Question

17-41 Weighted average method. Mcknight Handcraft is a manufacturer of picture frames for large department. This problem focuses on the assembly department. The process-costing system at McKnight Direct materials are added when the assembly department process is 10% complete. Conversion costs are added evenly during the assembly department's process. retailers. Every picture frame passes through two departments: the assembly department and the finishing Using Dos a single direct-cost category (direct materials) and a single indirect-cost category (conversion costs). McKnight uses the weighted-average method of process costing. Consider the following data for the assembly department in April 2017: Physical Unit (Frames) 60 Direct Materials $ 1,530 Conversion Costs $ 156 510 Work in process, April 10 Started during April 2017 Completed during April 2017 Work in process, April 300 Total costs added during April 2017 450 120 $17,850 $11,544 Degree of completion: direct materials, 100%; conversion costs, 40%. Degree of completion: direct materials, 100%; conversion costs, 15%.

Answer 1

Requirement 1 Cost of Production Report- FIFO Physical units Equivalent Units Direct Materials Conversion costs % e.u % e.u 60 510 570 UNITS Units to account for Beginning Work-in-Process Started in production Total units to acount for Units accounted for: Transferred out-from Beg.WIP Transferred out- from current input (450-60) Ending Work-in-Process Total units acccounted for 0 36 60 390 0% 100% 60% 100% 390 390 120 100% 120 15% 18 570 510 444 Total Costs Direct Materials Conversion costs COSTS Costs to account for: Beginning Work-in-Process Costs added during the period Total costs to account for $ $ $ 1,686 29,394 31,080 $ $ $ 1,530 17,850 19,380 $ $ $ 156 11,544 11,700 $ 29,394 Costs added during the period Divided by: EUP this period Cost per equivalent unit $ $ $ 17,850 510 35.00 $ $ $ 11,544 444 26.00 Costs accounted for: Costs already accounted in Beg.WIP Transferred out- from Beg.WIP 1,530 156 $ $ 1,686 936 $ $ $ $ Transferred out-from current input $ 23,790 $ $ (0*35) 13,650 (390*35) 15,180 936 (36*26) 10,140 (390*26) 11,232 Total Cost of goods transferred $ 26,412 $ $ Ending Work-in-Process $ 4,668 $ $ 468 4,200 (120*35) 19,380 (18*26) 11,700 Total costs accounted for $ 31,080 $ $

Cost of Production Report- WACC Physical units Equivalent Units Direct Materials Conversion costs % e.u % e.u UNITS Units to account for Beginning Work-in-Process Started in production Total units to acount for Units accounted for: Transferred out Ending Work-in-Process Total units acccounted for 60 510 570 450 120 570 100% 100% 450 120 570 100% 15% 450 18 468 Total Costs Direct Materials Conversion costs COSTS Costs to account for: Beginning Work-in-Process Costs added during the period Total costs to account for Divided by: EUP this period Cost per equivalent unit $ $ $ 1,686 29,394 31,080 $ $ $ 1,530 17,850 19,380 570 34.00 $ $ $ 156 11,544 11,700 468 25.00 $ $ Costs accounted for: Transferred out $ $ 26,550 $ $ Ending Work-in-Process $ 4,530 $ 15,300 (450*34) 4,080 (120*34) 19,380 $ 11,250 (450*25) 450 (18*25) 11,700 Total costs accounted for $ 31,080 $ $ Requirement 2 Under Weighted-Average method Under FIFO method Difference Cost of work completed Cost of ending and transferred out work in process $ 26,550 $ 4,530 $ 26,412 $ 4,668 $ 138 $ (138) The difference is due to the averaging of beginning WIP costs in the ending inventory and costs transferred out. FIFO method provides lower costs to Mcknight. Hence, FIFO method may be applied.