Question

Clopack Company manufactures one product that goes through one processing department called Mixing. All raw materials are introduced at the start of work in the Mixing Department. The company uses the weighted average method of process costing. Its Work in Process T-account for the Mixing Department for June follows (all forthcoming questions pertain to June): Work in Process-Mixing Department June 1 balance 28,000 Completed and transferred to Finished Goods Materials 120,000 Direct labor 79,500 Overhead 97,000 June 30 balance The June 1 work in process inventory consisted of 5,000 units with $16,000 in materials cost and $12,000 in conversion cost. The June 1 work in process inventory was 100% complete with respect to materials and 50% complete with respect to conversion. During June, 37,500 units were started into production. The June 30 work in process inventory consisted of 8,000 units that were 100% complete with respect to materials and 40% complete with respect to conversion. Page 205 Required: 1. Prepare the journal entries to record the raw materials used in production and the direct labor cost incurred. 2. Prepare the journal entry to record the overhead cost applied to production. 3. How many units were completed and transferred to finished goods during the period? 4. Compute the equivalent units of production for materials. 5. Compute the equivalent units of production for conversion. 6. What is the cost of beginning work in process inventory plus the cost added during the period for materials? 7. What is the cost of beginning work in process inventory plus the cost added during the period for conversion? 8. What is the cost per equivalent unit for materials? 9. What is the cost per equivalent unit for conversion? 10. What is the cost of ending work in process inventory for materials? 11. What is the cost of ending work in process inventory for conversion? 12. What is the cost of materials transferred to finished goods?

Answer 1

	Particulars			Debit	Credit
1)	Work in Process - Mixing Dept			$ 199,500.00
	To Raw Materials				$ 120,000.00
	To Factory Payroll				$   79,500.00
2)	Work in Process - Mixing Dept			$   97,000.00
	Factory OH				$   97,000.00

3)	Units completed and transferred				34500
4)	Eq. units of production for materials				42500
5)	Eq. units of production for conversion				37700
6)	Total cost of material				$ 136,000.00
7)	Total cost of conversion				$ 188,500.00
8)	Cost per eq. unit for material				$             3.20
9)	Cost per eq. unit for conversion				$             5.00
10)	Cost of ending WIP for materials				$   25,600.00
11)	Cost of ending WIP for conversion				$   16,000.00
12)	Cost of materials transferred to fin. Goods				$ 110,400.00

Workings:

1)	Equivalent Units of Production (EUP) - Weighted Average Method
					Units	% Mat.	EUP- Mat.	% Conv.	EUP- Conv.
	Units completed and transferred out				34500	100%	34500	100%	34500
	Units in ending inventory				8000	100%	8000	40%	3200
	Equivalent units of production						42500		37700

2)	Cost per Equivalent Unit of Production
						Materials		Conversion
	Beginning costs					$      16,000.00		$   12,000.00
	During the month costs					$    120,000.00		$ 176,500.00
	Total cost				Costs	$    136,000.00	Costs	$ 188,500.00
	÷	Equivalent units of production			EUP	42500	EUP	37700
	Cost per equivalent unit of production					$                3.20		$             5.00

3)	Cost Assignment and Reconciliation
	Cost of units transferred out				EUP	Cost/ EUP	Total Cost
	Direct Materials				34500	$      3.20	$    110,400.00
	Conversion				34500	$      5.00	$    172,500.00
	Total costs of units transferred out					(a)	$    282,900.00
	Cost of ending work in process				EUP	Cost/ EUP	Total Cost
	Direct Materials				8000	$      3.20	$      25,600.00
	Conversion				3200	$      5.00	$      16,000.00
	Total cost of ending work in process					(b)	$      41,600.00
	Total costs accounted for					(a+b)	$    324,500.00