Question

Need help with the following accounting problem.

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 $95,500 as of October 1, which consists of $20,100 of direct materials and $75,400 of conversion costs. During the month the company incurred the following costs: $ 192,650 Direct materials Conversion 1,040,600 During October, the company started 150,000 units and transferred 160,000 units to finished goods. At the end of the month, the worl in process inventory consisted of 25,000 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

Solution:

Fast Co. Production cost Report
Particulars	Units	% Materials	Material	% Conversion	Conversion
Equivalent units of production - Weighted Average method
Unit completed & Transferred out	160000	100%	160000	100%	160000
Ending Work In Proces	25000	100%	25000	80%	20000
Equivalent units of production	185000		185000		180000
Cost per equivalent unit of production			Material		Conversion
Beginning Work In Process			$20,100.00		$75,400.00
Cost added during the period			$192,650.00		$1,040,600.00
Total costs		Cost	$212,750.00	Cost	$1,116,000.00
Equivalent units of production		EUP	185000	EUP	180000
Cost per equivalent unit			$1.15		$6.20
Cost Assignment and Reconciliation:
Cost of unit transferred out	EUP	Cost per EUP	Total Cost
Direct materials	160000	$1.15	$184,000.00
Conversion	160000	$6.20	$992,000.00
Total costs transferred out			$1,176,000.00
Cost of ending work in process
Direct materials	25000	$1.15	$28,750.00
Conversion	20000	$6.20	$124,000.00
Total Cost of ending work in process			$152,750.00
Total costs accounted for			$1,328,750.00
Cost charged to production:
Beginning Work In Process	$95,500.00
Cost Added during period	$1,233,250.00
Total costs to account for	$1,328,750.00
Total costs accounted for	$1,328,750.00
Difference due to rounding cost per unit	$0.00
Units reconciliation:
Units to accounts for:
Beginning WIP	35000
Units started	150000
Total units to account for	185000
Total units accounted for:
Units completed and transferred out	160000
Units in ending WIP	25000
Total units accounted for	185000

Date	Particulars	Debit	Credit
31-Oct	Finished goods inventory Dr	$1,176,000.00
	To Work In Process Inventory		$1,176,000.00
	(Being completed units transferred to finished goods)