Midterm - Ch.

17
17-26 (Weighted-Average Method, Equivalent Units and Unit Costs)
Consider the following data for the assembly division of Cranberry Watches Inc.:
Physical Units Direct Materials Conversion Costs
Beg WIP (May 1)A 70 $494,000 $96,000
Started in May 2018 490
Completed during May 2018 470
Ending work in process (May 31)B 90
Costs added during May 2018 $3,205,000 $1,390,000
A - degree of completion: direct materials, 90%; conversion costs, 50%
B - degree of completion: direct materials, 65%; conversion costs, 35%
The assembly division uses the weighted-average method of process costing. Compute equivalent units
for direct materials and conversion costs. Show physical units in the first column of the schedule.
Flow of Production Physical Units Direct Materials Conversion Costs
Beg WIP 70
Stated during current period 490
To account for 560
Completed and transferred out during current period 470 470 470
End WIP 90 59* 32*
Accounted for 560 _____________ ______________
Work done to date 529 502
*90 units x 65% = 59 **90 units x 35% = 32
17-28 (FIFO Method, Equivalent Units)
Consider the following data for the assembly division of Quality TimePieces Inc.:
Physical Units Direct Materials Conversion Costs
Beg WIP (May 1)A 110 $543,000 $142,800
Started in May 2018 515
Completed during May 2018 465
Ending work in process (May 31)B 160
Costs added during May 2018 $3,690,000 $1,211,600
A - degree of completion: direct materials, 70%; conversion costs, 50%
B - degree of completion: direct materials, 65%; conversion costs, 35%
The assembly division uses the FIFO method of process costing. Compute equivalent units for direct
materials and conversion costs. Show physical units in the first column of the schedule.
Flow of Production Physical Units Direct Materials Conversion Costs
Beg WIP 110
Started during current period 515
To account for 625
Completed and transferred out during current period:
Form Beg WIP 110* 33** 55***
Started and completed 355^ 355 355
End WIP 160 104^^ 56^^^
Accounted for 625 ___________ ____________
Work done in current period only 492 466
*Given **110 units x (1 - 70%) = 33 ***110 units x (1 - 50%) = 55
^465 units - 110 units = 355 ^^160 units x 65% = 104 ^^^160 units x 35% = 56
17-33 (Transferred-In Costs, Weighted-Average Method)
Smitty Sports, which produces basketballs, has two departments: cutting and stitching. Each department
has one direct-cost category (direct materials) and oneindirect-cost category (conversion costs). This
problem focuses on the stitching department. Basketballs that have undergone the cutting process are
immediately transferred to the stitching department. Direct material is added when the stitching process is
80% complete. Conversion costs are added evenly during stitching operations. When those operations
are done, the basketballs are immediately transferred to Finished Goods. Smitty Sports uses the
weighted-average method of process costing. The following is a summary of the March 2017 operations
of the stitching department:
Physical Units Transferred-In Direct Conversion
(basketballs) Costs Materials Cost
Beg WIP 10,000 $50,000 $0
$50,000
Degree of completion, Beg WIP 100% 0% 60%
Transferred in during March 2017 70,000
Completed and transferred out during March 2017 40,000
End WIP, March 31 40,000
Degree of completion, End WIP 100% 0% 40%
Total costs added during March $230,000 $34,000
$90,000
a) Summarize total stitching department costs for March 2017, and assign these costs to units completed (and
transferred out) and to units in ending work in process.
Physical Units Transferred-In Direct Conversion
(books) Costs Materials Cost
Beg WIP 10,000
Transferred in during March 70,000
To account for 80,000
Completed and transferred out during March 40,000 40,000 40,000 40,000
End WIP 40,000 40,000* 0** 16,000***
Accounted for 80,000
Equivalent units of work done to date 80,000 40,000 56,000
*$40,000 x 100% = $40,000
**$40,000 x 0% = $0
***$40,000 x 40% = $16,000
Total Transferred-In Direct Conversion
Production Costs Costs Materials Costs
Beg WIP $100,000* $50,000 $0 $50,000
Costs added in current period 354,000** 230,000 34,000 90,000
Total costs to account for $454,000 $280,000 $34,000 $140,000
*$50,000 + $50,000 = $100,000
**$230,000 + $34,000 + $90,000 = $354,000
Transferred-In Direct Conversion
Costs Materials Csost
Costs incurred to date $280,000* $34,000 $140,000**
Divide by equivalent units of work done to date 80,000^ 40,000 56,000^^
Cost per equivalent unit $3.50 $0.85 $2.50
*$230,000 + $50,000 = $280,000
