Purchase Solution

equivalent production-weighted average method

Not what you're looking for?

Ask Custom Question

Study Guide
Practice Exercise

Why is a process cost system not appropriate for company that produce items that are distinctly different form one another?

What is the weighted average method of determining equivalent units? Why is it used? What are its weaknesses?

Process costing: determining equivalent units and allocating costs

Walker Corporation, which makes suitcases, completed 21,000 suitcases in august 2006. at the end of august, work in process inventory consisted of 3,000 suitcases estimated to be 40 percent complete. Total product costs for August amounted to $666,000.

Required
a. Determine the cost per equivalent unit.
b. Determine the cost of the goods transferred to finished goods.
c. Determine the cost of the ending work in process inventory.

Exercise 12 21B on page 564

Cowboy Gifts makes unique western gifts that are sold at souvenir shops. One of the company's more popular products is a ceramic Eagle that is produced in a mass production process that entails two manufacturing stages. In the first production stage ceramic glass is heated and molded into the shape of the Eagle by the Corporation Department. Finally, color and artistic detail is applied to the Eagle by the Finishing Department. The company has jus hired a new accountant who will be responsible for preparing the Cost of Production Report for June 2006. The account is given the following inventory from which to prepare his report.

Department Cost Information for June

Compression Finishing
Costs in beginning inventory $3000 $14400
Costs added during June:
Materials $42000 $18120
Labor $20000 $13200
Overhead $90000 $62000

Department Product Information for June

Compression Finishing
Units in beginning in inventory 5000 1800
Units started 26000 23000
Units in ending inventory 8000(25% complete) 4800(80% complete)

Required

a. Prepare a Cost of Production Report for the Compression Department for June.
b. Prepare a Cost of Production report for the Finishing Department for June.
c. If 48000 units are sold in June for $160,000, determine the company's gross margin for June.

Purchase this Solution

Solution Summary

The solution contains the answers for two questions :1. Difference between process costing and job costing 2. computation of equivalent units by weighted average method of two departments and also the weakness of weighted average method.

Solution Preview

Dear student,
1. Answer to question no:1

Process costing system is adopted when the similar units are produced on large scale. The costs incurred in the manufacturing of the products are accumulated from first process till the last process and the cost per unit is computed on the basis of the cost accumulated in the last process. The process costing system cannot be applied when each unit is different because the cost of dissimilar units cannot be ...

Purchase this Solution


Free BrainMass Quizzes
Lean your Process

This quiz will help you understand the basic concepts of Lean.

Paradigms and Frameworks of Management Research

This quiz evaluates your understanding of the paradigm-based and epistimological frameworks of research. It is intended for advanced students.

Employee Orientation

Test your knowledge of employee orientation with this fun and informative quiz. This quiz is meant for beginner and advanced students as well as professionals already working in the HR field.

Understanding Management

This quiz will help you understand the dimensions of employee diversity as well as how to manage a culturally diverse workforce.

MS Word 2010-Tricky Features

These questions are based on features of the previous word versions that were easy to figure out, but now seem more hidden to me.