Question

The Laramie Factory produces expensive boots. It has two departments that process all the items. During January, the beginning work in process in the tanning department was 40% complete as to conversion and 100% complete as to direct materials. The beginning inventory included $6,000 for materials and $18,000 for conversion costs. Ending work-in-process inventory in the tanning department was 40% complete. Direct materials are added at the beginning of the process. Beginning work in process in the finishing department was 60% complete as to conversion. Beginning inventories included $7,000 for transferred-in costs and $10,000 for conversion costs. Ending inventory was 30% complete. Additional information about the two departments follows: Tanning Finishing Beginning work-in-process units 5,000 4,000 Units started this period 14,000 ? Units transferred this period 16,000 18,000 Ending work-in-process units ? 2,000 Material costs added $18,000 ? Conversion costs 32,000 $19,000 Transferred-out cost 50,000 ?
Required: Prepare a production cost worksheet using weighted-average costing for the finishing department.

Answer 1

Answer:

The Laramie Factory

Finishing Department

Production Cost Worksheet, using weighted-average costing

Cost assigned to:              Materials    Conversion       Total

Units transferred out        $66,348        $28,062      $94,410

Ending work in process        7,372                935          8,307

Total cost accounted for $73,720         $28,997     $102,717

Explanation:

a) Data and Calculations:

                                                     Materials                     Conversion

                                                 Tanning  Finishing      Tanning  Finishing

Beginning work in process     100%          100%           40%          60%

Cost of beginning WIP         $6,000          $7,000     $18,000      $10,000

Ending work in process          100%           100%          40%          30%

Additional information:

                                                     Tanning    Finishing

Beginning work-in-process units  5,000         4,000

Units started this period               14,000       16,000

Units transferred out this period 16,000       18,000

Ending work-in-process units       3,000         2,000

                                                      Materials                     Conversion

                                                 Tanning  Finishing      Tanning  Finishing

Beginning work in process     100%          100%           40%          60%

Beginning work in process done this period               60%          40%

Ending work in process          100%           100%          40%          30%

Cost of beginning WIP         $6,000        $7,000     $18,000       $10,000

Costs added                          18,000      $66,720      32,000         19,000

Total costs of production  $24,000      $73,720    $50,000      $29,000

Transferred-out cost                                                  

Equivalent units

                                                       Materials                        Conversion

                                                     Tanning   Finishing      Tanning  Finishing

 Units started and completed       16,000       18,000         16,000     18,000

Ending work-in-process units       3,000        2,000           1,200          600

Equivalent units of production    19,000      20,000        17,200      18,600

Cost per equivalent units                Materials                        Conversion

                                                  Tanning   Finishing      Tanning  Finishing

Total cost of production          $24,000   $73,720      $50,000   $29,000

Equivalent units of production   19,000    20,000          17,200      18,600

Cost per equivalent unit            $1.263    $3.686          $2.907     $1.559

Tanning Department

Cost assigned to:              Materials    Conversion     Total

Units transferred out        $20,208       $46,512      $66,720

Ending work in process        3,789           3,488            7,277

Total costs                        $23,997      $50,000      $73,997

Finishing Department

Cost assigned to:              Materials    Conversion     Total

Units transferred out        $66,348        $28,062       $94,410

Ending work in process        7,372                935           8,307

Total cost accounted for $73,720         $28,997      $102,717