**$90,000 + $50,000 = $140,000
^70,000 + 10,000 = 80,000 units
^^40,000 + (40,000 x 0.40) = 56,000 units
 Total Transferred-In Direct Conversion
Production Costs Costs Materials Costs
Assigned of costs:
Completed and transferred out $274,000* $140,000^ $34,000 $100,000^
End WIP 180,000** 140,000^^^ 0 40,000***
Total costs to account for $454,000 $280,000 $34,000 $140,000
*$140,000 + $34,000 + $100,000 = $274,000
**$140,000 + $40,000 = $180,000
^40,000 units x $3.50 = $140,000
^^40,000 units x $2.50 = $100,000
^^^$140,000 x 100% = $140,000
***$100,000 x 40% = $40,000
b) Prepare journal entries for March transfers from the cutting department to the stitching department and from the
stitching department to Finished Goods.
Begin by recording the transfer from the cutting department to the stitching department.
Work in Process - Stitching 230,000
Work in Process - Cutting 230,000
Now record the transfer from the stitching department to Finished Goods
Finished Goods 274,000
Work in Process - Stitching 274,000
17-34 (Transferred-In Costs, FIFO Method)
Southside Sports, which produces basketballs, has two departments: cutting and stitching. Each
department has one direct-cost category (direct materials) and one indirect-cost category (conversion
costs). This problem focuses on the stitching department.
Basketballs that have undergone the cutting process are immediately transferred to the stitching
department. Direct material is added when the stitching process is 85% complete. Conversion costs are
added evenly during stitching operations. When those operations are done, the basketballs are
immediately transferred to Finished Goods. Southside Sports uses the FIFO method of process costing.
The following is a summary of the March 2017 operations of the stitching department:
Physical Units Transferred-In Direct Conversion
(basketballs) Costs Materials Cost
Beg WIP 50,000 $60,000 $0
$24,000
Degree of completion, Beg WIP 100% 0% 50%
Transferred in during March 2017 70,000
Completed and transferred out during March 2017 100,000
End WIP, March 31 20,000
Degree of completion, End WIP 100% 0% 25%
Total costs added during March $210,000 $40,000
$60,000
Total Transferred-In Direct Conversion
Production Costs Costs Materials Costs
Assigned of costs:
Completed and transferred out $345,000 $225,000 $40,000 $80,000
End WIP 49,000 45,000 0 4,000
Total costs to account for $394,000 $270,000 $40,000
$84,000
a) Summarize total stitching department costs for March 2017, and assign these costs to units completed
(and transferred out) and to units in ending work in process.
Physical Transferred-In Direct Conversion
Units Costs Materials Cost
Beg WIP 50,000
Transferred-In during current period 70,000
To account for 120,000
Completed and transferred out during current period:
From Beg WIP 50,000 0 50,000 25,000^
Started and completed 50,000 50,000 50,000 50,000
End WIP 20,000 20,000* 0 5,000**
Accounted for 120,000
Equivalent units of work done in current period 70,000 70,000 80,000
*20,000 units x 100% = $20,000
**20,000 units x 25% = $5,000
^50,000 units x 50% = $25,000
Total Transferred-In Direct Conversion
Production Costs Costs Materials Costs
Beg WIP $84,000* $60,000 $0 $24,000
Costs added in current period 310,000** 210,000 40,000 60,000
Total costs to account for $394,000 $270,000 $40,000 $84,000
*$60,000 + $24,000 = $84,000
**$210,000 + $40,000 + $60,000 = $310,000
Transferred-In Direct Conversion
Costs Materials Csost
Costs incurred to date $210,000 $40,000 $60,000
Divide by equivalent units of work done to date 70,000^ 100,000 80,000*
Cost per equivalent unit $3.00 $0.40 $0.75
^70,000 units x 100% = 70,000
*50,000 units + (70,000 units x 50%) = 80,000
Total Transferred-In Direct Conversion
Production Costs Costs Materials Costs
Completed and transferred out:
Beg WIP $84,000* $60,000 $0 $24,000
Costs added to Beg WIP in current period 38,750** 0 20,000”” 18,750”
Total from Beg Inv 122,750
Started and completed 207,500*** 150,000^ 20,000^^
37,500^^^
Total costs of units completed and transferred out 330,250
End WIP 63,750**** 60,000(-) 0 3,750(+)
Total Costs accounted for $394,000 $270,000 $40,000 $84,000
*$60,000 + $24,000 = $84,000
**$20,000 + $18,750 = $38,750
***$150,000 + $20,000 + $37,500 = $207,500
****$60,000 + $3,750 = $63,750
“(50,000 units x 50%) x $0.75 = $18,750
””50,000 units x $0.40 = 20,000
^50,000 units x $3.00 = 150,000
^^50,000 units x $0.40 = 20,000
^^^50,000 units x $0.75 = 37,500
(-) 20,000 units x $3 = $60,000
(+) (20,000 units x 25%) x $0.75 = $3,750

