Concept explainers
Concept introduction:
Process costing systems is a system to assign the costs where the production goes through different processes. A product may take several processes to complete and when these processes are separable, the process costing system is applied to ascertain the cost of each process.
Weighted average method:
Weighted average method is one of the methods of process costing, under this method the cost of beginning work in process is mixed with the current period cost and weighted cost and equivalent units are calculated. In other words, the weighted average method does not teat the beginning work in process cost separately.
To calculate:
a. Physical units’ reconciliation
b. Number of equivalent units
c. Cost per equivalent units
d. Cost reconciliation
Want to see the full answer?
Check out a sample textbook solutionChapter 3 Solutions
MANAGERIAL ACCOUNTING W/CONNECT
- Assuming that all materials are added at the beginning of the process and that labor and factory overhead are applied evenly during the process, compute the figures to be inserted in the blank spaces of the following data, using the weighted average cost method. [Hint: for best success in solving each Case, solve them in numerical order starting with (1)]arrow_forwardPatterson Company produces wafers for integrated circuits. Data for the most recent year are provided: aCalculated using number of dies as the single unit-level driver. bCalculated by multiplying the consumption ratio of each product by the cost of each activity. Required: 1. Using the five most expensive activities, calculate the overhead cost assigned to each product. Assume that the costs of the other activities are assigned in proportion to the cost of the five activities. 2. Calculate the error relative to the fully specified ABC product cost and comment on the outcome. 3. What if activities 1, 2, 5, and 8 each had a cost of 650,000 and the remaining activities had a cost of 50,000? Calculate the cost assigned to Wafer A by a fully specified ABC system and then by an approximately relevant ABC approach. Comment on the implications for the approximately relevant approach.arrow_forwardAero Aluminum Inc. uses a process cost system. The records for May show the following information: Required: Prepare a cost of production summary for each department. (Hint: When preparing the Converting production summary, refer to the Rolling production summary for the costs transferred in during the month.)arrow_forward
- K-Briggs Company uses the FIFO method to account for the costs of production. For Crushing, the first processing department, the following equivalent units schedule has been prepared: The cost per equivalent unit for the period was as follows: The cost of beginning work in process was direct materials, 40,000; conversion costs, 30,000. Required: 1. Determine the cost of ending work in process and the cost of goods transferred out. 2. Prepare a physical flow schedule.arrow_forwardRoberts Company produces two weed eaters: basic and advanced. The company has four activities: machining, engineering, receiving, and inspection. Information on these activities and their drivers is given below. Overhead costs: Required: 1. Calculate the four activity rates. 2. Calculate the unit costs using activity rates. Also, calculate the overhead cost per unit. 3. What if consumption ratios instead of activity rates were used to assign costs instead of activity rates? Show the cost assignment for the inspection activity.arrow_forwardSeacrest Company uses a process-costing system. The company manufactures a product that is processed in two departments: A and B. As work is completed, it is transferred out. All inputs are added uniformly in Department A. The following summarizes the production activity and costs for November: Required: 1. Using the weighted average method, prepare the following for Department A: (a) a physical flow schedule, (b) an equivalent unit calculation, (c) calculation of unit costs (Note: Round to four decimal places.), (d) cost of EWIP and cost of goods transferred out, and (e) a cost reconciliation. 2. CONCEPTUAL CONNECTION Prepare journal entries that show the flow of manufacturing costs for Department A. Use a conversion cost control account for conversion costs. Many firms are now combining direct labor and overhead costs into one category. They are not tracking direct labor separately. Offer some reasons for this practice.arrow_forward
- Required information [The following information applies to the questions displayed below.] Victory Company uses weighted average process costing. The company has two production processes. Conversion cost is added evenly throughout each process. Direct materials are added at the beginning of the first process. Additional information for the first process follows. Beginning work in process inventory Units started this period Units completed and transferred out Ending work in process inventory Beginning work in process inventory Direct materials Conversion Costs added this period Direct materials Conversion Total costs to account for Cost assignment-Weighted average Completed and transferred out Direct materials Conversion Ending work in process Direct materials Conversion Total costs accounted for Units EUP 73,000 831,000 710,000 194,000 $352,560 165,280 2,359,440 3,140,320 Direct Materials Percent Complete 100% 3. Assign costs to the department's output-specifically, to the units…arrow_forwardRequired information [The following information applies to the questions displayed below.] Victory