The Company uses a single department production process. Materials are added at

Question

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 2018, the Company records have the following information:

UNITS:
Beginning WIP:                                                                                                          10,000 units

100% complete for materials, 50% complete for labor; 3% 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.

Explanation / Answer

Units Material Completion Labor Completion Overhead Completion Beginning WIP 10000 100% 50% 3% Units Completed 49000 100% 100% 100% Closing WIP 11000 100% 60% 20% Equivalent Units:= Units Completed & Transferred + Closing Units*% of Completion (Respective) Material Completion Labor Completion Overhead Completion Units Completed 49000 49000 49000 49000 (49000* Respective Completion %) Closing WIP 11000 11000 6600 2200 (11000* Respective Completion %) Total 60000 55600 51200 Material Labor Overhead Total Opening WIP Cost 22000 18000 11000 51000 Added Cost 320000 180160 152840 653000 Total Cost 342000 198160 163840 704000 Equivalent Units 60000 55600 51200 Cost per Equivalent Units 5.70 3.56 3.20 (Total Cost/E Units) Allocation of Costs: Material Labor Overhead Total To Unis Completed & Transferred 279300 174637 156800 610737 To Closing Stock 62700 23523 7040 93263 Total Cost 342000 198160 163840 704000 Material Account Dr. 279300 Labor Account Dr. 174637 Overhead Dr. 156800 To WIP Account 610737 (Being Cost transferred recorded)

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