Question

Clarke Manufacturing produces denim jeans in two departments, cutting and finishing. In the cutting department, the materials are added at the beginning of the process and conversion costs are added uniformly during the process. In the finishing department, materials are added once the jeans have passed through the mid-way point of the process and conversion costs are added uniformly throughout the process.

The following are costs relating to the finishing department for the month of May: Work-in-Process, May 1, 20XX (2,000 units, 80% complete):

Materials 12000

Conversion costs 5750

Transferred-in Costs 56000

Costs added during May (12,000 units):

Materials 72000

Conversion costs 37850

Transferred-in costs 334550

Work-in-Process, May 31, 20XX 3000 units, 30% completed

The company uses the weighted-average method of process costing. Prepare a complete production report comprising the five steps of process costing. (Calculate per unit costs to four decimal places)

Answer 1

The answer has been presented in the supporting sheet. For detailed answer refer to the supporting sheet.

Answer Production Report Weighted Average Cost Summary of Physical Units and Equivalent Unit Calculations Unist to be accounted for Physical units Units in beginning WIP Inventory 2000 Units started during the period 12000 Total units to be accounted for 14000 Equivalent Units Units accounted for Physical units Direct Material Conversion Cost 11000 Units completed and transferred out (14000-3000) Units in ending work in process 11000 3000 11000 900 (3000*30%) 11900 Transferred in Costs 11000 3000 (3000*100%) 14000 Total units accounted for 14000 11000 Summary of costs to be accounted for Direct Material Conversion Cost Transferred in Costs Total Costs to be accounted for Costs in beginning WIP inventory Costs incurred during the period Total costs to be accounted for 12000 72000 84000 5750 37850 43600 56000 334550 390550 73750 444400 518150

2 Calculation of cost per equivalent unit Direct Material Conversion Cost Total 3 518150 4 Total costs to be accounted for Total equivalent units accounted for 6 Cost per equivalent unit Assign Costs to units transferred out and units in ending 7 WIP inventory 5 Transferred in Costs 390550 14000 27.8964 84000 11000 7.6364 43600 11900 3.6639 Total Costs assigned to units transferred out 431163 Transferred in Direct Material Conversion Cost Costs 84000 40303 306860 (7.6364*11000) (3.6639*11000) (27.8964*11000) 3298 83689 (3.6639*900) (27.8964*3000) Costs asiigned to ending work in process inventory 86987 m Rounding difference Total costs accounted for 518150