Question

Required information [The following information applies to the questions displayed below.) 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 36,000 units in inventory, 70% complete as to materials and 30% complete as to conversion costs. The beginning inventory cost of $82,100 consisted of $58,000 of direct materials costs and $24,100 of conversion costs. During the month, the forming department started 520,000 units. At the end of the month, the forming department had 40,000 units in ending inventory, 85% complete as to materials and 35% 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 Direct materials added during the month Conversion added during the month $ 82,100 1,889,000 1,226,700 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

Answer:

1) CALCULATE EQUIVALENT UNIT OF PRODUCTION UNDER WEIGHTED AVERAGE :

EQUIVALENT UNIT = UNIT TRANSFEED OUT+ENDING INVENTORY*PERCENTAGE COMPLETION

UNIT TRANSFERED OUT=OPENING WIP+UNIT STARTED-CLOSING WIP

= 36000+520000-40000

UNIT TRANSFERED OUT = 516000

EQUIVALENT UNIT IN MATERIAL = 516000+40000*85% = 550000

EQUIVALENT UNIT IN CONVERSION COST= 516000+40000*25% = 526000

2) CALCULATE COST PER EQUIVALENT UNIT :

	MATERIAL	CONVERSION COST
OPENING WIP	58000	24100
COST ADDED	1889000	1226700
TOTAL COST	1947000	1250800
EQUIVALENT UNIT	550000	526000
COST PER UNIT	3.54	2.38

3) COST ASSIGNED & ALLOCATION :

COST OF UNITS TRANSFERED OUT	EUP	COST PER EUP	TOTAL COST
DIRECT MATERIAL	516000	3.54	1826640
CONVERSION	516000	2.38	1228080
TOTAL COST TRANSFERED OUT			3054720
COST OF ENDING WORK IN PROCESS	EUP	COST PER EUP	TOTAL COST
DIRECT MATERIAL	34000	3.54	120360
CONVERSION	14000	2.38	33320
TOTAL COST OF ENDING WORK IN PROCESS			153680
TOTAL COST ASSIGNED				3208400