Weighted Average Method, Physical Flow, Equivalent Units, Unit Costs, Cost Assignment, ABC

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Weighted Average Method, Physical Flow, Equivalent Units, Unit Costs, Cost Assignment, ABC

Swasey Fabrication, Inc., manufactures frames for bicycles. Each frame passes through three processes: Cutting, Welding, and Painting. In September, the Cutting Department of the Tulsa, Oklahoma, plant reported the following data:

In Cutting, all direct materials are added at the beginning of the process.
Beginning work in process consisted of 40,500 units, 20 percent complete with respect to direct labor and overhead. Costs in beginning inventory included direct materials, $1,215,000; direct labor, $222,600; and applied overhead, $150,000.

Costs added to production during the month were direct materials, $2,565,000; direct labor, $3,471,150. Overhead was assigned using the following information:

Activity	Rate	Actual Driver Usage
Inspection	$150 per inspection hour	4,000 inspection hours
Maintenance	$750 per maintenance hour	1,600 maintenance hours
Receiving	$300 per receiving order	2,000 receiving orders

At the end of the month, 121,500 units were transferred out to Welding, leaving 13,500 units in ending work in process, or 25 percent complete.

Required:

1. Prepare a physical flow schedule.

2. Calculate equivalent units of production for direct materials and conversion costs.

3. Compute unit cost under weighted average.

4. Calculate the cost of goods transferred to Welding at the end of the month. Calculate the cost of ending inventory.

5. Prepare the journal entry that transfers the goods from Cutting to Welding.

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Answer 1

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Overheads applied in current yar.
Activity		Rate	Driver	Activity cost

Inspection	150	4000	600000
Maintenance	750	1600	1200000
Receiving		300	2000	600000
Total Activity cost			24,00,000


UNITS TO ACCOUNT FOR:
Beginning Work in Process units			40,500
Add: Units Started in Process			94,500
Total Units to account for:			1,35,000

UNITS TO BE ACCOUNTED FOR:
Units completed and transferred out.		1,21,500
Ending Work in Process			13,500
Total Units to be accounted for:		1,35,000

Equivalent Units:
			UNITS	Material Cost	Conversion
				% Completion	Units	% Completion	Units
Units completed		121500	100%	1,21,500	100%	1,21,500
Ending Work in Process	13500	100%	13,500	25%	3,375
Total Equivalent units	135000		1,35,000		1,24,875


TOTAL COST TO ACCOUNT FOR:
				Material		Conversion
Beginning work in Process		12,15,000		3,72,600
Cost Added during May		25,65,000		58,71,150
Total Cost to account for:		37,80,000		62,43,750
Equivalent Units			1,35,000		1,24,875
Cost per Equivalent unit		28		50
TOTAL COST ACCOUNTED FOR:
Units completed and Transferred out (121500 units)
				Equivalent unit	Cost per EU	Total Cost
Material				1,21,500	28	3402000
Conversion Cost			1,21,500	50	6075000
Total Cost of Units completed and transferred out:		9477000

Ending Work in process (13500 units)
				Equivalent unit	Cost per EU	Total Cost
Material				13,500	28	378000
Conversion Cost			3,375	50	168750
The total cost of Ending Work in process:			5,46,750
Total cost accounted for				1,00,23,750

Journal entry
S.no.	Accounts title and explanations		Debit $	Credit $
a.	Finished goods inventory		94,77,000
	Work in process inventory			94,77,000
	(for goods finished)

answered by: Carfluti

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