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

2. Prepare a production cost report for October using the weighted-average method.
3. Repeat requirement 1 using the FIFO method.
4. Repeat requirement 2 using the FIFO method.

Answer 1

Weighted average

	Physcial units	Materials	Conversion
Work in Process Beginning	300
Started during the period	800
To account for	1100
Units transferred to next department	900	900	900
Ending Work in Process :	200	200	140
Accounted for	1100	1100	1040
	Materials	Conversion	Total
Cost of Beginning Work in Process	$                    -	$              3,750	$            3,750
Cost added during the period	$              9,600	$              4,200	$         13,800
Total Cost	$              9,600	$              7,950	$         17,550
Equivalent units of Production	1100	1040
Cost per equivalent unit	$                8.73	$                7.64	$           16.37
	Materials	Conversion	Total
Ending work in Process Inventory
Equivalent units of Production	200	140
Cost per equivalent unit	$                8.73	$                7.64
Cost of Ending work in Process Inventory	$              1,745	$              1,070	$            2,815
Units Completed and transferred out
Units transferred to next department	900	900
Cost per equivalent unit	$                8.73	$                7.64
Cost of units transferred out	$              7,855	$              6,880	$         14,735
Reconciliation
Costs to be accounted for :
Cost of beginning work in process inventory	$              3,750
Costs added to the production during the year	$           13,800
Total Costs to be accounted for	$           17,550
Cost of Ending work in Process Inventory	$              2,815
Cost of units transferred out	$           14,735
Total Costs accounted for	$           17,550

FIFO

	Physcial units	Materials	Conversion
Work in Process Beginning	300
Started during the period	800
To account for	1100
Work in Process Beginning	300	300	150
Units started and completed	600	600	600
Units transferred to next department	900	900	750
Ending Work in Process :	200	200	140
Accounted for	1100	1100	890
	Materials	Conversion	Total
Cost added during the period	$              9,600	$              4,200	$             13,800
Equivalent units of Production	1100	890
Cost per equivalent unit	$                8.73	$                4.72	$               13.45
	Materials	Conversion	Total
Ending work in Process Inventory
Equivalent units of Production	200	140
Cost per equivalent unit	$                8.73	$                4.72
Cost of Ending work in Process Inventory	$              1,745	$                 661	$               2,406
Units Completed and transferred out
Cost of Beginning Work in Process	$                    -	$              3,750	$            3,750.0
Cost of work on Beginning Work in Process	$        2,618.00	$           708.00	$         3,326.00
Total Cost of Beginning WIP	$        2,618.00	$        4,458.00	$         7,076.00
Units started and completed	600	600
Cost per equivalent unit	$                8.73	$                4.72
Cost of units started and completed	$        5,236.00	$        2,832.00	$         8,068.00
Cost of units transferred out	$        7,854.00	$        7,290.00	$       15,144.00
Reconciliation
Costs to be accounted for :
Cost of beginning work in process inventory	$              3,750
Costs added to the production during the year	$           13,800
Total Costs to be accounted for	$           17,550
Cost of Ending work in Process Inventory	$              2,406
Cost of units transferred out	$           15,144
Total Costs accounted for	$           17,550