Question

1. Cohe Problem 17-41 using the FIFO method of process costing. method? Exnlain hriefly 17.41 Weighted-average method. McKnight Handcraft is a manufacturer of picture frames for large tallers. Every picture frame passes through two departments: the assembly department and the finishing department. This problem focuses on the assembly department. The process-costing system at McKnight hes a single direct-cost category (direct materials) and a single indirect-cost category (conversion costs). Direct materials are added when the assembly department process is 10% complete. Conversion costs are added evenly during the assembly department's process. McKnight uses the weighted average method of process costing. Consider the following data for the assembly department in April 2017: ring the FIFO process-costing method, complete Proble 17-4 method (continuation of 17-41). Direct Conversion Physical Unit (Frames) Materials Costs 60 $ 1,530 $ 156 Work in process, April 1° Started during April 2017 510 Completed during April 2017 450 Work in process, April 30b 120 Total costs added during April 2017 $17,850 $11,544 Degree of completion direct materials, 100%; conversion costs, 40%. "Degree of completion direct materials, 100%; conversion costs, 15%. 1. Summarize the total assembly department costs for April 2017, and assign them to units completed (and transferred out) and to units in ending work in process. 2 Waues should a manager focus on when reviewing the equivalent units calculation? 2 you wid Problem 17-41, explain any difference between the cost of work completed and transferred Out the cost of ending work in process in the assembly department under the weighted-average me and the FIFO method. Should McKnight's managers choose the weighted

just 17-42

Answer 1

1. FIFO

	Physical units	Materials	Conversion
Work in Process Beginning	60
Started during the period	510
Total Units to account for	570
Work in Process Beginning	60	0	36
Units started and completed	390	390	390
Units transferred to next department	450	390	426
Ending Work in Process :	120	120	18
Total Units Accounted for	570
Equivalent units		510	444
	Materials	Conversion	Total
Costs to account for
Beginning Work in Process	$            1,530	$               156	$            1,686
Cost added during the period	$          17,850	$          11,544	$          29,394
Total costs to account for	$          19,380	$          11,700	$          31,080
	Materials	Conversion	Total
Cost added during the period	$          17,850	$          11,544	$          29,394
Equivalent units of Production	510	444
Cost per equivalent unit	$            35.00	$            26.00	$            61.00
	Materials	Conversion	Total
Units Completed and transferred out
Cost of Beginning Work in Process	$            1,530	$               156	$            1,686
Cost of work on Beginning Work in Process	$                   -	$               936	$               936
Total Cost of Beginning WIP	$            1,530	$            1,092	$            2,622
Units started and completed	390	390
Cost per equivalent unit	$            35.00	$            26.00
Cost of units started and completed	$          13,650	$          10,140	$          23,790
Cost of units transferred out	$          15,180	$          11,232	$          26,412
	Materials	Conversion	Total
Ending work in Process Inventory
Equivalent units of Production	120	18
Cost per equivalent unit	$            35.00	$            26.00
Cost of Ending work in Process Inventory	$            4,200	$               468	$            4,668
Total Costs accounted for			$          31,080

2.
The difference between the cost of work completed and transferred out and cost of ending work in process under weighted average method and FIFO method is due to difference in equivalent cost per unit. Due to which cost of goods transferred and cost of ending inventory are different.

The manager should chose weighted average method since it gives lower cost per unit which will help in recognizing better performance of manager.

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