Chapter 6

Process Costing

Cost Accounting

Job order costing Process costing

COLA

Process Costing Systems

Large quantity of identical unitsCola

Job Order Assign costs to job

and then to units within the job

Process Costing Using an averaging

technique, assign costs directly to units produced during the period

Averaging technique to assign costs to units produced

Unit Cost = Production Costs Production Quantity

The Numerator - Production Costs◦ Accumulate costs by department◦ Accumulate costs by product◦ Direct material from material requisitions◦ Direct labor from time sheets and wage rates◦ Overhead Actual Predetermined application rates

Unit Cost = Production Costs Production Quantity

Process Costing

• Production Costs– Direct material from material requisitions– Direct labor from time sheets and wage rates– Overhead

• Actual • Predetermined application rates

Materials Requisition Form

Date ___________________ No. ###

Job No. _________________

Authorized by ___________

Department _______________Issued by _________________Inspected by _______________

Item Part Unit of Quantity Quantity Unit Total

No. No. Descrip. Measure Required Issued Cost Cost

Received by _____________

Employee Time SheetEmployee Name _______________

Employee No. _______________

Department _______________

For week ending

_______

Start Stop Total Type of Work Job No. Time Time Day Hours

Employee Signature Supervisor’s Signature

The Denominator - Units Produced Complicated by work in process

◦ Units started last period and completed this period

◦ Units started this period and not completed Convert partially completed units to

equivalent whole units

Unit Cost = Production Costs Production Quantity

Approximation of the number of whole units of output that could have been produced from the actual effort expended

Includes units◦ started last period and finished this period◦ started and finished this period◦ started this period and not finished

Assumes FIFO physical flow through the production department

Weighted Average Method◦ combines beginning work in process current period production

FIFO Method◦ separates beginning work in process current period production

Weighted AverageBeginning WIP 100%Started and finished 100%Ending WIP % completedFIFOBeginning WIP % completedStarted and finished 100%Ending WIP % completed

THEDIFFERENCE

Direct material◦ added at the beginning, during, and/or at the

end of process Direct labor

◦ added throughout the process Overhead

◦ added throughout the process based on direct labor based on other, multiple cost drivers

1 Units to account for2 Units accounted for3 Determine equivalent units4 Costs to account for5 Compute cost per equivalent unit6 Assign costs to inventories

Units

Costs

Cost of Production ReportName of Department

for the period ---

Production Data:Units to account forUnits accounted for EUP for each cost

Cost Data:Costs to account forCost per EUP

Cost Assignment:Transferred OutEnding Work In Process Inventory

1 2

3

4

56

Beginning WIP 5,000Started 200,700Units to account for205,700

Step 2 - Units Accounted For

Finished and transferred 203,000

Ending WIP 2,700

Units accounted for 205,700

Beginning WIP 5,000Started 200,700Units to account for 205,700

mustbeequal

Step 3 - Compute Equivalent Units

DM ConversionBeginning WIP inventory 5,000 5,000Started and completed 198,000 198,000Ending WIP inventory 2,700 2,160* Equivalent units 205,700205,160

* ending units * % complete2,700 * 80% = 2,160

Weighted Average Method

Step 4 - Costs to Account For

DM Conversion TotalBeginning WIP $ 5,943 $ 16,758 $ 22,701 Current costs 321,120 660,270 981,390To account for $327,063 $677,028 $1,004,091

Weighted Average Method

Step 5 - Cost per Equivalent Unit

Divide by EUP 205,700 205,160

Cost per EUP $1.59 + $3.30 = $4.89

Weighted Average Method

DM Conversion TotalBeginning WIP $ 5,943 $ 16,758 $ 22,701 Current costs 321,120 660,270 981,390To account for $327,063 $677,028 $1,004,091

Step 6 - Assign Costs to Inventories

Transferred (203,000 * $4.89) $992,670Ending WIP Inventory Direct Materials (2,700 * $1.59) $ 4,293 Conversion Costs (2,700 * 80% * $3.30) 7,128 11,421Cost accounted for $1,004,091**must agree with costs to account for

