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    Practice Problems With Answers - Process Costing Average Method

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    Andrea Valdez
    Four Seasons Company uses the weighted-average process costing method. In September, it began with 1,600 units at 40% completion and ended the month at 60% completion. It started 2,000 units and completed 3,200 units. Total conversion costs were $200,000 and materials costs were $260,000. Equivalent units were calculated to assign costs to completed and ending work-in-process units. Journal entries were made to record the transfer of materials into work-in-process and the transfer of completed units into finished goods.

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    Practice Problems With Answers - Process Costing Average Method

    Uploaded by

    Andrea Valdez
    131 views3 pages
    Four Seasons Company uses the weighted-average process costing method. In September, it began with 1,600 units at 40% completion and ended the month at 60% completion. It started 2,000 units and completed 3,200 units. Total conversion costs were $200,000 and materials costs were $260,000. Equivalent units were calculated to assign costs to completed and ending work-in-process units. Journal entries were made to record the transfer of materials into work-in-process and the transfer of completed units into finished goods.

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    Practice Problems with Answers - Process Costing Average Method

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    Four Seasons Company uses the weighted-average process costing method. In September, it began with 1,600 units at 40% completion and ended the month at 60% completion. It started 2,000 units and completed 3,200 units. Total conversion costs were $200,000 and materials costs were $260,000. Equivalent units were calculated to assign costs to completed and ending work-in-process units. Journal entries were made to record the transfer of materials into work-in-process and the transfer of completed units into finished goods.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    131 views3 pages

    Practice Problems With Answers - Process Costing Average Method

    Uploaded by

    Andrea Valdez
    Four Seasons Company uses the weighted-average process costing method. In September, it began with 1,600 units at 40% completion and ended the month at 60% completion. It started 2,000 units and completed 3,200 units. Total conversion costs were $200,000 and materials costs were $260,000. Equivalent units were calculated to assign costs to completed and ending work-in-process units. Journal entries were made to record the transfer of materials into work-in-process and the transfer of completed units into finished goods.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    of 3

    Problem 1

    Four Seasons Company makes snow blowers. Materials are added at the beginning of the process and conversion costs
    are uniformly incurred. At the beginning of September, work in process is 40% complete and at the end of the month it is
    60% complete. Other data for the month include:

    Beginning work-in-process inventory 1,600 units


    Units started 2,000 units
    Units placed in finished goods 3,200 units

    Conversion costs P200,000


    Cost of direct materials P260,000
    Beginning work-in-process costs:
    Materials P154,000
    Conversion P 82,080

    The company uses the weighted-average method of process costing.

    Required:
    Determine the following:
    1. Units to account for
    2. Units accounted for
    3. Equivalent units for material
    4. Equivalent units for conversion costs
    5. Total costs to account for
    6. Cost per equivalent unit for material
    7. Cost per equivalent unit for conversion costs
    8. Cost of units transferred out
    9. Cost of ending work in process
    10. Prepare journal entries to record transferring of materials to processing and from processing to finished goods.

    1 of 12
    Answer:

    Physical Direct
    Flow of Production
    Units Materials Conversion
    Work in process, beginning 1,600
    Started during period 2,000
    To account for 3,600

    Units completed 3,200 3,200 3,200


    Work in process, ending 400 400 240
    Accounted for 3,600 3,600 3,440

    Costs Totals Direct Materials Conversion


    Work in process, beginning P236,080 P154,000 P 82,080
    Costs added during period 460,000 260,000 200,000
    Total costs to account for P696,080 P414,000 P282,080
    Divided by equivalent units 3,600 3,440
    Equivalent-unit costs P197 P 115 P 82

    Assignment of costs
    Completed units (3,200 x P197) P630,400
    Work in process, ending
    Direct materials (400 x P115) P46,000
    Conversion (400 x P82 x 0.60) 19,680 65,680
    Costs accounted for P696,080

    10.

    Work in Process P260,000


    Materials Inventory P260,000
    Finished Goods P630,400
    Work in Process P630,400

    Problem 2
    Power Corporation uses the weighted-average method in its process costing system. This month, the beginning
    inventory in the first processing department consisted of 400 units. The costs and percentage completion of these units in
    beginning inventory were:
    Percent
    Cost Complete
    Materials costs P5,700 65%
    Conversion costs P6,800 45%

    A total of 6,500 units were started and 5,900 units were transferred to the second processing department during the
    month. The following costs were incurred in the first processing department during the month:
    Materials costs P125,500
    Conversion costs P207,000

    The ending inventory was 50% complete with respect to materials and 35% complete with respect to conversion costs.

    Note: Your answers may differ from those offered below due to rounding error. In all cases, select the answer that is the
    closest to the answer you computed. To reduce rounding error, carry out all computations to at least three
    decimal places.

    1. What are the equivalent units for conversion costs for the month in the first processing department?
    A) 6,250 B) 5,900 C) 350 D) 6,900
    Answer: A Level: Medium LO: 2,3

    2. The cost per equivalent unit for materials for the month in the first processing department is closest to:
    A) P19.01 B) P19.61 C) P20.50 D) P18.19

    2 of 12
    Answer: C Level: Medium LO: 4

    3. The cost per equivalent unit for conversion costs for the first department for the month is closest to:
    A) P30.99 B) P35.92 C) P33.12 D) P34.21

    4. The cost per equivalent whole unit for the month in the first processing department is closest to:
    A) P58.47 B) P50.00 C) P57.99 D) P54.71
    Answer: D Level: Medium LO: 4

    5. The total cost transferred from the first processing department to the next processing department during the month
    is closest to:
    A) P332,500 B) P345,000 C) P322,777 D) P377,485
    Answer: C Level: Medium LO: 5

    6. The cost of ending work in process inventory in the first processing department according to the company's cost
    system is closest to:
    A) P19,148 B) P22,223 C) P54,708 D) P27,354
    Answer: B Level: Medium LO: 5

    3 of 12

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