Question

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The 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 34,500 units in inventory, 80% complete as to materials and 20% complete as to conversion costs. The beginning inventory cost of $79,100 consisted of $56,200 of direct materials costs and $22,900 of conversion costs.

During the month, the forming department started 490,000 units. At the end of the month, the forming department had 30,000 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 is as follows:

Beginning work in process inventory	$	79,100
Direct materials added during the month		1,800,200
Conversion added during the month		1,179,000

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

Requirement 1

	Material	Conversion
Equivalent Units of Production	520,000	505,000

Requirement 2

	Material	Conversion
Cost per equivalent Unit	$                    3.57	$                   2.38

.

Requirement 3

Units transferred = 494,500

	Material	Conversion	Total
Units Completed and transferred	$ 1,765,365	$ 1,176,910	$ 2,942,275
Ending Inventory	$ 91,035	$ 24,990	$ 116,025

Working

Reconciliation of Units
A	Opening WIP	34,500
B	Introduced	490,000
C=A+B	TOTAL	524,500
D	Transferred	494,500
E=C-D	Closing WIP	30,000

.

Statement of Equivalent Units(Weighted average)
				Material		Conversion cost
	Units			Complete %	Equivalent units	Complete %	Equivalent units
Transferred	494,500			100%	494,500.0	100%	494,500
Closing WIP	30,000			85%	25,500.0	35%	10,500
Total	524,500			Total	520,000.0	Total	505,000

.

.

Statement of cost (Weighted average)
Cost	Equivalent Cost/unit	Ending WIP		Transferred
		Units	Cost Allocated	Units	Cost Allocated
Material	$ 3.57	25,500	$          91,035.00	494,500	$ 1,765,365
Conversion cost	$ 2.38	10,500	$          24,990.00	494,500	$    1,176,910.00
TOTAL	$ 3,058,300	TOTAL	$ 116,025	TOTAL	$ 2,942,275