The Fields Company has two manufacturing departments, forming and painting. The

Question

The Fields Company has two manufacturing departments, forming and painting. The company uses the weighted-average method of process costing. At the beginning of the month, the forming department has 36,000 units in inventory, 70% complete as to materials and 30% complete as to conversion costs. The beginning inventory cost of $82,100 consisted of $58,000 of direct materials costs and $24,100 of conversion costs.

During the month, the forming department started 520,000 units. At the end of the month, the forming department had 40,000 units in ending inventory, 85% complete as to materials and 35% complete as to conversion. Units completed in the forming department are transferred to the painting department.

Cost information for the forming department is as follows:

Explanation / Answer

1) Calculate equivalent unit :

Material = 516000+(40000*85%) = 550000 Units

Conversion = 516000+(40000*35%) = 530000 Units

2) Calculate cost per equivalent unit

Direct material = (58000+1889000)/550000 = 3.54

Conversion = (24100+1226700)/530000 = 2.36

3) Prepare cost reconciliation report :

Cost assignment and reconciliation Cost of units transferred out EUP Cost per EUP Total cost Direct material 516000 3.54 1826640 Conversion 516000 2.36 1217760 Total cost transferred out 3044400 Cost of ending work in process EUP Cost per EUP Total cost Direct material 34000 3.54 120360 Conversion 14000 2.36 33040 Total cost of ending work in process 153400 Total cost assigned 3197800

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