Question

Exercise 20-17 Weighted Average: Process cost summary LO C3 Oslo Company produces large quantities of a standardized product. The following information is available for its production activities for May Units Beginning work in process inventory Started Ending work in process inventory Costs Beginning work in process inventory Direct materials Conversion 4,600 15,000 4,200 $3,480 6,978 $ 10,458 247,400 159,680 123,506 Status of ending work in process inventory Materials-Percent complete Conversion-Percent complete Direct materials added 1008 Direct labor added 35% Overhead applied (778 of direct labor) $541,044 Total costs to account for $ 62,183 Ending work in process inventory Prepare a process cost summary report for this company, showing costs charged to production, unit cost information, equivalent units of production, cost per EUP, and its cost assignment and reconciliation. Use the weighted-average method. (Do not round intermediate calculations. Round "Cost per EUP" to 2 decimal places.) Total costs to account for: Costs of beginning work in process Total costs to account for Total costs accounted for Difference due to rounding cost/unit Unit reconciliation: Units to account for Total units to account for Total units accounted for: Total units accounted for

Answer 1

Oslo Company Process Cost Summary For the Month Ended May 31 Equivalent Units Direct Conversion Materials 15,400 15,400 4,200 1,470 19,600 16,870 Physical Units 15,400 4,200 19,600 Completed and Transferred out Ending Work in Process Total units Cost Information Total costs to account for: Beginning work-in-process Costs added during the period Total costs to account for Total costs accounted for Difference due to rounding cost/unit $10,458 $530,586 $541,044 $541,044 $o

Unit reconciliation: Units to account for: Beginning work in Process Started in Production Total units to account for Total units accounted for: Completed and Transferred out Ending Work in Process Total units accounted for 15,400 4,200 19,600 15,400 4,200 19,600 Equivalent Units of Production (EUP) - Weighted Average Method % EUP Particulars Whole Units % Conversion Conversion Direct Materials 100% 100% EUP- Direct Materials 15,400 4,200 19,600 Completed and transferred Ending work in process Equivalent Units of Production (EUP) 15,400 4,200 19,600 100% 35% 15,400 1,470 16,870

Cost per equivalent units of production Conversion Cost of beginning work in process Cost added during the period Total Costs Divided by Equivalent units of Production (EUP) Cost per Equivalent units of Production Direct Materials $3,480 $247,400 $250,880 19,600 $12.80 $6,978 $283,186 $290,164 16,870 $17.20 Costs accounted for: Cost of units transferred out: Direct Materials Conversion Total costs transferred out EUP 15,400 15,400 Cost per EUP $12.80 $17.20 Total cost $197,120 $264,880 $462,000 Costs of ending work in process Direct Materials Conversion Total cost of ending work in process Total costs accounted for EUP 4,200 1,470 Cost per EUP $12.80 $17.20 Total cost $53,760 $25,284 $79,044 $541,044

Workings: Under weighted average method, equivalent units are to be calculated only for units completed & transferred out and units lying as ending work in process as it is assumed that the units once entered into the process become integral part of total units and no segregation between units transferred from beginning work in process and introduced during current process. Conversion cost includes Labor + Overheads. So, Physical units of production: Units in beginning inventory Add: Units started during the month Less: Units in ending inventory Units completed and transferred out 4,600 15,000 -4,200 15,400 Equivalent Units of Production (EUP) % EUP- Particulars Whole Units Conversion Conversion Direct Materials 100% 100% EUP- Direct Materials 15,400 4,200 19,600 Completed and transferred Ending work in process Equivalent Units of Production (EUP) 15,400 4,200 19,600 100% 35% 15,400 1,470 16,870 [15400 x 100% for both cases] [4200 x 100%; 4200 x 35%]

Cost per equivalent units of production Conversion Direct Materials $3,480 $247,400 $250,880 19,600 $12.80 Cost of beginning work in process Cost added during the period Total Materials Costs & Conversion Costs Divided by Equivalent units of Production (EUP) Cost per Equivalent units of Production [Conversion = $159,680 + $123,506] $6,978 $283,186 $290,164 16,870 $17.20 [As computed EUP schedule presented above] $250880 / 19600 units = $12.8; $290164 / 16870 units = $17.2] Cost of goods completed & transferred EUP Totals Cost per EUP $12.80 $17.20 Direct Materials Conversion Total Cost of goods completed & transferred 15,400 15,400 $197,120 $264,880 $462,000 [15400 units x $12.8] [15400 units x $17.2] Cost of ending work-in-process EUP Totals Cost per EUP $12.80 $17.20 Direct Materials Conversion Total cost of ending work-in-process 4,200 1,470 $53,760 $25,284 $79,044 [4200 units x $12.8] [1470 units x $17.2]