Weighted Average Method

TransferredOut Ending

WIP

Emphasizes current period costs and production

Steps 1 and 2 are the same

Process Costing - FIFO• Step 3

DM ConversionBeginning WIP/completed 0 3,000*Started and completed 198,000 198,000Ending WIP Inventory 2,700 2,160 Equivalent units 200,700 203,160

* beginning units * % complete in current period5,000 * 60% = 3,000

Process Costing - FIFO

• Step 4 is the same

• Step 5DM Conversion Total

Current costs $321,120 $660,270 $981,390

Divide by EUP 200,700 203,160

Cost per EUP $1.60 + $3.25 = $4.85

Step 6 Assign Costs to Inventories - FIFO

Transferred Beginning WIP Inventory $22,701 Cost to complete Conversion (3,000 * $3.25) 9,750 $ 32,451 Started and completed (198,000 * $4.85) 960,300Total cost transferred $992,751Ending inventory Direct Materials (2,700 * $1.60) $4,320Conversion Costs (2,7000 * 80% * $3.25) 7,020 11,340Cost accounted for $1,004,091**must agree with costs to account for

TransferredOut Ending

WIP

Weighted Average EUP DM

205,700 EUP Conversion 205,160 Cost per unit DM $ 1.59 Cost per unit Conv. 3.30 Total $4.89 Transferred Out $992,670 Ending WIP 11,421 Total

$1,004,091

FIFO EUP DM

200,700 EUP Conversion 203,160 Cost per unit DM $ 1.60 Cost per unit Conv. 3.25 Total $ 4.85 Transferred Out $

992,751 Ending WIP 11,340 Total

$1,004,091

The purpose of the six steps ◦ Assign a value to ending work in process◦ Assign a value to items transferred out◦ Prepare this journal entry

Finished Goods

Work in ProcessorTransferred In Cost (successor department)

Work in Process (current department)

Beginning Work in Process Inventory  (25% complete as to conversion) 10,000 unitsStarted 120,000 unitsEnding Work in Process Inventory

  (30% complete as to conversion) 30,000 unitsBeginning Work in Process Inventory Costs:

  Material $  2,100

  Conversion 2,030Current Period Costs:

  Material $ 33,000

  Conversion 109,695

Landers Company

Landers Company has the following information available for May:

All material is added at the start of production and all products completed are transferred out.

1. Refer to Landers Company. Prepare an equivalent units schedule using

(a)FIFO method(b) Weighted average method.

2. Refer to Landers Company. Prepare a schedule showing the computation for cost per equivalent unit assuming the

(a) FIFO method (b) Weighted average method.

3. Refer to Landers Company. Prepare a schedule showing the assignment of costs assuming the

(a)FIFO method(b)Weighted average method.

REQUIRED:

Landers CompanySchedule of Equivalent Units for

FIFO and Weighted AverageMay 31, 20X5

FIFO Weighted Average

Beginning Work In Process 10,000 Beginning Work In Process

10,000

Units Started 120,000 Units Started 120,000Units to Acct. For 130,000 Units to Acct. For 130,000

Beginning Work In Process 10,000 Transferred Out 100,000

Started & Completed 90,000 Ending Work in Process

30,000

Ending Work in Process 30,000 Units Accounted For

130,000

Units Accounted For 130,000

(a) FIFO (b) Weighted Average

Mat. CC Mat. CC

BWIP 0 7,500

S & C 90,000 90,000 TO 100,000 100,000

EWIP 30,000 9,000 EI 30,000 9,000

EUP 120,000 106,500 EUP 130,000 109,000

Landers CompanySchedule of Average Cost Per Unit

FIFO and Weighted AverageMay 31, 20X5

(a) FIFO (b) Weighted Average

Mat. CC Mat. CC

Costs $33,000 $109,695 $ 35,100 $111,725

Eq Units 120,000  106,500  130,000  109,000

$.275/eq unit $ 1.03/eq unit

$.27/eq unit

$  1.025/eq unit

Total cost/eq. unit

$  1.305/eq unit

$  1.295/eq unit

Landers CompanySchedule of Assigned Costs

FIFO May 31, 20X5

Beginning Work in Process $  4,130To complete beginning inventory(7,500 x $1.03)

