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 900 units into production and completed 1,000 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					$	3,510
Costs added in October	$	8,200				6,750
Total costs	$	8,200			$	10,260

Required:

1. Calculate each of the following amounts using weighted-average process costing:
a. Equivalent units of direct materials and conversion.
b. Equivalent unit costs of direct materials and conversion.
c. Cost of goods completed and transferred out during the period.
d. Cost of Work-in-Process Inventory at the end of the period.

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

1 & 2

		Material	Conversion
Units to account for
Beginning Work in process	300
Units started	900
Total Units to account for	1200
Units accounted for
Units transferred	1000	1000	1000
Equivalent units in ending WIP	200	200	140
Total units accounted for	1200
Equivalent units of production		1200	1140
	Material	Conversion	Total
Cost of beginning work in process	$                   -	$           3,510	$            3,510
Cost added during the production	$            8,200	$           6,750	$          14,950
Total Cost	$            8,200	$        10,260	$          18,460
Equivalent units of production	1200	1140
Cost per Equivalent unit	$              6.83	$             9.00
	Material	Conversion	Total
Ending Work in process inventory
Equivalent units	200	140
Cost per Equivalent unit	$              6.83	$             9.00
Cost of Ending Work in process inventory	$            1,367	$           1,260	$            2,627
Units completed and transferred out
Units transferred	1000	1000
Cost per Equivalent unit	$              6.83	$             9.00
Cost of Units transferred	$            6,833	$           9,000	$          15,833
Costs to be accounted for
Cost of beginning work in process	$            3,510
Cost added during production	$         14,950
Total Costs to be accounted for	$         18,460
Costs accounted for as follows
Cost of Ending work in process	$            2,627
Cost of Units transferred	$         15,833
Total Costs accounted for	$         18,460

3 & 4

		Material	Conversion Costs
Units to account for
Beginning Work in process	300
Units started	900
Total Units to account for	1200
Units accounted for
Inventory in Process, Beginning	300	300	150
Started and completed	700	700	700
Units transferred	1000	1000	850
Equivalent units in ending WIP	200	200	140
Total units accounted for	1200
Equivalent units of production		1200	990
	Material	Conversion Costs
Cost added during the production	$            8,200	$           6,750
Equivalent units of production	1200	990
Cost per Equivalent unit	$              6.83	$             6.82
	Material	Conversion Costs	Total
Inventory in Process, Beginning	$                   -	$           3,510	$            3,510
Costs incurred	$            8,200	$           6,750	$          14,950
Total Costs to be accounted for			$          18,460
	Material	Conversion Costs	Total
Costs allocated
Inventory in Process, Beginning	$                   -	$           3,510	$            3,510
To completed beginning inventory	$            2,050	$           1,023	$            3,073
Total Cost of Work in Process	$            2,050	$           4,533	$            6,583
Started and completed	$            4,782	$           4,774	$            9,556
Completed and Transferred	$            6,832	$           9,306	$          16,139
Inventory in Process, Ending	$            1,367	$              955	$            2,321
Total Costs accounted for			$          18,460