Problem 20-3A Weighted Average: Process cost summary; equivalent units LO C2, C3

Question

Problem 20-3A Weighted Average: Process cost summary; equivalent units LO C2, C3, P4 Fast Co. produces its product through a single processing department. Direct materials are added at the start of production, and conversion costs are added evenly throughout the process. The company uses monthly reporting periods for its weighted-average process costing system. The Work in Process Inventory account has a balance of $87,300 as of October 1, which consists of $18,000 of direct materials and $69,300 of conversion costs. During the month the company incurred the following costs Direct materials Conversion $121,600 866,800 During October, the company started 143,000 units and transferred 153,000 units to finished goods. At the end of the month, the work in process inventory consisted of 21,500 units that were 80% complete with respect to conversion costs. Required 1. Prepare the company's process cost summary for October using the weighted-average method. 2. Prepare the journal entry dated October 31 to transfer the cost of the completed units to finished goods inventory

Explanation / Answer

Process Cost Summary:

First we will calculate equivalent units, for that we have to first find out the beginning inventory:

Units Closing Stock 21,600 Transferred To Finished Goods 1,53,000 less Units Started 1,43,000 Opening WIP 31,600

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