - Weighted Average Method	Units	% Material	EUP Materials	% Conversion	EUP - Conversion
Units TRANSFERRED	172,000	100%	172,000	100%	172,000
Units of ENDING WIP	31,000	100%	31,000	80%	24,800
Equivalent Units of Production			203,000		196,800
COST per EUP			Material		Conversion
Cost of Beginning WIP			$          23,700.00		$                                  82,600.00
Cost incurred during the period			$        169,150.00		$                                940,760.00
Total Costs		Costs	$        192,850.00	Costs	$                            1,023,360.00
Equivalent units of production		EUP	203,000	EUP	196,800
Cost per EUP			$              0.95000		$                                      5.20000

TOTAL COST ACCOUNTED FOR
Cost of Units Transferred Out	EUP	Cost per EUP	Total Cost
- Direct Materials	172,000	$                      0.95	$        163,400.00
- Conversion	172,000	$                      5.20	$        894,400.00
Total Cost transferred Out				$        1,057,800.00
Cost of ending WIP	EUP	Cost per EUP	Total Cost
- Direct Materials	31,000	$                      0.95	$          29,450.00
- Conversion	24,800	$                      5.20	$        128,960.00
Total cost of ending WIP				$            158,410.00
Total costs accounted for					$                            1,216,210.00

• Requirement 2

	Accounts title	Debit	Credit
Oct-31	Finished Goods Inventory	$               1,057,800.00
	Work In Process Inventory		$       1,057,800.00
	(to record transfer of cost from WIP to Finished Goods)