Question

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:

1. In Cutting, all direct materials are added at the beginning of the process.
2. Beginning work in process consisted of 41,500 units, 20 percent complete with respect to direct labor and overhead. Costs in beginning inventory included direct materials, $1,225,000; direct labor, $222,500; and applied overhead, $150,000.
3. Costs added to production during the month were direct materials, $2,695,800; direct labor, $3,477,500. 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

4. At the end of the month, 121,600 units were transferred out to Welding, leaving 13,600 units in ending work in process, or 25 percent complete.

Required:

1. Prepare a physical flow schedule.

Swasey Fabrication, Inc.
Physical Flow Schedule
Units to account for:
Total units to account for
Units accounted for:
Total units accounted for

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

	Equivalent Units
Direct Materials
Conversion Costs

3. Compute unit cost under weighted average.

Unit direct materials cost	$
Unit conversion costs
Total unit cost	$

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

Cost of goods transferred out	$
Ending WIP	$

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

Answer 1

calculation of unit to account for

particular		units
work in progress at the begining		41500
unit introduce in the process		93700
Total unit to account for		135200

Calculation of unit to be accounted for

particular		units
Finished goods transfered		121600
closing work in progress		13600
Total unit to be accounted for		135200

Calculation of Total overhead during the month   

particular	rate	activities	amount
maintainance	750	1600	1200000
Inspection	150	4000	600000
Receiving order	300	2000	600000
Total overhead			2400000

calculation of Equivalent production (units)

Statement of Equivalent Units UNITS Material Cost Labour & overhead % Completion Units % Completion Units Units completed 121600 100% 121,600 100% 121,200 Ending Work in Process 13600 100% 13,600 25% 3400 Total Equivalent units 135200 135200 124600

Calculation of cost per equivalent unit

Particular Material Labour & overhead Beginning work in Process 1,225,000 372,500 Cost Added during May 2,695,800 5,877,500 Total Cost to account for: 3920800 6250000 Equivalent Units 135200 124,600 Cost per Equivalent unit 29 50

Statement showing apportionment of cost

Particulars Equivalent unit Cost per unit Total Cost Material 121,600 29 3526400 Conversion Cost 121,600 50 6080000 Total Cost of Units completed and transferred out: 9606400

Statement showing apportionment of cost

Particular Equivalent unit Cost per unit Total Cost Material 13,600 29 394400 Conversison Cost 3,400 50 170000 Total cost of Ending Work in process: 564400 Total cost accounted for 101708001

Journal Entry for transfers the goods from Cutting to Welding

Work in Progress cutting A/C $10170800
To work in progress welding A/C $10170800

(Being amount transferes to welding a/c)