ABC Company manufactures a product through three process departments. In the fir
ID: 2340267 • Letter: A
Question
ABC Company manufactures a product through three process departments. In the first process, all direct materials are added at the beginning of the process. The following information pertains to the month of September Production units In process, September 1 (20% complete) Started during September In process, September 30 (60% complete) 1,000 units 5,000 units 1,500 units Manufacturing costs Work in process, beginning Direct materials Conversion costs $14,730 $45,000 $154,440 Assume the beginning balance of work in process includes direct materials $1,770 (1) Prepare production report for September using FIFO process costing (2) Prepare all necessary journal entries for the first process using FIFGO (3) Determine the ending balance of work in process using weighted averageExplanation / Answer
UNITS TO ACCOUNT FOR: Beginning Work in Process units 1,000 Add: Units Started in Process 5,000 Total Units to account for: 6,000 UNITS TO BE ACCOUNTED FOR: Units completed from Beginning WIP 1000 Units started and completed 3,500 Ending Work in Process 1,500 Total Units to be accounted for: 6,000 Equivalent Units: Material Cost Conversion % Completion Units % Completion Units Units completed from Beg. WIP 0% 0 80% 800 Units started and completed 100% 3,500 100% 3,500 Ending Work in Process 100% 1,500 80% 900 Total Equivalent units 5,000 5,200 COST PER EQUIVALENT UNIT: Material Conversion Total cost added during the year 45,000 154,440 Equivalent Units 5,000 5,200 Cost per Equivalent unit 9 29.7 TOTAL COST ACCOUNTED FOR: Units Completed from Beginning WIP (1000 units) Equivalent unit Cost per EU Total Cost Beginning Cost 14730 Material 0 9 0 Conversion Cost 800 29.7 23760 Cost of units completed from Beg WIP 38490 Units started and Transferred out (3500 units) Equivalent unit Cost per EU Total Cost Material 3,500 9 31500 Conversion Cost 3,500 29.7 103950 Total Cost of Units completed and transferred out: 135450 Ending Work in process (1500 units) Equivalent unit Cost per EU Total Cost Material 1,500 9 13500 Conversion Cost 900 29.7 26730 Total cost of Ending Work in process: 40,230 Cost of Goods completed 173940 Journal entries: S.no. Accounts title and explanation Debit $ Credit $ a. Work in process Inventory Dr. 45000 Raw material inventory 45000 b. Work in process inventory Dr. 154440 Manufacturing wages and overheads account 154440 c. Work in process Inventory-Second process Dr. 173940 Work in process inventory 173940 UNITS TO ACCOUNT FOR: Beginning Work in Process units 1,000 Add: Units Started in Process 5,000 Total Units to account for: 6,000 UNITS TO BE ACCOUNTED FOR: Units started and completed 4,500 Ending Work in Process 1,500 Total Units to be accounted for: 6,000 Equivalent Units: Material Cost Conversion % Completion Units % Completion Units Units started and completed 100% 4,500 100% 4,500 Ending Work in Process 100% 1,500 80% 900 Total Equivalent units 6,000 5,400 TOTAL COST TO ACCOUNT FOR: Material Conversion Beginning work in Process 1,770 12,960 Cost Added during May 45,000 154,440 Total Cost to account for: 46,770 167,400 Total Cost to account for: 214,170 COST PER EQUIVALENT UNIT: Material Conversion Total cost added during the year 46,770 167,400 Equivalent Units 6,000 5,400 Cost per Equivalent unit 7.795 31 TOTAL COST ACCOUNTED FOR: Ending Work in process (1500 units) Equivalent unit Cost per EU Total Cost Material 1,500 7.795 11692.5 Conversison Cost 900 31 27900 Total cost of Ending Work in process: 39,593