   7,725

$ 11,855Started and Completed90,000 x $1.305 =  117,450Total costs transferred out $129,305Ending Work in Process30,000 x $ .275 = $  8,2509,000 x $1.03 =   9,270Cost of ending inventory $ 17,520Total costs accounted for $146,825

Completed

100,000 x $1.295 = $129,500

Ending Work in Process

30,000 x $ .27 = $  8,100

9,000 x $1.025 =    9,225

$ 17,325

Total costs accounted for $146,825

Landers CompanySchedule of Assigned Costs

Weighted AverageMay 31, 20X5

Beginning Work in Process Inventory

  (45% complete as to conversion) 10,000 units

Started this period 120,000 units

Ending Work in Process Inventory

  (80% complete as to conversion) 8,200 units

Beginning Work in Process Inventory Costs:

  Material $24,500

  Conversion 68,905

Current Period Costs:

  Material $ 75,600

  Conversion 130,053

Maxwell Company

Maxwell Company adds material at the start of production. The following production information is available for June:

1. How many units must be accounted for?2.What is the total cost to account for?3.How many units were started and completed in the period?4.What are the equivalent units for material using the weighted average

method?5.What are the equivalent units for material using the FIFO method?6.What are the equivalent units for conversion using the weighted average

method?7.What are the equivalent units for conversion using the FIFO method?8.What is the material cost per equivalent unit using the weighted average

method?9.What is the conversion cost per equivalent unit using the weighted

average method?10.What is the cost of units completed using the weighted average?11.What is the conversion cost per equivalent unit using the FIFO

method?12.What is the cost of all units transferred out using the FIFO method?

ANSWERS:

1.130,0002. $299,0583. 111,8004. 130,0005. 120,0006. 128,3607. 123,8608. $.779. $1.5510. $282,57611. $1.0512. $287,004

a. 37,800b. 40,200c. 40,800d. 42,000

Taylor Company uses a weighted average process costing system and started 30,000 units this month. Taylor had 12,000 units that were 20 percent complete as to conversion costs in beginning Work in Process Inventory and 3,000 units that were 40 percent complete as to conversion costs in ending Work in Process Inventory.

What are equivalent units for conversion costs?

a. 3,450

b. 4,560

c. 4,610

d. 4,910

Kerry Company makes small metal containers. The company began December with 250 containers in process that were 30 percent complete as to material and 40 percent complete as to conversion costs. During the month, 5,000 containers were started. At month end, 1,700 containers were still in process (45 percent complete as to material and 80 percent complete as to conversion costs).

Using the weighted average method, what are the equivalent units for conversion costs?

a. 18,000b. 22,000c. 25,000d. 27,000

Mehta Company Co. uses a FIFO process costing system. The company had 5,000 units that were 60 percent complete as to conversion costs at the beginning of the month. The company started 22,000 units this period and had 7,000 units in ending Work in Process Inventory that were 35 percent complete as to conversion costs. What are equivalent units for material, if material is added at the beginning of the process?

a. 3,295b. 3,395c. 3,450d. 3,595

Julia Company makes fabric-covered hatboxes. The company began September with 500 boxes in process that were 100 percent complete as to cardboard, 80 percent complete as to cloth, and 60 percent complete as to conversion costs. During the month, 3,300 boxes were started. On September 30, 350 boxes were in process (100 percent complete as to cardboard, 70 percent complete as to cloth, and 55 percent complete as to conversion costs).

Using the FIFO method, what are equivalent units for cloth?

