Weather Instruments assembles products from component parts. It has two departments that process all products. During January, the beginning work in process in the assembly department was half complete as to conversion and complete as to direct materials

The beginning inventory included $12,000 for materials and $4,000 for conversion costs. Overhead is applied at the rate of 50% of direct manufacturing labor costs. Ending work-in-process inventory in the assembly department was 40% complete. All spoilage is considered normal and is detected at the end of the process.

Beginning work in process in the finishing department was 75% complete as to conversion and ending work in process was 25% converted. Direct materials are added at the end of the process. Beginning inventories included $16,000 for transferred-in costs and $10,000 for direct manufacturing labor costs. Overhead in this department is equal to direct manufacturing labor costs. Additional information about the two departments follows:

Assembly Finishing
Beginning work-in-process units 20,000 24,000
Units started this period 40,000 ?
Units transferred this period 50,000 54,000
Ending work-in-process units 8,000 20,000
Material costs added $44,000 $28,000
Direct manufacturing labor $16,000 $24,000

Required:
Prepare a production cost worksheet using weighted-average for the assembly department and FIFO for the finishing department.

Answer: Normal spoilage in assembly = 20,000 + 40,000 - 50,000 - 8,000 = 2,000

PRODUCTION COST WORKSHEET
Assembly Department
Weighted-Average Method

Flow of production Physical Units Direct Materials Conversion
Work in process, beginning 20,000
Started during period 40,000
To account for 60,000

Good units completed and
Transferred out 50,000 50,000 50,000
Normal spoilage 2,000 2,000 2,000
Work in process, ending 8,000 8,000 3,200
Accounted for 60,000 60,000 55,200

Costs Totals Direct materials Conversion
Work in process, beginning $16,000 $12,000 $ 4,000
Costs added during period 68,000 44,000 24,000

Total costs to account for 84,000 56,000 28,000
Divided by equivalent units 60,000 55,200

Equivalent-unit costs $ 1.44 $ 0.93 $ 0.51

Assignment of costs
Transferred out (50,000 × $1.44) $72,000
Normal spoilage (2,000 × $1.44) 2,880
Total costs transferred out 74,880
Work in process, ending
Direct materials (8,000 × $0.93) $7,440
Conversion (8,000 × 0.40 × $0.51) 1,632 9,072

Costs accounted for $83,952
(Differences due to rounding)

PRODUCTION COST WORKSHEET
Finishing Department
FIFO Method

Physical Direct Transferred
Flow of Production Units Materials Conversion In
Work in process, beginning 24,000
Started during period 50,000
To account for 74,000

Good units completed:
Beginning work in process 24,000 24,000 6,000
Started and completed 30,000 30,000 30,000 30,000
Work in process, ending 20,000 0 5,000 20,000

Accounted for 74,000 54,000 41,000 50,000

Physical Direct Transferred
Costs Units Materials Conversion In

Work in process, beginning $ 36,000
Costs added during period 150,880 $28,000 $48,000 $74,880

Total costs to account for 186,880 28,000 48,000 74,880
Divided by equivalent units 54,000 41,000 50,000

Equivalent-unit costs $ 3.19 $ 0.52 $ 1.17 $ 1.50

Assignment of costs:
Work in process, beginning $ 36,000
Completion of beginning:
Direct materials (24,000 × $0.52) $12,480
Conversion costs (24,000 × 0.25 × $1.17) 7,020 19,500

Total beginning inventory 55,500
Started and completed (30,000 × $3.19) 95,700

Total costs transferred out 151,200
Work in process, ending
Transferred in (20,000 × $1.50) $30,000
Conversion costs (20,000 × $1.17 × 0.25) 5,850 35,850

Costs accounted for $187,050
(Differences due to rounding)