Question

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Fields Company has two manufacturing departments, forming and painting. The company uses the weighted-average method of process costing. At the beginning of the month, the forming department has 35,000 units in inventory, 60% complete as to materials and 40% complete as to conversion costs. The beginning inventory cost of $80,100 consisted of $56,800 of direct materials costs and $23,300 of conversion costs.

During the month, the forming department started 500,000 units. At the end of the month, the forming department had 40,000 units in ending inventory, 90% complete as to materials and 40% complete as to conversion. Units completed in the forming department are transferred to the painting department.

Cost information for the forming department follows.

Beginning work in process inventory	$	80,100
Direct materials added during the month		1,828,250
Conversion added during the month		1,192,880

1. Calculate the equivalent units of production for the forming department.
2. Calculate the costs per equivalent unit of production for the forming department.
3. Using the weighted-average method, assign costs to the forming department’s output—specifically, its units transferred to painting and its ending work in process inventory.

Answer 1

1) calculation of Equivalent units of production for the forming department( weighted average method)

Particular	Material	conversion
UNIT STARTED AND COMPLETED (note below)	(495000×100%) 495000	(495000×100%) 495000
Ending inventory
Material	(40000×90%) 36000
Conversion		(40000×40%) 16000
total equivalent units of production	531000	511000

Note: unit's started and completed = beginning inventory+unit's started during the month - ending inventory

=35000+500000-40000=495000units

2) calculate the cost per Equivalent unit of production for the forming department

Particular	material	conversion
(a)Cos of beginning work in process	$56800	$23300
(b)Cost incurred during the month	$1828250	$1192880
(C)otal cost (a+b)	$1885050	$1216180
(d) equivalent units	531000	511000
Cost per equivalent unit (c/d)	$3.55	$2.38

3) calculation cost of units transferred and ending inventory

Particular	amount ($)
Unit's transferred out
Material (495000×$3.55)	1757250
Conversion(495000×$2.38)	1178100
Total cost of units transferred out(1)	2935350
Cost of ending inventory
Material (36000× $3.55)	127800
Conversion (16000×$2.38)	38080
Total cost of ending inventory(2)	165880
Total (1+2)	3101230

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