PROCESS COSTING

I. One Department only

Production and Cost Information:

Units in beginning WIP Inventory (100% complete as to DM; 40% as to Labor and Overhead) 10,000.00
Units started during the current period 401,400.00
Units completed and transferred to FG Inventory 406,000.00
Units in ending WIP Inventory (100% complete as to DM; 80% as to Labor and Overhead) 5,400.00

Costs of beginning WIP Inventory

DM 11,886.00
DL 3,600.00
OH 29,916.00 45,402.00

Current period costs

DM 642,240.00
DL 345,372.00
OH 975,168.00 1,962,780.00

I.I Weighted Average vs. FIFO

Step 1. Calculate the Total Physical Units to account for

WA FIFO
Units in Beginning WIP Inventory 10,000.00 10,000.00
Units started during current period 401,400.00 401,400.00
Units to account for 411,400.00 411,400.00

Step 2. Calculate the Physical Units accounted for

Units completed and transferred to FG Inventory 406,000.00 406,000.00

Units in ending WIP Inventory 5,400.00 5,400.00
Units accounted for 411,400.00 411,400.00
Step 3. Calculate the Equivalent Units of Production
WA FIFO
DM DL OH DM DL OH
Beginning WIP Inventory 10,000.00 10,000.00 10,000.00 - 6,000.00 6,000.00
Units started and completed 396,000.00 396,000.00 396,000.00 396,000.00 396,000.00 396,000.00
Ending WIP Inventory 5,400.00 4,320.00 4,320.00 5,400.00 4,320.00 4,320.00
Equivalent Units of production 411,400.00 410,320.00 410,320.00 401,400.00 406,320.00 406,320.00

Step 4. Calculate the Total Cost to Account for

DM DL OH TOTAL
Beginning WIP Inventory costs 11,886.00 3,600.00 29,916.00 45,402.00
Current period costs 642,240.00 345,372.00 975,168.00 1,962,780.00
Total cost to account for 654,126.00 348,972.00 1,005,084.00 2,008,182.00

Step 5. Calculate the Cost per Equivalent Unit of Production

DM DL OH TOTAL DM DL OH TOTAL
Beginning WIP Inventory costs 11,886.00 3,600.00 29,916.00 45,402.00 ignore ignore ignore ignore
Current period costs 642,240.00 345,372.00 975,168.00 1,962,780.00 642,240.00 345,372.00 975,168.00 1,962,780.00
Total cost 654,126.00 348,972.00 1,005,084.00 2,008,182.00 642,240.00 345,372.00 975,168.00 1,962,780.00
Divided by EUP (Step 3) 411,400.00 410,320.00 410,320.00 401,400.00 406,320.00 406,320.00
Cost per EUP 1.59 0.85 2.45 4.89 1.60 0.85 2.40 4.85

Step 6. Assign Costs to Inventories

WA FIFO
Costs transferred to FG Inventory Costs transferred to FG Inventory
Total 406,000 4.89 1,985,340.00 1.a. Prior period costs 45,402.00
1.b. Share in current period costs
DM (10,000 x 0 x 1.60) -
DL (10,000 x 0.6 x .85) 5,100
OH (10,000 x 0.6 x 2.4) 14,400 19,500.00
2. Units started & completed (396,000 x 4.85) 1,920,600.00 1,985,502.00

Costs of Ending WIP Inventory Costs of Ending WIP Inventory

DM 5400 1.59 8,586.00 DM 5400 1.60 8,640.00
DL 4320 0.85 3,672.00 DL 4320 0.85 3,672.00
 OH 4320 2.45 10,584.00 22,842.00 OH 4320 2.40 10,368.00 22,680.00
2,008,182.00 2,008,182.00

Step 7. Journal Entries

DR CR DR CR
a. Work in Process Inventory 642,240.00 Work in Process Inventory 642,240.00
Raw Materials Inventory 642,240.00 Raw Materials Inventory 642,240.00

b. Work in Process Inventory 345,372.00 Work in Process Inventory 345,372.00

Wages Payable 345,372.00 Wages Payable 345,372.00

c. Manufacturing Overhead 975,168.00 Manufacturing Overhead 975,168.00

Various Accounts 975,168.00 Various Accounts 975,168.00

Work in Process Inventory 975,168.00 Work in Process Inventory 975,168.00

Manufacturing Overhead 975,168.00 Manufacturing Overhead 975,168.00

d. Finished Goods Inventory 1,985,340.00 Finished Goods Inventory 1,985,502.00

Work in Process Inventory 1,985,340.00 Work in Process Inventory 1,985,502.00