b) Prepare journal entries for March transfers from the cutting department to the stitching department and
from the stitching department to Finished Goods.
Begin by recording the transfer from the cutting department to the stitching department.
Work in Process - Stitching 210,000
Work in Process - Cutting 210,000
Now record the transfer from the stitching department to Finished Goods.
Finished Goods 330,250
Work in Process - Stitching 330,250
c) Explain any difference between the cost of work completed and transferred out and the cost of ending
work in process in the stitching department under the weighted-average method and the FIFO method.
● The FIFO work in process ending inventory is higher than the weighted-average work in process ending
inventory. This is because FIFO assumes that all the lower-cost prior-period units in work in process are
the first to be completed and transferred out while ending work in process consists of only the higher-cost
current-period units.
● The weighted-average method smoothes out cost per equivalent unit by assuming that more of the higher-
cost units are completed and transferred out, while some of the lower-cost units in beginning work in
process are placed in ending work in process. Hence, in this case, the weighted-average method results in a
higher cost of units completed and transferred out and a lower ending work-in-process inventory relative to
FIFO.

17-27 (Weighted-Average Method, Assigning Costs) (got some of this wrong)

Consider the following data for the assembly division of a satellite manufacturer:

Physical Units Direct Materials Conversion Costs

Beg WIP (May 1)A 7 $5,500,000 $1,001,480
Started in May 2018 75
Completed during May 2018 46
Ending work in process (May 31)B 36
Costs added during May 2018 $35,460,000 $15,280,000
A - degree of completion: direct materials, 90%; conversion costs, 40%
B - degree of completion: direct materials, 55%; conversion costs, 25%

Flow of Production Physical Units Direct Materials Conversion Costs

Completed and transferred out during current period 46 46 46
WIP Ending 36 20 9
Accounted for 82 ___ ___
Work done to date 66 55

The assembly division uses the weighted-average method of process costing. Summarize total costs to
account for and assign these costs to units completed (and transferred out) and to units in ending work in
process.
Total Direct Conversion
Production Costs Materials Costs
WIP, Beg $6,501,480* $5,500,000 $1,001,480
Costs added in current period $50,740,000** $35,460,000 $15,280,000
Total costs to account for $57,241,480 $40,960,000 $16,281,480
*$5,500,000 + $1,001,480 = $6,501,480
**$35,460,000 + $15,280,000 = $50,740,000

Direct Materials Conversion Costs

Costs incurred to date $40,960,000* $16,281,480**
Divide by: Equivalent units of work done to date 66^ 55^^
Cost per equivalent unit for work done to date $620,606.06 $296,026.91

