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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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Question: Spring Fresh produces premium bottled water. Spring Fresh purchases artesian water, stores the water in large tanks, and then runs the water through two processes: filtration and bottling.
During February, the filtration process incurred the following costs in processing
200,000 liters:
Wages of workers operating filtration equipment | $19,950 |
Manufacturing overhead allocated to filtration | 20,050 |
Water | 110,000 |
Spring Fresh had no beginning Work-in-Process Inventory in the Filtration Department in February and uses the weighted-average method.
Requirements
1. Compute the February conversion costs in the Filtration Department.
2. The Filtration Department completely processed 200,000 liters in February. What was the filtration cost per liter?
Color Explosion prepares and packages paint products. Color Explosion has two departments: Blending and Packaging. Direct materials are added at the beginning of the blending process (dyes) and at the end of the packaging process (cans). Conversion costs are added evenly throughout each process. The company uses the weighted- average method. Data from the month of May for the Blending Department are as follows:
Gallons | |
Beginning work-in-process inventory | 0 gallons |
Started in production | 8,500 gallon |
Completed and transferred out to packaging in may | 6,500 gallon |
Ending work-in-process inventory (30% of the way through the blending process) | 2,000 gallon |
Costs | |
Beginning work-in-process inventory | \(0 |
Costs added during May: | |
| 5,525 |
| 1,500 |
| 2,547 |
Total costs added during May | \)9,572 |
Requirements
1. Compute the Blending Department’s equivalent units of production for direct
materials and for conversion costs.
2. Compute the total costs of the units (gallons)
a. completed and transferred out to the Packaging Department.
b. in the Blending Department ending Work-in-Process Inventory.
Bishop Company uses the FIFO method in its process costing system. The Mixing Department started the month with 500 units in a process that was 20% complete, started in the production of 2,000 units, and transferred 2,100 units to the finished goods storage area. All materials are added at the beginning of the process, and conversion costs occur evenly. The units in process at the end of the month are 45% complete concerning conversion costs. The department incurred the following costs:
Beginning WIP | Added this month | Total | |
Direct materials | \(500 | \)2,000 | \(2,500 |
Conversion cost | 1,250 | 5,450 | 6,700 |
Total | \)1,750 | \(7,450 | \)9,200 |
14A. How many units are still in process at the end of the month?
15A. Compute the equivalent production units for the Mixing Department for the current month.
16A. Determine the cost per equivalent unit for the current period for direct materials and conversion costs.
17A. Determine the cost to be transferred to the next department.
Question: What are the four steps in preparing a production cost report?
Salish Craft Beers provides the following information for the Malting Department for the month of August 2018:
| UNITS | COSTS | |
Beginning Work-in-Process Inventory | 0 | \(0 |
Started in Production in August | 26,000 | 54,000* |
Total to Account For | 26,000 | \)54,000 |
Completed and Transferred to Packaging Department during August | 21,000 | ? |
Ending Work-in-Process Inventory (30% complete for direct materials and 60% complete for conversion work) | 5,000 | ? |
Total Accounted For | 26,000 | \(54,000 |
* Includes \)18,000 direct materials and $36,000 conversion costs |
Requirements
Complete a production cost report for the Malting Department for the month of August 2018 to determine the cost of the units completed and transferred out, and the cost of the ending Work-in-Process Inventory. Assume Salish Craft Beers uses the weighted average method.
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