Simplify costing process Eliminate periodic cost recomputations Same as FIFO computations

◦ emphasize current period costs and production Inventories are stated at standard cost Variances are calculated for material,

labor, and overhead

Multidepartment Processing

Process 1

Process 3

Process 2

FinishedProduct

MaterialsWait

Wait

Transferred-inCosts

Transferred-InCost

Process Costing with Standard Costs• Assigns a “normal” production cost to the

equivalent units of output each period• Allows managers to quickly recognize and

investigate significant deviations from expected production costs

• Allows benchmarking with other firms

Characteristics of job order and process costing systems

Various product lines◦ different direct material - job order costing◦ different direct labor – job order costing◦ same process - process costing

Hybrid costing used for furniture, clothing, jam

• There are two alternative methods to calculate Weighted Average and FIFO equivalent units of production (EUP)

• Use alternative methods – To confirm standard computation– As a simplified computation

Appendix 1 – Alternative Cost Computation

Conversion Costs WA FIFOBeginning WIP inventory 5,000 3,000Started and completed 198,000 198,000Ending WIP inventory 2,160 2,160Equivalent units 205,160 203,160

Units transferred out (whole units)

Plus Ending work in process (equivalent units)

Weighted average equivalent units (EUP)

Less Beginning work in process (equivalent units)

FIFO equivalent units (EUP)

Appendix 1 – Alternative Cost Computation 1

Conversion CostsCandles transferred 203,000Ending WIP EUP 2,160Weighted Average EUP 205,160Beginning WIP EUP (2,000)FIFO EUP 203,160

Total units to account forLess EUP to be completed next period

Weighted Average EUPLess EUP completed in prior period FIFO EUP

Appendix 1 – Alternative Cost Computation 2

Conversion Costs

Total units to account for 205,700

EUP to be completed next period (540)

Weighted Average EUP 205,160

EUP completed in prior period (2,000)

FIFO EUP 203,160

Appendix 1 – Alternative Cost Computation 2

Continuous loss◦ Loss occurs fairly uniformly through the process

Discrete loss◦ Loss occurs at a specific point and is detectable

only when a quality check is performed

Use Method of Neglect◦ Excludes spoiled units in the equivalent units schedule◦ Spreads cost of lost units proportionately over the

good units transferred and those remaining in WIP inventory

NOTE: Cost of Normal spoilage = 0

• Normal shrinkage and discrete losses– Assign costs only to units that have passed the

inspection point

INSPECTION POINT> PERCENTAGE OF COMPLETION ASSIGNED TO TRANSFERRED

OUT UNITS

INSPECTION POINT < PERCENTAGE OF COMPLETION

ASSIGNED TO TRANSFERRED OUT UNITS AND ENDING INVENTORY

SPOILAGE ( NORMAL AND DISCRETE )

• Abnormal losses – Period expense– ALWAYS accounted for on an equivalent unit

basis

SPOILAGE ( ABNORMAL)

NormalSpoilage

AbnormalSpoilage

ContinuousLoss

DiscreteLoss

Loss in all ending

inventory and transferred out units on an EUP

basis

Period expensein EUP

Period expensein EUP

SPOILAGE

Loss in all units passed inspection

point in ending inventory and

transferred out on an EUP basis

Beginning Work in Process Costs of Beginning Work in Process:

(75% complete)

14,500 units Material $25,100

Started 75,000 units Conversion 50,000

Ending Work in Process Current Costs:

(60% complete)

16,000 units Material $120,000

Abnormal spoilage

2,500 units Conversion 300,000

Normal spoilage (continuous)

5,000 units

Transferred out 66,000 units

Talmidge CompanyThe following information is available for Talmidge Company for the current year:

All materials are added at the start of production.

COMPUTE THE FOLLOWING USING WEIGHTED AVERAGE

1. EUP –MATERIALS2. EUP- CONVERSION COST3. COST PER EUP-MATERIALS4. COST PER EUP-CONVERSION COST5. COST ASSIGNED TO NORMAL SPOILAGE6. ASSUMING THAT COST PER EUP-MATERIALS=1.75

AND COST PER EUP- CC= 4.55, WHAT IS THE COST ASSIGNED TO ENDING WORK IN PROCESS?