*$5,500,000 + $35,460,000 = $40,960,000

**$1,001,480 + $15,280,000 = $16,281,480
^Given
^^Given

Total Direct Conversion

Production Costs Materials Costs
Completed and transferred out $42,165,117*** $28,547,879* $13,617,238**
WIP End $18,149,333^^^ $12,288,000^ $5,861,333^^
Total costs accounted for $60,314,450 $40,835,879 $19,478,571

*46 x $620,606.06 = $28,547,878.76 (round it)

**46 x $296,026.91 = $13,617,237.86 (round it)
***$28,547,879 + $13,617,238 = $42,165,117
^(36 x 55%) x $620,606.06 = $12,287,999.99 (round it)
^^(36 x 55%) x $296,026.91 = $5,861,332.818 (round it)
^^^$12,288,000 + $5,861,333 = $18,149,333

17-25 (Transferred-in Costs, FIFO Method) (got some of this wrong)

Fashion Clothing Inc. is a manufacturer of winter clothes. It has a knitting department and a finishing
department. This exercise focuses on the finishing department. Direct materials are added at the end of
the process. Conversion costs are added evenly during the process. Fashion uses the FIFO method of
process costing. The information for June 2018 is provided.
Physical Units Transferred-In Direct Conversion
(tonnes) Costs Materials Costs
WIP, Beg Inv (June 1) 95 $104,500 $0 $38,000
Degree of Completion, Beg WIP 100% 0% 40%
Transferred in during June 125
Completed and Transferred out during June 145
WIP, End Inv (June 30) 75
Degree of Completion, End WIP 100% 0% 60%
Total Costs Added During June $130,500 $39,875 $75,400
a) Calculate equivalent units (tonnes) of transferred-in costs, direct materials, and conversion costs.
Physical Units Transferred-In Direct Conversion
(tonnes) Costs Materials Costs
WIP, Beg Inv (June 1) 95
Transferred in during June 125
To account for 220
Completed and transferred out during June:
From Beg WIP 95 0 95 47.5
Started and completed 50* 50 50 50
WIP, End Inv (June 30) 75 75 0 45^
Accounted for 220
Work done to date 125 145 142.5
*220 - 95 - 75 = 50 ^75 x 60% = 45
b) Summarize total costs to account for and calculate the cost per equivalent unit for transferred-in costs,
direct materials, and conversion costs.
Total Transferred-In Direct Conversion
Production Costs Costs Materials Costs
WIP, Beg $142,500* $104,500 $0 $38,000
Costs added in current period $245,775** $130,500 $39,875 $75,400
Total costs to account for $388,275 $235,000 $39,875 $113,400

*$104,500 + $38,000 = $142,500

**$130,500 + $39,875 + $75,400

Transferred-In Direct Conversion

Costs Materials Csost
Costs added in current period $130,500 $39,875 $75,400
Divide by equivalent units of work done to date 125* 145 145**
Cost per equivalent unit of work done to date $1,044 $275 $520

*125 x 100% = 125

**95 + (125 x 0.4) = 145

c) Assign total costs to units completed (and transferred out) and to units in ending work in process.

Total Transferred-In Direct Conversion

Production Costs Costs Materials Costs
Completed and transferred out:
Beg WIP $142,500* $104,500 $0 $38,000
Costs added to Beg WIP in current period $45,885**** $0 $26,125** $19,760***
Total costs to account for $188,385
Started and completed $69,882^^^ $39,672^ $10,450^^ $19,760***
Total costs of units completed and transferred out $258,267
WIP, End $101,700@ $78,300& 0 $23,400&&
Total costs accounted for $359,967 $222,472 $36,575 $100,920

*$104,500 + $38,000 = $142,500

**95 x 275 = $26,125
***(95 x 40%) x 520 = $19,760
****$26,125 + $19,760 = $45,885
^(95 x 1,044) x 40% = $39,672
^^(95 x 275) x 40% = $10,450
^^^$39,672 + $10,450 + $19,760 = $69,882
&75 x 1,044 = $78,300
&&(74 x 60%) x 520 = $23,400
@$78,300 + $23,400 = $101,700