Concept explainers
Concept introduction:
Process costing systems is a system to assign the costs where the production goes through different processes. A product may take several processes to complete and when these processes are separable, the process costing system is applied to ascertain the cost of each process.
Weighted average method:
Weighted average method is one of the methods of process costing, under this method the cost of beginning work in process is mixed with the current period cost and weighted cost and equivalent units are calculated. In other words, the weighted average method does not teat the beginning work in process cost separately.
To indicate:
The Reconciliation of physical units and the calculation of number of equivalent units using the weighted average method
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Managerial Accounting
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- Friedman Company has a production process that involves three processes. Units move through the processes in this order: cutting, stamping, and then polishing. The company had the following transactions in November: View the transactions. Prepare the joumal entries for Friedman Company. (Record debits first, then credits. Exclude explanations from journal entries.) 1. Cost of units completed in the Cutting Department, $14,000 Date Nov. 30 Accounts Debit Credit Transactions 1. Cost of units completed in the Cutting Department, $14,000 2. Cost of units completed in the Stamping Department, $28,000 $39,000 3. Cost of units completed in the Polishing Department, 4. Sales on account, $40,000 5. Cost of goods sold is 80% of sales - Xarrow_forwardEyring Manufacturing produces a component used in its production of washing machines. The time to set up and produce a batch of the components is two days. The average daily usage is 800 components, and the maximum daily usage is 875 components. Required: Compute the reorder point assuming that safety stock is carried by Eyring Manufacturing. How much safety stock is carried by Eyring?arrow_forwardUsing the same data found in Exercise 6.22, assume the company uses the FIFO method. Required: Prepare a schedule of equivalent units, and compute the unit cost for the month of December. Fordman Company has a product that passes through two processes: Grinding and Polishing. During December, the Grinding Department transferred 20,000 units to the Polishing Department. The cost of the units transferred into the second department was 40,000. Direct materials are added uniformly in the second process. Units are measured the same way in both departments. The second department (Polishing) had the following physical flow schedule for December: Costs in beginning work in process for the Polishing Department were direct materials, 5,000; conversion costs, 6,000; and transferred in, 8,000. Costs added during the month: direct materials, 32,000; conversion costs, 50,000; and transferred in, 40,000.arrow_forward
- Dura-Conduit Corporation manufactures plastic conduit that is used in the cable industry. A conduit is a tube that encircles and protects the underground cable. In the process for making the plastic conduit, called extrusion, the melted plastic (resin) is pressed through a die to form a tube. Scrap is produced in this process. Information from the cost of production reports for three months is as follows, assuming that inventory remains constant: Assume that there is one-half pound of resin per foot of the finished product. a. Determine the resin materials cost per foot of finished product for each month. Round to the nearest whole cent. b. Determine the ratio of the number of resin pounds output in conduit by the number of pounds input into the process for each month. Round percentages to one decimal place. c. Interpret the resin materials cost per foot for the three months. Use the information in (a) and (b) to explain what is happening. d. Determine the conversion cost per foot of finished product for each month and interpret the result.arrow_forwardMorrison Company had the equivalent units schedule and cost information for its Sewing Department for the month of December, as shown on the next page. Required: 1. Calculate the unit cost for December, using the weighted average method. 2. Calculate the cost of goods transferred out, calculate the cost of EWIP, and reconcile the costs assigned with the costs to account for. 3. What if you were asked to show that the weighted average unit cost for materials is the blend of the November unit materials cost and the December unit materials cost? The November unit materials cost is 6.60 (66,000/10,000), and the December unit materials cost is 12.22 (550,000/45,000). The equivalent units in BWIP are 10,000, and the FIFO equivalent units are 45,000. Calculate the weighted average unit materials cost using weights defined as the proportion of total units completed from each source (BWIP output and current output).arrow_forwardFoamy Inc. manufactures shaving cream and uses the weighted average cost method. In November, production is 14,800 equivalent units for materials and 13,300 units for labor and overhead. During the month, materials, labor, and overhead costs were as follows: Beginning work in process for November had a cost of 11,360 for materials, 11,666 for labor, and 9,250 for overhead. Compute the following: a. Weighted average cost per unit for materials b. Weighted average cost per unit for labor c. Weighted average cost per unit for overhead d. Total unit cost for the montharrow_forward
- Jackson Products produces a barbeque sauce using three departments: Cooking, Mixing, and Bottling. In the Cooking Department, all materials are added at the beginning of the process. Output is measured in ounces. The production data for July are as follows: With respect to conversion costs. Required: 1. Prepare a physical flow schedule for July. 2. Prepare an equivalent units schedule for July using the weighted average method. 3. What if you were asked to calculate the FIFO units beginning with the weighted average equivalent units? Calculate the weighted average equivalent units by subtracting out the prior-period output found in BWIP.arrow_forwardNarwhal Swimwear has a beginning work in process inventory of 13,500 units and transferred in 130,000 units before ending the month with 14,000 units that were 100% complete with regard to materials and 30% complete with regard to conversion costs. The cost per unit of material is $5.80 and the cost per unit for conversion is $8.20 per unit. Using the weighted-average method, what is the amount of material and conversion costs assigned to the department for the month?arrow_forwardArdt-Barger has a beginning work in process inventory of 5.500 units and transferred in 25,000 units before ending the month with 3.000 u flits that were 100% complete with regard to materials and 80% complete with regard to conversion costs. The cost per unit of material is $5.45, and the cost per unit for conversion is $6.20 per unit, Using the weighted-average method, prepare the companys process cost summary for the month.arrow_forward
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