COMPUTE THE FOLLOWING USING WEIGHTED AVERAGE

1. EUP –MATERIALS= 84,5002. EUP- CONVERSION COST= 78,1003. COST PER EUP-MATERIALS= 1.724. COST PER EUP-CONVERSION COST= 4.485. COST ASSIGNED TO NORMAL SPOILAGE- 0, NO

COSTS ARE ASSIGNED TO NORMAL , CONTINUOUS SPOILAGE. HIGHER COSTS ARE ASSIGNED TO GOOD UNITS PRODUCED

6. ASSUMING THAT COST PER EUP-MATERIALS=1.75 AND COST PER EUP- CC= 4.55, WHAT IS THE COST ASSIGNED TO ENDING WORK IN PROCESS?= 71,680

Units started 100,000 unitsBeginning Work in Process: (35% complete)

20,000 units

Normal spoilage (discrete) 3,500 unitsAbnormal spoilage 5,000 unitsEnding Work in Process: (70% complete) 14,500 unitsTransferred out 97,000 unitsBeginning Work in Process Costs:

  Material $15,000  Conversion 10,000

Bowman CompanyBowman Company has the following information for July:

All materials are added at the start of the production process. Bowman Company inspects goods at 75 percent completion as to conversion.

COMPUTE THE FOLLOWING USING THE FIFO METHOD:

1. EUP –MATERIALS2. EUP- CONVERSION COST3. COST PER EUP-MATERIALS4. COST PER EUP-CONVERSION COST5. ASSUMING THAT COST PER EUP-MATERIALS=1.00

AND COST PER EUP- CC= 1.50, WHAT IS THE AMOUNT OF THE PERIOD COST FOR JULY?

6. ASSUMING THAT COST PER EUP-MATERIALS=1.00 AND COST PER EUP- CC= 1.50, WHAT IS THE TOTAL COST ASSIGNED TO TRANSFERRED OUT UNITS?

COMPUTE THE FOLLOWING USING THE FIFO METHOD:

1. EUP –MATERIALS= 100,0002. EUP- CONVERSION COST= 106,6253. ASSUMING THAT COST PER EUP-MATERIALS=1.00

AND COST PER EUP- CC= 1.50, WHAT IS THE AMOUNT OF THE PERIOD COST FOR JULY?= 10,625

4. ASSUMING THAT COST PER EUP-MATERIALS=1.00 AND COST PER EUP- CC= 1.50, WHAT IS THE TOTAL COST ASSIGNED TO TRANSFERRED OUT UNITS?= 244,438

Started this month 80,000 unitsBeginning WIP  (40% complete) 7,500 unitsNormal spoilage (discrete) 1,100 unitsAbnormal spoilage 900 unitsEnding WIP  (70% complete) 13,000 unitsTransferred out 72,500 unitsBeginning Work in Process Costs:  Material $10,400  Conversion 13,800Current Costs:  Material $120,000  Conversion 350,000

Jones CompanyThe following information is available for Jones Company for April:

All materials are added at the start of production and the inspection point is at the end of the process.

COMPUTE THE FOLLOWING USING THE WEIGHTED AVERAGE METHOD:

1. EUP –MATERIALS2. EUP- CONVERSION COST3. COST PER EUP-MATERIALS4. COST PER EUP-CONVERSION COST5. WHAT IS THE COST ASSIGNED TO NORMAL

SPOILAGE AND HOW IS IT CLASSIFIED?6. WHAT IS THE TOTAL COST ASSIGNED TO GOODS

TRANSFERRED OUT?