Company uses weighted average process costing. The company has two production processes. Conversion cost is added evenly throughout each process. Direct materials are added at the beginning of the first process. Additional information for the first process follows. Beginning work in process inventory Units started this period Units completed and transferred out Ending work in process inventory Beginning work in process inventory Direct materials Conversion Costs added this period Direct materials Conversion Total costs to account for Cost per equivalent unit of production Units Total costs + Equivalent units of production (from part 1) Cost per equivalent unit of production 72,000 882,000 775,000 179,000 $ 558,090 84,660 3,734,910 1,608,540 Direct Materials Percent Complete 100% 100% 2. Compute cost per equivalent unit of production for both direct materials and conversion. Costs EUP ( $…arrow_forwardRequired Information [The following information applies to the questions displayed below.] Victory Company uses weighted average process costing. The company has two production processes. Conversion cost is added evenly throughout each process. Direct materials are added at the beginning of the first process. Additional information for the first process follows. Beginning work in process inventory Units started this period Units completed and transferred out Ending work in process inventory Beginning work in process inventory Direct materials Conversion Costs added this period Direct materials Conversion Total costs to account for Cost assignment-Weighted average Completed and transferred out Direct materials Conversion Ending work in process Direct materials Conversion Total costs accounted for EUP 7,000,003 7,000,005 1,800,003 54,000 Units 3. Assign costs to the department's output-specifically, to the units transferred out and to the units in ending work in process inventory. (Round…arrow_forward
- Required information [The following information applies to the questions displayed below.] Victory Company uses weighted average process costing. The company has two production processes. Conversion cost is added evenly throughout each process. Direct materials are added at the beginning of the first process. Additional information for the first process follows Beginning work in process inventory Units started this period Units completed and transferred out Ending work in process inventory Beginning work in process inventory Direct materials Conversion Costs added this period Direct materials. Conversion Total costs to account for Units Cost per equivalent unit of production Costs added this period Costs of beginning work in process Total costs +Equivalent units of production (from part 1) Cost per equivalent unit of production 78,000 831,000 710,000 199,000 $ 354,510 212,325 2,372,490 4,034,175 Direct Materials Percent Complete 100% 30 100% Conversion Percent Complete -80% Costs EUP $…arrow_forward[The following information applies to the questions displayed below.] Victory Company uses weighted average process costing. The company has two production processes. Conversion cost is added evenly throughout each process. Direct materials are added at the beginning of the first process. Additional information for the first process follows. Beginning work in process inventory Units started this period Units completed and transferred out Ending work in process inventory. Beginning work in process inventory. Direct materials Conversion Costs added this period Direct materials Conversion Total costs to account for Cost per equivalent unit of production Units Total costs + Equivalent units of production (from part 1) Cost per equivalent unit of production 78,000 876,000 760,000 194,000 $ 496,080 87,640 3,319,920 1,665, 160 Direct Materials. Percent Complete 100% 100% 2. Compute cost per equivalent unit of production for both direct materials and conversion. Costs EUP $ 583,7: 4,985,0…arrow_forwardFor all Problems, assume the weighted-average method is to be used unless you are told otherwise. Preparing a production cost report, second department with beginning WIP; journal entries Casey Carpet manufactures broadloom carpet in seven processes: spinning, dyeing, plying, spooling, tufting, latexing, and shearing. In the Dyeing Department, direct materials (dye) are added at the beginning of the process. Conversion costs are incurred evenly throughout the process. Information for July 2018 follows: Requirements Prepare a production cost report for Casey’s Dyeing Department for July. The company uses the Weighted-average method. Journalize all transactions affecting Casey’s Dyeing Department during July, including the entries that have already been posted. Assume labor costs are accrued and not yet paid.arrow_forward
- Managerial AccountingAccountingISBN:9781337912020Author:Carl Warren, Ph.d. Cma William B. TaylerPublisher:South-Western College PubExcel Applications for Accounting PrinciplesAccountingISBN:9781111581565Author:Gaylord N. SmithPublisher:Cengage LearningManagerial Accounting: The Cornerstone of Busines...AccountingISBN:9781337115773Author:Maryanne M. Mowen, Don R. Hansen, Dan L. HeitgerPublisher:Cengage Learning
- Cornerstones of Cost Management (Cornerstones Ser...AccountingISBN:9781305970663Author:Don R. Hansen, Maryanne M. MowenPublisher:Cengage LearningPrinciples of Cost AccountingAccountingISBN:9781305087408Author:Edward J. Vanderbeck, Maria R. MitchellPublisher:Cengage LearningFinancial And Managerial AccountingAccountingISBN:9781337902663Author:WARREN, Carl S.Publisher:Cengage Learning,