Question

Muskoge Company uses a process-costing system. The company manufactures a product that is

processed in two departments: Molding and Assembly. In the Molding Department, direct materials
are added at the beginning of the process; in the Assembly Department, additional direct
materials are added at the end of the process. In both departments, conversion costs are incurred
uniformly throughout the process. As work is completed, it is transferred out. The following
table summarizes the production activity and costs for February:
Beginning inventories for Molding; Assembly (first number for molding second number for assembly)
Physical units 10,000;8,000
Costs:
Transferred in � ;$ 45,200
Direct materials $ 22,000; �
Conversion costs $ 13,800 ;$ 16,800
Current production:
Units started 25,000 ; ?
Units transferred out 30,000 ; 35,000
Costs:
Transferred in � ; ?
Direct materials $ 56,250 ; $ 39,550
Conversion costs $103,500 $136,500
Percentage of completion:
Beginning inventory 40% ; 50%
Ending inventory 80 ; 50
Required:
1. Using the weighted average method, prepare the following for the Molding Department:
a. A physical flow schedule
b. An equivalent units calculation
c. Calculation of unit costs. Round to four decimal places.
d. Cost of ending work in process and cost of goods transferred out
e. A cost reconciliation
2. Prepare journal entries that show the flow of manufacturing costs for the Molding Department.
Materials are added at the beginning of the process.
3. Repeat Requirements 1 and 2 for the Assembly Department.

Answer 1

Total Equivalent Units: 29,000 equivalent units
Unit Cost= $2.80
Cost of Goods Transferred Out: = $84,000
Total Costs Accounted For $95,200.

1. Weighted Average Method

a. Physical Flow Schedule

Molding Department

Beginning Inventory (10,000 units, 40% complete)

Units Started (25,000 units)

Total Units in Process (35,000 units)

Units Transferred Out (30,000 units)

Ending Inventory (5,000 units, 80% complete)

b. Equivalent Units Calculation

Beginning Inventory: 10,000 units * 40% = 4,000 equivalent units

Units Started: 25,000 units

Total Equivalent Units: 29,000 equivalent units

c. Calculation of Unit Costs

Total Costs: Transferred In ($45,200) + Direct Materials ($22,000) + Conversion Costs ($13,800) = $81,000

Unit Cost: $81,000 / 29,000 equivalent units = $2.80

d. Cost of Ending Work in Process and Cost of Goods Transferred Out

Cost of Ending Work in Process: 5,000 units * 80% * $2.80 = $11,200

Cost of Goods Transferred Out: 30,000 units * $2.80 = $84,000

e. Cost Reconciliation

Molding Department:

Transferred In Costs $45,200

Direct Materials $22,000

Conversion Costs $13,800

Total Costs $81,000

Cost of Goods Transferred Out $84,000

Ending Work in Process Inventory $11,200

Total Costs Accounted For $95,200

2. Journal Entries

Molding Department:

Debits Credits

Work in Process - Molding $22,000 Accounts Payable $22,000

Work in Process - Molding $13,800 Factory Payroll

Work in Process - Molding $45,200 Finished Goods

Finished Goods $84,000 Work in Process - Molding

Answer 2

Total Equivalent Units: 29,000 equivalent units

Unit Cost= $2.80

Cost of Goods Transferred Out: = $84,000

Total Costs Accounted For $95,200

How to solve

1. Weighted Average Method

a. Physical Flow Schedule

Molding Department

Beginning Inventory (10,000 units, 40% complete)

Units Started (25,000 units)

Total Units in Process (35,000 units)

Units Transferred Out (30,000 units)

Ending Inventory (5,000 units, 80% complete)

b. Equivalent Units Calculation

Beginning Inventory: 10,000 units * 40% = 4,000 equivalent units

Units Started: 25,000 units

Total Equivalent Units: 29,000 equivalent units

c. Calculation of Unit Costs

Total Costs: Transferred In ($45,200) + Direct Materials ($22,000) + Conversion Costs ($13,800) = $81,000

Unit Cost: $81,000 / 29,000 equivalent units = $2.80

d. Cost of Ending Work in Process and Cost of Goods Transferred Out

Cost of Ending Work in Process: 5,000 units * 80% * $2.80 = $11,200

Cost of Goods Transferred Out: 30,000 units * $2.80 = $84,000

e. Cost Reconciliation

Molding Department:

Transferred In Costs $45,200

Direct Materials $22,000

Conversion Costs $13,800

Total Costs $81,000

Cost of Goods Transferred Out $84,000

Ending Work in Process Inventory $11,200

Total Costs Accounted For $95,200

2. Journal Entries

Molding Department:

Debits Credits

Work in Process - Molding $22,000 Accounts Payable $22,000

Work in Process - Molding $13,800 Factory Payroll

Work in Process - Molding $45,200 Finished Goods

Finished Goods $84,000 Work in Process - Molding