COST ACCOUNTING COST OF PRODUCTION SUMMARY: WEIGHTED AVERAGE AND FIFO METHODS Th

Question

COST ACCOUNTING

COST OF PRODUCTION SUMMARY: WEIGHTED AVERAGE AND FIFO METHODS

The Company uses a single department production process. Materials are added at the start of the production process and labor and overhead are added as indicated. For January 2015, the Company records have the following information:

UNITS:
Beginning WIP:                                                                                                          10,000 units

100% complete for materials, 50% complete for labor; 30% complete for overhead

Units started in process                                                                                               50,000 units

Units completed                                                                                                          49,000 units

Ending WIP:                                                                                                             11,000 units

100% complete for materials, 60% complete for labor; 20% complete for overhead

PRODUCTION COSTS:

Work in Process, Beginning of the Month:
Materials                                          $ 22,000
Labor                                                   18,000
Overhead                                             11,000                                                          51,000

Current Month Costs:
Materials                                          $ 320,000
Labor                                                   180,160
Overhead                                             152,840                                    653,000

                                    Total Costs:                        $                                  704,000

REQUIRED:

Prepare a Cost of Production Summary using the weighted average method (calculations for equivalent units of production, cost per equivalent unit of production, total cost for units completed and WIP, ending). Prepare your calculations for Materials, Labor, and Overhead separately.

Prepare the appropriate journal entries at month end.

Prepare a Cost of Production Summary using the FIFO method (calculations for equivalent units of production, cost per equivalent unit of production, total cost for WIP, beginning, units started and completed and WIP, ending). Prepare your calculations for Materials, Labor, and Overhead separately.

Prepare the appropriate journal entries at month end.

You need to present your work in an excel spreadsheet and you need to create your own formatting (templates).

Explanation / Answer

Solution 1:

Solution 2:

Computation of Equivalent unit of Production - Weighted Average Particulars Physical Units Material Labor Overhead Unit completed & Transferred out 49000 49000 49000 49000 Closing WIP: 11000 Material (100%) 11000 Labour (60%) 6600 Overhead (20%) 2200 Equivalent units of production 60000 60000 55600 51200

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