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Chapter 18: Q14RQ (page 1006)
What is the weighted-average method for process costing systems?
The weighted average method for the process costing system combines the beginning work-in-process cost and the cost added into the cost pool.
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Mayhem Electronics makes game consoles in three processes: assembly, programming, and packaging. Direct materials are added at the beginning of the assembly process. Conversion costs are incurred evenly throughout the process. The Assembly Department had no Work-in-Process Inventory on March 31. In mid-April, Mayhem Electronics started production on 99,000 game consoles. Of this number, 95,000 game consoles were assembled during April and transferred out to the Programming Department. The April 30 Work-in-Process Inventory in the Assembly Department was 45% of the way through the assembly process. Direct materials costing \(301,950 were placed in production in Assembly during April, direct labor of \)100,960 was assigned, and manufacturing overhead of $136,200 was allocated to that department.
Requirements
1. Prepare a production cost report for the Assembly Department for April. The
company uses the weighted-average method.
2. Prepare a T-account for Work-in-Process Inventory鈥擜ssembly to show its activity during April, including the April 30 balance.
Question: The Finishing Department of Lee and Lewis, Inc., the last department in the manufacturing process, incurred production costs of \(220,000 during the month of June.If the June 1 balance in Work-in-Process Inventory鈥擣inishing is \)0 and the June 30balance is $70,000, what amount was transferred to Finished Goods Inventory?
Happy Colors manufactures crayons in a three-step process: mixing, molding, and packaging. The Mixing Department combines the direct materials of paraffin wax and pigments. The heated mixture is pumped to the Molding Department, where it is poured into molds. After the molds cool, the crayons are removed from the molds and are transferred to the Packaging Department, where paper wrappers are added and the crayons are boxed.
In the Mixing Department, the direct materials are added at the beginning of the
process and the conversion costs are incurred evenly throughout the process. Work in process of the Mixing Department on April 1, 2018, consisted of 300 batches of crayons that were 30% of the way through the production process. The beginning balance in Work-in-Process Inventory鈥擬ixing was \(27,800, which consisted of \)10,700 in direct materials costs and $17,100 in conversion costs. During April, 3,200 batches were started in production. The Mixing Department transferred 2,800 batches to the Molding Department in April, and 700 were still in process on April 30. This ending inventory was 80% of the way through the mixing process. Happy Colors uses FIFO process costing.
At April 30, before recording the transfer of costs from the Mixing Department
to the Molding Department, the Happy Colors general ledger included the following account:
Work-in-process inventory 鈥� Mixing
Balance, March 1 | 27,800 | ||
Direct materials | 22,400 | ||
Direct labor | 21,330 | ||
Manufacturing overhead | 44,070 |
Requirements
1. Prepare a production cost report for the Mixing Department for April. Round
equivalent unit costs to four decimal places. Round all other costs to the nearest
dollar.
2. Journalize all transactions affecting the Mixing Department during April, including the entries that have already been posted. Assume the labor costs are accrued and not yet paid.
Refer to Short Exercise S18-5. At Spring Fresh, water is added at the beginning of the filtration process. Conversion costs are added evenly throughout the process. Now assume that in February, 155,000 liters were completed and transferred out of the Filtration Department into the Bottling Department. The 45,000 liters remaining in Filtration鈥檚 ending Work-in-Process Inventory were 80% of the way through the filtration process. Recall that Spring Fresh has no beginning inventories.
Compute the equivalent units of production for direct materials and conversion
costs for the Filtration Department.
Most companies using a process costing systems have to calculate more than one EUP. Why? How many do they have to calculate?
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