Exercise 3

Gores Green Chemicals inventory goes through 2 distinct processes. Process 1 had beginning WIP inventory of $98,260 on October 1. Of this amount, $31,400 was the cost of direct materials, and $66,860 was for conversion costs. The 8,000 units in the beginning inventory were 30% complete with respect to both direct materials and conversion costs.

During October 17,000 units were transferred out, 500 were spoiled, and 4,500 units remain in ending inventory. Spoiled units were 100% complete with respect to materials and 50% complete with respect to conversion costs. The units in ending WIP were 80% complete with respect to direct materials and 40% complete with respect to conversion costs. Cost incurred during the period amounted to $390,600 for direct materials and $504,640 for conversion costs.

Required:

1. Prepare a production cost report for Process 1 using weighted-average costing.
2. What journal entry would be made after preparing the production cost report for process 1?

Follow Outline:

Production Report - Weighted-Average Method Step 1: Analysis of Physical Flor of Units: Beginning WIP 0.00 Started 0.00 Step 2: Compute Equivalent Units: Material: Conversi Trans-in Completed 0.00 0.00 Spoiled Ending WIP 0.00 0.00 0.00 0.00 0.00 Step 3: Summarize the total costs to be accounted' for: Material: Conversi Trans-i Total Cost of Beginning WIP + Costs during period - Total Costs to : Step 4: Compute Cost per Equie Material: Conversi Trans-in 0.00 s completed and to units Step 5: Assign unit costs from step 4 to u in ending work-in-process inventory Completed Spoiled Ending WIP Total