Refer to Exercise 28. Prepare a production cost report for Southwest Corporation for the month of April using the format shown in Figure 4.9.

In Exercise 28

Southwest Corporation uses the weighted average method for its process costing system. The Assembly department at Southwest began the month of April with 6,000 units in work-in-process inventory, all of which were completed and transferred out during April. An additional 8,000 units were started during the month, 3,000 of which were completed and transferred out during April. A total of 5,000 units remained in work-in-process inventory at the end of April and were at varying levels of completion, as shown in the following.

Direct materials €¦€¦€¦€¦€¦€¦€¦..     40 percent complete

Direct labor€¦€¦€¦€¦€¦€¦€¦€¦€¦€¦.      30 percent complete

Overhead€¦€¦€¦€¦€¦€¦€¦€¦€¦€¦€¦.      50 percent complete

The following cost information is for the Assembly department at Southwest Corporation for the month of April. 

 

Required: 

a. Determine the units to be accounted for and units accounted for; then calculate the equivalent units for direct materials, direct labor, and overhead. 

b.Calculate the cost per equivalent unit for direct materials, direct labor, and overhead.

c. Assign costs to units transferred out and to units in ending WIP inventory.

d. Confirm that total costs to be accounted for (from step 2) equals total costs accounted for (from step 4). Note that minor differences may occur due to rounding the cost per equivalent unit in step 3. 

e. Explain the meaning of equivalent units.

In figure 4.9

Transcribed Image Text:

Desk Products, Inc. Assembly Department Production Cost Report: Weighted Average Method Month Ended May 31 Step 1: Summary of physical units and equivalent unit calculations Physical Units Units to Be Accounted For Units in beginning WIP inventory Units started during May Total units to be accounted for 3,000 6,000 9,000 Equivalent Units Physical Units Direct Labor Direct Units Accounted For Materials Overhead Units completed and transferred out 4,000 4,000 4,000 4,000 Units in ending WIP inventory Total units accounted for 5,000 9,000 1,500 5,500 3,000 1,500 5,500 7,000 Step 2: Summary of costs to be accounted for Direct Direct Costs to Be Accounted For Materials Labor Overhead Total $ 95,000 $ 40,000 70,000 $110,000 $ 26,000 40,000 $ 66,000 $ 161,000 225,000 $ 386,000 Costs in beginning WIP inventory Costs incurred during May Total costs to be accounted for 115,000 5 210,000 Step 3: Calculation of cost per equivalent unit Direct Direct Materials Labor Overhead Total $ 210,000 Total costs to be accounted for Total equivalent units accounted for Cost per equivalent unit $ 66,000 + 5,500 $110,00 + 7,000 + 5,500 30 20 12 62 Step 4: Assign costs to units transferred out and units in ending WIP inventory. Direct Direct Materials Labor Overhead Total $ 120,000 $ 80,000 $ 48,000 18,000 $ 248,000 138,000 Costs assigned to units transferred out Costs assigned to ending WIP inventory Total costs accounted for 90,000 30,000 $ 386,000