Problem 8-50 Prepare a Production Cost Report and Adjust Inventory Balances: Weighted-Average Method (LO 8-3, 4) The records of Fremont Corporations initial and unaudited accounts show the following ending inventory balances, which must be adjusted to actual costs. Units Unaudited Costs Work-in-process inventory 215,000 $ 818,897 Finished goods inventory 26,000 366,250 As the auditor, you have learned the following information. Ending work-in-process inventory is 40 percent complete with respect to conversion costs. Materials are added at the beginning of the manufacturing process, and overhead is applied at the rate of 80 percent of the direct labor costs. There was no finished goods inventory at the start of the period. The following additional information is also available. Costs Units Direct Materials Direct Labor Beginning inventory (80% complete as to labor) 93,000 $ 435,600 $ 524,000 Units started 590,000 Current costs 1,750,000 2,246,000 Units completed and transferred to finished goods inventory 468,000 Required: a. Prepare a production cost report for Fremont using the weighted-average method. (Hint: You will need to calculate equivalent units for three categories: materials, labor, and overhead.) (Round "Cost per equivalent unit" to 2 decimal places.)

	DETAILS
	Total Costs	Materials	Labor	Overhead
Costs to be accounted for:
Costs in beginning WIP inventory		$435,600	$524,000	?
Current period costs		1,750,000	2,246,000	?
Total costs to be accounted for	$0	$2,185,600	$2,770,000	?
Cost per equivalent unit:
Materials		$3.20
Labor			$5.00
Overhead				?
Costs accounted for:
Costs assigned to units transferred out:
Materials	$1,497,600	$1,497,600
Labor	2,340,000		2,340,000
Overhead				?
Total costs of units transferred out	$3,837,600
Costs assigned to ending WIP inventory:
Materials	688,000	688,000
Labor	430,000		430,000
Overhead				?
Total ending WIP inventory	$1,118,000
Total costs accounted for	$4,955,600	$2,185,600	$2,770,000	$0

Journal entry worksheet

• Record the difference between the unaudited records and actual ending balances of Work-in-Process Inventory and Finished Goods Inventory.

Note: Enter debits before credits.

Event	General Journal	Debit	Credit
1	Work in process
	Finished goods
	Cost of goods sold

c. If the adjustment in requirement (b) is not made, will the companys income and inventories be overstated or understated?

Income would have been
Work in process would have been
Finished goods would have been