Weighted Average Method, Physical Flow, Equivalent Units, Unit Costs, Cost Assignment, ABC 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: a. In Cutting, all direct materials are added at the beginning of the process. b. Beginning work in process consisted of 41,000 units, 20 percent complete with respect to direct labor and overhead. Costs in beginning inventory included direct materials, $1,205,000; direct labor, $222,800; and applied overhead, $150,000. C. Costs added to production during the month were direct materials, $2,704,200; direct labor, $3,457,200. 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 d. At the end of the month, 121,200 units were transferred out to Welding, leaving 13,600 units in ending work in process, or 25 percent complete. Required: 1. Prepare a physical flow schedule. Swasey Fabrication, Inc. Physical Flow Schedule Units to account for: Total units to account for Units accounted for: Total units accounted for 2. Calculate equivalent units of production for direct materials and conversion costs. Equivalent Units Direct Materials Conversion Costs 3. Compute unit cost under weighted average. Unit direct materials cost Unit conversion costs Total unit cost 4. Calculate the cost of goods transferred to Welding at the end of the month. Calculate the cost of ending inventory. Cost of goods transferred out Ending WIP Feedback Check My Work 2. To calculate equivalent units, weighted average counts prior-period output in BWIP as belonging to the current period. So all completed units are treated as output of the current period. 3. Add beginning and current period production costs and divide by equivalent units. Calculate for direct materials and conversion costs. Add two together to calculate total unit cost. 4. The cost of goods (services) transferred out is the unit cost multiplied by the units completed. The cost of EWIP is the unit cost multiplied by the equivalent units found in EWIP. The partially completed units and all their associated costs are transferred to the next process (department) by debiting the WIP account of the process (department) receiving the unit and crediting the WIP account of the transferring process (department). 5. Prepare the journal entry that transfers the goods from Cutting to Welding. o
