Question

Fast Co. produces its product through two processing departments. Direct materials are added at the start of production in the Cutting department, and conversion costs are added evenly throughout each process. The company uses monthly reporting periods for its weighted-average process costing system. The Work in Process Inventory-Cutting account has a balance of $84,300 as of October 1, which consists of $17,100 of direct materials and $67,200 of conversion costs. During the month, the Cutting department incurred the following costs: Direct materials $ 144,400 Conversion 862,400 At the beginning of the month, 30,000 units were in process. During October, the company started 140,000 units and transferred 150,000 units to the Assembly department. At the end of the month, the Cutting department's work in process inventory consisted of 20,000 units that were 80% complete with respect to conversion costs. Required: 1. Prepare the Cutting department's process cost summary for October using the weighted-average method. 2. Prepare the journal entry dated October 31 to transfer the cost of the partially completed units to Assembly.

Answer 1

Solution to Requirement 1:

Total costs to account for :

Particulars	Total cost in $
Cost of beginning Work In process	$ 84,300
Cost added during the month	$ 10,06,800
Total costs to account for	$ 10,91,100
Total costs to account for	$ 10,91,100
Difference due to rounding cost / unit	Nil

Units Reconciliation

Units to account for
Beginning work in process inventory – Units	30,000 units
Units started during the month	1,40,000 units
Total units to account for	1,70,000 units

Total units to account for	1,70,000 units
Units completed and transferred out	1,50,000 units
Ending work in process - Units	20,000 units
Total units accounted for	1,70,000 units

Equivalent units of production (EUP) - Weighted average method

Particulars	Units	% Materials	EUP Materials	% Conversion	EUP Conversion
Units completed	1,50,000	100%	1,50,000	100%	1,50,000
Ending work in process	20,000	100%	20,000	80 %	16,000
Total units	1,70,000		1,70,000		1,66,000

Cost per equivalent unit of production :

Particulars	Materials	Conversion cost	Total
Cost of beginning work in process	$ 17,100	$ 67,200	$ 84,300
Cost incurred during the month	$ 1,44,400	$ 8,62,400	$ 10,06,800
Total cost (A)	$ 1,61,500	$ 9,29,600	$ 10,91,100
Equivalent units (B)	1,70,000	1,66,000
Cost per equivalent unit : C= (A /B)	$ 0.95	$ 5.60	$ 6.55

Total costs accounted for :

Particulars	EUP (A)	Cost per EUP (B)	Total cost in $ C = (A) * (B)
Cost of units transferred out
Direct materials	1,50,000 units	$ 0.95	$ 1,42,500
Conversion	1,50,000 units	$ 5.60	$ 8,40,000
Total costs transferred out		$ 9,82,500
Cost of ending work in process	EUP (A)	Cost per EUP (B)	Total cost
Direct materials	20,000 units	$ 0.95	$ 19,000
Conversion	16,000 units	$ 5.60	$ 89,600
Total cost of ending work in process		$ 1,08,600
Total costs accounted for		$ 10,91,100

Solution to requirement 2

Journal entry :

General journal	Debit in $	Credit in $
Work in process – Assembly	$ 9,82,500
Work in process Inventory – Cutting		$ 9,82,500

Thankyou !!!!!