Question
Management wants to know the difference between using the weighted average and FIFO methods. Every picture frame passes through two departments: the assembly department and
Management wants to know the difference between using the weighted average and FIFO methods.
Every picture frame passes through two departments: the assembly department and the finishing department. This problem focuses on the assembly department. The process-costing system at Clear View has a single direct-cost category (direct materials) and a single indirect-cost category (conversion cost). Direct materials are added when the assembly department process is 10% complete. Conversion costs are added evenly during the assembly departments process.
Consider the following data for the assembly department in April 2014:
Physical unit Direct Conversion
(Frames) Materials Costs
Work in process April 1 60 $1530 $156
Started during April 2014 510
Completed during April 2014 450
Work in Process, April 30 120
Total Costs added during April 2014 $17,850 $11,544
Degree of completion: direct materials, 100%; conversion costs, 40%
Degree of completion: direct materials, 100%; conversion costs, 15%
Summarize the total assembly department costs for April 2014, and assign them to units completed (and transferred out) and to units in ending work in process using the weighted average method.
What issues should a manager focus on when reviewing the equivalent units calculation?
Summarize the total assembly department costs for April 2014, and assign them to units completed (and transferred out) and to units in ending work in process using the FIFO method.
Explain any difference between the cost of work completed and transferred out and the cost of ending work in process in the assembly department under the weighted-average method and the FIFO method. Should Clear Views managers choose the weighted-average method or the FIFO method? Explain briefly.
Here are the sheets that need to be filled out with the information:
Summarize the Flow of Physical Units and Compute Output in Equivalent Units;Weighted-Average Method of Process Costing, Assembly Department of Clear View for April 2014.
Equivalent Units | |||
Physical | Direct | Conversion | |
Flow of Production | Units | Materials | Costs |
Work in process, beginning | |||
Started during current period | |||
To account for | |||
Completed and transferred out | |||
during current period | |||
Work in process, ending | |||
Accounted for | |||
Equivalent units of work done to date | |||
Direct materials = | |||
Conversion costs = |
Total | |||
Production | Direct | Conversion | |
Costs | Materials | Costs | |
Work in process, beginning | |||
Costs added in current period | |||
Total costs to account for | |||
Costs incurred to date | |||
equivalent units of work done | |||
Cost per equivalent unit | |||
Assignment of costs: | |||
Completed and transferred out | |||
Work in process, ending | |||
Total costs accounted for |
FIFO Method
Equivalent Units | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Physical | Direct | Conversion | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Flow of Production | Units | Materials | Costs | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Work in process, beginning | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Started during current period | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
To account for | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Completed and transferred out | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Started and Completed | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Work in process, ending | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accounted for | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Equivalent units of work done to date | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
The following table summarizes the costs assigned to units completed and those still in process under the weighted-average and FIFO process-costing methods
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