COMPUTE THE FOLLOWING USING THE WEIGHTED AVERAGE METHOD:

1. EUP –MATERIALS = 87,5002. EUP- CONVERSION COST= 83,6003. COST PER EUP-MATERIALS= 1.494. COST PER EUP-CONVERSION COST= 4.355. WHAT IS THE COST ASSIGNED TO NORMAL

SPOILAGE AND HOW IS IT CLASSIFIED?= 6,424 ASSIGNED TO TRANSFERRED OUT UNITS

6. WHAT IS THE TOTAL COST ASSIGNED TO GOODS TRANSFERRED OUT?= 429,824

South Company produces paint in a process in which spoilage occurs continually. Spoilage of 1 percent or fewer of the gallons of raw material placed into production is considered normal. The following operating statistics are available for June 2006:

Beginning inventory ( 60% complete as to material;70% complete as to conversion) 8,000 gallons

Started during June 180,000 gallons

Ending inventory( 40% complete as to material20% complete as to conversion ) 4,000 gallons

Spoiled 1,400 gallons

South Company produces paint in a process in which spoilage occurs continually. Spoilage of 1 percent or fewer of the gallons of raw material placed into production is considered normal. The following operating statistics are available for June 2006:

Beginning inventory ( 60% complete as to material;70% complete as to conversion) 8,000 gallons

Started during June 180,000 gallons

Ending inventory( 40% complete as to material20% complete as to conversion ) 4,000 gallons

Spoiled 1,400 gallons

1. How many gallons were transferred out?

2. What are the FIFO equivalent units of production for Material? For Conversion?

1. How many gallons were transferred out?

2. What are the FIFO equivalent units of production for Material? For Conversion?

Weezer Plastics uses the Weighted Average process costing system, and company management has specified that the normal loss from shrinkage cannot exceed 5% of the units started in a period. All raw material is added at the start of the production process. March processing information follows:

Beginning inventory ( 30% complete as to conversion ) 10,000 units

Started during March 60,000 units

Completed during March 58,200 units

Ending inventory( 20% complete as to conversion) 8,000 units

Weezer Plastics uses the Weighted Average process costing system, and company management has specified that the normal loss from shrinkage cannot exceed 5% of the units started in a period. All raw material is added at the start of the production process. March processing information follows:

Beginning inventory ( 30% complete as to conversion ) 10,000 units

Started during March 60,000 units

Completed during March 58,200 units

Ending inventory( 20% complete as to conversion) 8,000 units

A. How many units are there to account for?B. How many units should be treated as normal

loss?C. How many units should be treated as abnormal

loss?D. What are the equivalent units of production for

direct material? For conversion?E. How are costs associated with the normal

spoilage handled?F. How are costs associated with the abnormal

spoilage handled?

A. How many units are there to account for?B. How many units should be treated as normal

loss?C. How many units should be treated as abnormal

loss?D. What are the equivalent units of production for

direct material? For conversion?E. How are costs associated with the normal

spoilage handled?F. How are costs associated with the abnormal

spoilage handled?

Rodin Inc. produces small plastic toys. As the raw material is heated, shrinkage occurs. Management believes that shrinkage of less than 8% is normal. All direct material is entered at the beginning of the process. March 2006 data as follow:

Beginning inventory ( 30% complete as to conversion) 18,000 lbs.Started during the month 60,000 lbs.Transferred 63,000 lbs.Ending inventory 10,800 lbs.Loss ? lbs.

The following costs are associated with March production:Beginning inventory:

Material 7,000Conversion 5,400 12,400

Current period:Material 19,530Conversion 17,928 37,458

Total costs 49,858

Rodin Inc. produces small plastic toys. As the raw material is heated, shrinkage occurs. Management believes that shrinkage of less than 8% is normal. All direct material is entered at the beginning of the process. March 2006 data as follow:

Beginning inventory ( 30% complete as to conversion) 18,000 lbs.Started during the month 60,000 lbs.Transferred 63,000 lbs.Ending inventory 10,800 lbs.Loss ? lbs.

