72 8. Exercises (Part 4) – Weight average and FIFO questions. New problems created by Rob Zatulsky, Fall 2022

Weighted Average

Question 1

Terry Company, which uses the weighted average method, produces a product that passes through two departments: mixing and baking. In the mixing department, all materials are added at the beginning of the process. All other inputs are added uniformly.

The following information pertains to the baking department for June:

1. WIP, June 1: 100,000 units. Conversion costs were 50% complete.

The following costs were assigned

     Materials       $20,000

     Labour            10,000

     Overhead        30,000

   2. WIP, June 30: 50,000 units. Materials were 95% complete and conversion costs were 75% complete.

3. Units completed and transferred out: 370,000 units.

The following costs were added during the month:

     Materials        $350,000

     Labour              95,000

     Overhead        300,000

Prepare a production cost report for the baking department for the month of June.

Question 2

Irang Inc. manufactures cellphone cases. Each case is shaped from a piece of rubber in the moulding department. The cases are then transferred to the finishing department to be cut and painted. Irang uses the weighted average method and materials are added uniformly through the process.

In March, the moulding department reported the following data:

1. Beginning WIP consisted of 5,000 units, 20% complete. Costs in beginning inventory totaled $6,750 – 70% of which were direct materials and 20% were in direct labour.
2. Costs added to production during the month were $9,765. (70% in direct materials and 20% in direct labour).
3. At the end of the month, 18,000 units were transferred out to the finishing department. 4,000 units remained in the ending inventory, conversion costs 25% complete.

Prepare a production cost report for the moulding department for the month of March.

FIFO Method

Question 1

Terry Company , which uses the FIFO method, produces a product that passes through two departments: mixing and baking. In the mixing department, all materials are added at the beginning of the process. All other inputs are added uniformly.

The following information pertains to the mixing department for July:

1. WIP, July 1: 200,000 kilograms. Conversion costs were 40% complete.

The following costs were assigned:

     Materials         $30,000

     Labour                15,000

     Overhead           45,000

   2. WIP, July 31: 80,000 kilograms. Conversion costs were 70% complete.

3. Units completed and transferred out: 1,425,000 kilograms.

The following costs were added during the month:

     Materials     $1,450,000

     Labour             595,000

     Overhead        600,000

Prepare a production cost report for the mixing department for the month of July.

Question 2

Irang Inc. manufactures cellphone cases. Each case is shaped from a piece of rubber in the moulding department. The cases are then transferred to the finishing department to be cut and painted. Irang uses the FIFO method and materials are added uniformly through the process.

In November, the moulding department report consisted of the following data:

1. Beginning WIP consisted of 7,000 units, 60% complete. Costs in beginning inventory totaled $2,400 split evenly between materials and conversion costs.
2. Costs added to production during the month were $19,450, 66% being conversions costs.
3. At the end of the month, 25,000 units were transferred out to the finishing department. 4,000 units remained in the ending inventory, 30% complete.

Prepare a production cost report for the moulding department for the month of November. 

Question 3

Joorisity Company produces a product that passes through an assembly process and a finishing process. All manufacturing costs are added uniformly for both processes. The following information was obtained for the assembly department in August:

1. WIP August 1, had 50,000 units (Direct materials 75% complete and conversions was 70% complete) and the following costs:

Direct material     $175,656

Direct labour           $66,788

Overhead applied     35,980

   2. During August, 185,000 units were completed and transferred to the finishing department, and the following costs were added to production:

Direct materials      $275,680

Direct labour              111,900

Overhead applied       87,340

   3. On August 31, there were 25,400 partially completed units in process. These units were 65% complete.

Prepare a production report for the assembly department using the FIFO method. 

Question 4

Melnyk Industries produces a premium ice melter for the Canadian winters. The product goes through three manufacturing processes: mixing, crushing, packaging. In the mixing department the chemicals are mixed together at specific proportions; in the crushing department, the product is dried out and crushed into pellets; in the packaging department, the pellets are portioned out and sealed in their proper containers.

The company uses the FIFO method of costing to calculate production costs, and materials are added in the mixing department at the beginning of the process. During July, the following information was determined for the mixing department:

BWIP:

Current Production:

EWIP

Prepare a production report for the mixing department using the FIFO method.