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Weighted Average Method, Physical Flow, Equivalent Units, Unit Costs, Cost Assignment, ABC

Swasey Fabrication, Inc., manufactures frames for bicycles. Each frame passes through three processes: Cutting, Welding, and Painting. In September, the Cutting Department of the Tulsa, Oklahoma, plant reported the following data:

1. In Cutting, all direct materials are added at the beginning of the process.
2. Beginning work in process consisted of 41,000 units, 20 percent complete with respect to direct labor and overhead. Costs in beginning inventory included direct materials, $1,205,000; direct labor, $222,500; and applied overhead, $150,000.
3. Costs added to production during the month were direct materials, $2,698,400; direct labor, $3,455,000. Overhead was assigned using the following information:

   Activity		Rate		Actual Driver Usage
   Inspection		$150 per inspection hour		4,000 inspection hours
   Maintenance		$750 per maintenance hour		1,600 maintenance hours
   Receiving		$300 per receiving order		2,000 receiving orders

4. At the end of the month, 121,200 units were transferred out to Welding, leaving 13,400 units in ending work in process, or 25 percent complete.

Required:

1. Prepare a physical flow schedule.

Swasey Fabrication, Inc. Physical Flow Schedule

Units to account for:
Units, beginning work in processUnits completed and transferred outUnits, ending work in processUnits, beginning work in process	Units, beginning work in process
Units completed and transferred outUnits, ending work in processUnits started (transferred in)Units started (transferred in)	Units started (transferred in)
Total units to account for	fill in the blank 30f622fde00d010_5
Units accounted for:
Units, beginning work in processUnits completed and transferred outUnits started (transferred in)	- Select -
Units, beginning work in processUnits, ending work in processUnits started (transferred in)	- Select -
Total units accounted for	fill in the blank 30f622fde00d010_10

Feedback

1. The physical flow schedule traces the units in process regardless of their stage of completion and provides the information needed for preparing the equivalent units schedule.

2. Calculate equivalent units of production for direct materials and conversion costs.

	Equivalent Units
Direct Materials	fill in the blank a9597102aff3fb7_1
Conversion Costs	fill in the blank a9597102aff3fb7_2

3. Compute unit cost under weighted average.

Unit direct materials cost	$fill in the blank a9597102aff3fb7_3
Unit conversion costs	fill in the blank a9597102aff3fb7_4
Total unit cost	$fill in the blank a9597102aff3fb7_5

4. Calculate the cost of goods transferred to Welding at the end of the month. Calculate the cost of ending inventory.

Cost of goods transferred out	$fill in the blank a9597102aff3fb7_6
Ending WIP	$fill in the blank a9597102aff3fb7_7

Feedback

2. To calculate equivalent units, weighted average counts prior-period output in BWIP as belonging to the current period. So all completed units are treated as output of the current period.

3. Add beginning and current period production costs and divide by equivalent units. Calculate for direct materials and conversion costs. Add two together to calculate total unit cost.

4. The cost of goods (services) transferred out is the unit cost multiplied by the units completed. The cost of EWIP is the unit cost multiplied by the equivalent units found in EWIP. The partially completed units and all their associated costs are transferred to the next process (department) by debiting the WIP account of the process (department) receiving the unit and crediting the WIP account of the transferring process (department).

5. Prepare the journal entry that transfers the goods from Cutting to Welding.

	CashFinished GoodsOverhead ControlWork in Process-CuttingWork in Process-Welding	- Select -
	CashFinished GoodsOverhead ControlWork in Process-CuttingWork in Process-Welding