The following costs are associated with March production:Beginning inventory:

Material 7,000Conversion 5,400 12,400

Current period:Material 19,530Conversion 17,928 37,458

Total costs 49,858

Prepare a March 2006 cost of production report for Rodin Inc. using FIFO process costing

Prepare a March 2006 cost of production report for Rodin Inc. using FIFO process costing

Cooking Department:

Beginning WIP (30% complete as to conversion) 4,500 units

Units started this period 15,000 unitsEnding WIP (60% complete as to conversion) 2,400 unitsPackaging Department:

Beginning WIP (90% complete as to material, 80% complete as to conversion)

1,000 units

Units started during period ?Ending WIP (80% complete as to material and 80% complete as to conversion)

500 units

The Sweet Temptations Company has two processing departments, Cooking and Packaging. Ingredients are placed into production at the beginning of the process in Cooking, where they are formed into various shapes. When finished, they are transferred into Packaging, where the candy is placed into heart and tuxedo boxes and covered with foil. All material added in Packaging is considered as one material for convenience. Since the boxes contain a variety of candies, they are considered partially complete until filled with the appropriate assortment. The following information relates to the two departments for February 20X7:

a. Determine equivalent units of production for both departments using the weighted average method.

b . Determine equivalent units of production for both departments using the FIFO method.

Cooking DepartmentMaterials Conversio

n CostsTransferred Out 17,100 17,100Ending Work in Process 2,400 1,440TOTAL EUP 19,500 18,540

Packaging Department

 

Transferred In

Materials ConversionCosts

Transferred Out 17,600 17,600 17,600Ending Work in Process   500   400   400TOTAL EUP 18,100 18,000 18,000

Cooking Department

Materials Conversion Costs

Beginning Work in Process 0 3,150Transferred 12,600 12,600Ending Work in Process 2,400 1,440TOTAL EUP 15,000 17,190

Packaging Department

Transferred In

Materials

Conversion Costs

Beginning Work in Process

0 100 200

Transferred from Cooking 16,600 16,600 16,600Ending Work in Process   500   400   400TOTAL EUP 17,100 17,100 17,200

Cost Transferred

from DEPARTMENT

1

Material Conversion

Costs

Total

Beginning Inventory

$ 17,050 $ 5,450 $ 22,500

Current Period Cost

184,000 $ 34,000 104,000  322,000

$ 201,050 $ 34,000 $ 109,450 $344,500

WIP-April 1 2,000 60% complete

Complete period transferred 20,000WIP-April 30 5,000 40%

complete

The following costs were accumulated by Department 2 of Hughes Company during April:

Production for April in Department 2 (in units):

Materials are not added in Department 2 until the very end of processing Department 2.

a.Weighted average inventory assumption

b.

FIFO inventory assumption

Required: Compute the cost of units completed and the value of ending WIP for:

End WIP 5,000x $8.042 = $40,210CC = 2,000 units x $4.975 =   9,950

$50,160

COGM = $344,500 - $50,160 = $294,340

a. Weighted average inventory assumption

b. FIFO inventory assumption

End WIP

5,000 units x $8.00 = $40,000

CC = 2,000 units x $5.00

= 10,000

$50,000

COGM = $344,500 - $50,000 = $294,500

Fabrication Department:

Beginning WIP (100% complete as to material ; 25% complete as to conversion)

5,000 units

Units started this period 40,000 unitsEnding WIP (100% complete as to material ;60% complete as to conversion)

6,800 units

Assembly Department:

Beginning WIP (0% complete as to material, 35% complete as to conversion)

2,000 units

Units started during period ?Ending WIP (0% complete as to material and 15% complete as to conversion)

6,100 units

The Sour Temptations Company has two processing departments, Fabrication and Assembly. Metal is placed into production in the Fabrication Department, where it is cut and formed into various components. These components are transferred to Assembly, where they are welded, polished and coated with imported material. Production data follow for these two departments for March 2006:

Compute the EUP for each department using

a.FIFOb.WEIGHTED AVERAGE