Question

Preparing a production cost report, second department, withbeginning WIP and transferred in costs; journal entries; FIFO method Work Problem P18-40B using the FIFO method. The Mixing Department beginningwork in process of 400 units is 80% complete as to both direct materials and conversion costs. Round equivalent unit costs to four decimal places. Round all other costs to the nearest dollar.

Short answer

1. Production cost report

Production Cost Report- Department 2
		Equivalent unit of production
UNITS	Physical units	Direct material	Conversion costs	Total
Units to account for:
Beginning WIP	400
Started in production	4,600
Total units to account for	5,000
Units accounted for:
Completed and transferred	4,500	4,180	4,180
Ending WIP	500	100	100
Total units accounted for	5,000	4,280	4,280
COSTS		Direct material	Conversion costs	Total costs
Costs to account for:
Beginning WIP		$475	$575	$1,050
Cost added during the period		5,045	5,865	10,910
Total cost to account for		5,520	6,440	11,960
Divided by: total EUP		4,280	4,280
Cost per equivalent unit		$1.29	$1.50
Costs accounted for:
- Completed and transferred out		5,391 (4,180 x $1.29)	6,290 (4,180x$1.50)	11,681
- Ending WIP		129 (100x $1.29)	150 (100x$1.50)	279
Total costs accounted for		5,520	6,440	11,960

2. The journal entries to show the transaction affecting the mixing department are shown in step 4.

Step-by-step solution

Step-by-Step Solution:Step 1: Production Cost Report

A production cost report shows the direct material, and the conversion cost separately of a product that involves a certain number of manufacturing processes.

Equivalent unit of production for direct material cost

Particulars	EUP
Opening WIP (400 x 20%)	80
Completed and transferred (4,500 – 400) x 100%	4,100
Ending WIP (500 x 20%)	100
Total EUP	4,280

Equivalent unit of production for conversion costs

Particulars	EUP
Opening WIP (400 x 20%)	80
Completed and transferred (4,500 – 400) x 100%	4,100
Ending WIP (500 x 20%)	100
Total EUP	4,280

Journal Entries

Date	Particulars	Debit ($)	Credit ($)
1.	WIP Inventory-Mixing department	5,045
	Raw material		5,045
2.	WIP inventory-Mixing department	2,900
	Wages payable		2,900
3.	WIP inventory – mixing department	2,965
	Manufacturing overhead		2,965
4.	WIP inventory-cooking department	11,681
	WIP inventory – mixing department		11,681