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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,

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 40,500 units, 20 percent complete with respect to direct labor and overhead. Costs in beginning inventory included direct materials, $1,215,000; direct labor, $222,600; and applied overhead, $150,000.

  3. Costs added to production during the month were direct materials, $2,565,000; direct labor, $3,471,150. 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, 121,500 units were transferred out to Welding, leaving 13,500 units in ending work in process, or 25 percent complete.

Required:

  1. Prepare a physical flow schedule.

    Answer

    Check Figures: Total units accounted for = 135,000

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

  3. Compute unit cost under weighted average.

    Answer

    Check Figures: Conversion cost = $5,871,150

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

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

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