MINI- CASE 5 (Process Costing)

Cyclo Cap Inc. began business making cycling helmets several years ago and uses the weighted average method to account for inventories. The company has two departments: Forming and Finishing. The Forming department produces the foam structure of the helmet and the hard printed shell and pairs the parts, but does not glue the pieces together. The Finishing department inspects the parts received from Forming ensuring a perfect fit and glues the parts together. The finishing process is completed following the installation of a chin strap to the glued helmet. The Finishing department has direct materials costs and conversion costs. You are being asked to focus on the Finishing department.

As soon as the foam structures and hard shells are ready to be glued and the straps are ready to be added, they are transferred directly to the Finishing department. Direct materials are added at a point when the Finishing process is at least 85% complete. Conversion costs, however, are added evenly throughout the Finishing process. When all processing is complete, the helmets are immediately transferred to Finished Goods. The following is a summary of the January 2020 operations of the Finishing department. Cyclo Cap uses the weighted average method.

	Finishing Department
	Helmets	Costs	Direct	Conversion
	Physical Units	Transferred In	Materials	Costs
Beginning work in process	1,400	$42,050	$0	$15,780
Degree of completion, Beginning WIP		100%	0%	45%
Transferred in during January 2020	2,800
Completed and transferred out during Jan.	3,200
Ending work in process (Jan. 31)	1,000
Degree of completion, Ending WIP		100%	0%	65%
Total costs added during January		$148,000	$27,392	$72,000

Required:

1. Calculate the equivalent units and assign the January costs to units completed (and transferred out) and to units in ending work in process.
2. Prepare a cost reconciliation.