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					$	2,816
Costs added in October	$	9,700				7,500
Total costs	$	9,700			$	10,316

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

a) Equivalent units of direct materials and conversion
	Particulars	Total number of units	% completed in October	Equivalent Units
Direct Materials	Beginning WIP	300	100%	300
	Put in this month and completed in same month	700	100%	700
	Put in this month and uncompleted	200	40%	80
			TOTAL	1080
Conversion costs	Beginning WIP	300	50%	150
	Put in this month and completed in same month	700	100%	700
	Put in this month and uncompleted	200	70%	140
			TOTAL	990

b. Equivalent unit costs of direct materials and conversion
Particulars	Direct Materials	Conversion Costs
Equivalent units	1080	990
Total costs	9700	10316
Equivalent unit costs	8.98	10.42

c) Cost of goods completed and transferred out during the period
Particulars	Direct Materials	Conversion Costs
Equivalent units	1000	850
Equivalent unit costs	8.98	10.42
Cost of goods completed and transferred out	8981	8857
TOTAL	17,838

d) Cost of Work-in-Process Inventory at the end of the period
Particulars	Direct Materials	Conversion Costs
Equivalent units	80	140
Equivalent unit costs	8.98	10.42
Cost of goods completed and transferred out	719	1459
TOTAL	2177

2. All the tables all together would form the production cost report for October.