Question

The Fields Company has two manufacturing departments, forming and painting. The company uses the weighted-average method of process costing. At the beginning of the month, the forming department has 25,000 units in inventory, 60% complete as to materials and 40% complete as to conversion costs. The beginning inventory cost of \(60,100 consisted of \)44,800 of direct materials costs and \(15,300 of conversion costs.

During the month, the forming department started 300,000 units. At the end of the month, the forming department had 30,000 units in ending inventory, 80% complete as to materials and 30% complete as to conversion. Units completed in the forming department are transferred to the painting department.

Cost information for the forming department is as follows:

Beginning work-in-process inventory	\)60,100
Direct material added during the month	1,231,200
Conversion added during the month	896,700

1. Calculate the equivalent units of production for the forming department.

2. Calculate the costs per equivalent unit of production for the forming department.

3. Using the weighted-average method, assign costs to the forming department’s output—specifically, its units transferred to painting and its ending work in process inventory.

Short answer

1. Equivalent units for material:319,000 and for conversion:304,000.
2. Cost per equivalent unit for material:$4 and for conversion:$3.
3. Cost assigned to ending work-in-process is$123,000.

Step-by-step solution

Definition of Equivalent Units of Production

Equivalent units of production can be defined as the metric that calculates the work done by the business entity on the goods that are not completed during the period. In this metric, the finished and semi-finished goods are represented in terms of finished goods.

Equivalent units for forming department

Particular	Units (material)
Units completed and transferred out.	295,000
Add: Ending inventory.	24,000
Equivalent units	319,000

Particular	Units (conversion)
Units completed and transferred out.	295,000
Add: Ending inventory.	9,000
Equivalent units	304,000

Working note:

Calculation of units completed and transferred out:

Particular	Units
Beginning inventory	25,000
Add: Units started	300,000
Less: Ending inventory	(30,000)
Units completed and transferred out	295,000

Cost per equivalent unit of production for the forming department

For material:

Particular	Amount $
Beginning inventory	$44,800
Added during the year	1,231,200
Total cost	$1,276,000
Equivalent units	319,000
Cost per equivalent unit	$4

For conversion:

Particular	Amount $
Beginning inventory	$15,300
Added during the year	896,700
Total cost	$912,000
Equivalent units	304,000
Cost per equivalent unit	$3

Assigning costs to the forming department

Particular	Amount $
Cost of goods finished and transferred out	$2,065,000
Cost of ending work-in-process	123,000
Total cost	$2,092,000