18-29
18-39 (30−35 min.) Weighted-average method, inspection at 80% completion (chapter
appendix).
The computation and allocation of spoilage is the most difficult part of this problem. The units in
the ending inventory have passed inspection. Therefore, of the 100,000 units to account for
(12,500 beginning + 87,500 started), 12,500 must have been spoiled in May [100,000 – (62,500
complete.
• Direct materials units are included for ending work in process, which is 95%
complete, but not for beginning work in process, which is 25% complete. The reason
is that direct materials are added when production is 90% complete. The ending work
in process, therefore, contains direct materials units; the beginning work in process
does not.
18-30
SOLUTION EXHIBIT 18-39
Weighted-Average Method of Process Costing with Spoilage;
Finishing Department of the Kim Company for August.
PANEL A: Steps 1 and 2—Summarize Output in Physical Units and Compute Output in
Equivalent Units
(Step 1)
(Step 2)
Equivalent Units
Flow of Production
Physical
Units
Transferred-
in Costs
Direct
Materials
Conversion
Costs
Work in process, beginning (given)
Started during current period (given)
To account for
Good units completed and transferred out
during current period:
Normal spoilage on good units*
6,250 100%; 6,250 0%; 6,250 80%
Work in process, ending‡ (given)
25,000 100%; 25,000 100%; 25,000 95%
Normal spoilage on ending WIP**
2,500 100%; 2,500 0%; 2,500 80%
Abnormal spoilage†
3,750 100%; 3,750 0%; 3,750 80%
Accounted for
Equivalent units of work done to date
12,500
87,500
100,000
62,500
6,250
25,000
2,500
3,750
100,000
62,500
6,250
25,000
2,500
3,750
100,000
62,500
0
25,000
0
0
87,500
62,500
5,000
23,750
2,000
3,000
96,250
*Normal spoilage is 10% of good units that pass inspection: 10% 62,500 = 6,250 units. Degree of completion of normal
spoilage in this department: transferred-in costs, 100%; direct materials, 0%; conversion costs, 80%.
‡Degree of completion in this department: transferred-in costs, 100%; direct materials, 100%; conversion costs, 95%.
**Normal spoilage is 10% of the good units in ending WIP that have passed the inspection point, 10% 25,000 = 2,500 units.
Degree of completion of normal spoilage in this department: transferred-in costs, 100%; direct materials, 0%; conversion
costs, 80%.
†Abnormal spoilage = Actual spoilage − Normal spoilage = 12,500 − 8,750 = 3,750 units. Degree of completion of abnormal
18-31
SOLUTION EXHIBIT 18-39
PANEL B: Steps 3, 4, and 5— Summarize Total Costs to Account For, Compute Cost per
Equivalent Unit, and Assign Total Costs to Units Completed, to Spoiled Units, and to Units
in Ending Work in Process
Total
Production
Costs
Transferred-
in Costs
Direct
Materials
Conversion
Costs
$ 156,125
3,192,875
$3,349,000
$103,625
809,375
$913,000
$913,000
100,000
$ 9.13
$ −
819,000
$819,000
$819,000
87,500
$ 9.36
$ 52,500
1,564,500
$1,617,000
$1,617,000
96,250
$ 16.80
$2,205,625
141,063
2,346,688
84,638
861,250
56,425
917,675
$3,349,000
62,500# ($9.13 + $9.36 + $16.80)
(6,250# $9.13) + (0# $9.36) + (5,000# $16.80)
(3,750# $9.13) + (0# $9.36) + (3,000# $16.80)
(25,000# $9.13) + (25,000# $9.36) + (23,750# $16.80)
(2,500# $9.13) + (0# $9.36) + (2,000# $16.80)
$913,000 + $819,000 + $1,617,000
#Equivalent units of transferred-in costs, direct materials, and conversion costs calculated in Step 2 in Panel A.
18-32
18-40 (20 min.) Job costing, rework.
1. Manufacturing Overhead Control (rework costs) 1,800
Materials Control ($12 50) 600
Wages Payable ($9 50) 450
2. Total rework costs for XD1 chips in August 2011 are as follows:
3. Manufacturing costs of job #3879 before rework:
200 units ($60+$12+$38) $22,000
Add: Normal rework costs 1,800
Total cost of job #3879 $23,800
18-33
18-41 Physical units, inspection at various levels of completion, weighted average process
costing report
1.
Inspection
Inspection
Inspection
at 30%
at 60%
at 100%
Work in process, beginning (40%)*
Started during November
To account for
20,000
100,000
120,000
20,000
100,000
120,000
20,000
100,000
120,000
Good units completed and transferred out
Normal spoilage
75,000a
10,200b
75,000a
12,600c
75,000a
9,000d
Abnormal spoilage (15,000 – normal spoilage)
Work in process, ending (70%)*
Accounted for
4,800
30,000
120,000
2,400
30,000
120,000
6,000
30,000
120,000
*Degree of completion for conversion costs at the dates of the work-in-process inventories
a20,000 beginning inventory +100,000 –15,000 spoiled – 30,000 ending inventory = 75,000.
b12% (100,000 units started – 15,000 units spoiled) = 12% 85,000 = 10,200; beginning work-in-process
inventory is excluded because it was already 40% complete at Nov 1 and past the inspection point.
c12% (120,000 units – 15,000 ) = 12% 105,000 = 12,600, because all units passed the 60% completion
inspection point in November.
d 12% 75,000 = 9,000, because 75,000 units are fully completed and inspected during November.
2. There are different amounts of normal and abnormal spoilage because the spoilage is detected
at different points in the process. At the 30% inspection point, the beginning work in process
problem.)
3. Solution Exhibit 18-41 summarizes total costs to account for, calculates the equivalent units of
18-34
SOLUTION EXHIBIT 18-41
Weighted-Average Method of Process Costing with Spoilage;
Forging Department of Lester Company for November.
PANEL A: Steps 1 and 2—Summarize Output in Physical Units and Compute Output in
Equivalent Units
(Step 1)
(Step 2)
Equivalent Units
Flow of Production
Physical
Units
Direct
Materials
Conversion
Costs
Work in process, beginning (given)
Started during current period (given)
To account for
Good units completed and transferred out
during current period:
Normal spoilage (at 60% inspection pt)
12,600 100%; 12,600 60%
Abnormal spoilage (at 60% inspection pt)
2,400 100%; 2,400 60%
Work in process, ending‡ (given)
30,000 100%; 30,000 70%a
Accounted for
Equivalent units of work done to date
20,000
100,000
120,000
75,000
12,600
2,400
30,000
120,000
75,000
12,600
2,400
30,000
120,000
75,000
7,560
1,440
21,000
105,000
aDegree of completion in this department: direct materials, 100%; conversion costs, 70%.
18-35
SOLUTION EXHIBIT 18-41
PANEL B: Steps 3, 4, and 5— Summarize Total Costs to Account For, Compute Cost per
Equivalent Unit, and Assign Total Costs to Units Completed, to Spoiled Units, and to Units
in Ending Work in Process
Total
Production
Costs
Direct
Materials
Conversion
Costs
(Step 3) Work in process, beginning (given)
Costs added in current period (given)
Total costs to account for
(Step 4) Costs incurred to date
Divided by equivalent units of work done to date
Cost per equivalent unit
(Step 5) Assignment of costs
Good units completed and transferred out (75,000 units)
$ 166,500
1,200,000
$1,366,500
$ 64,000
200,000
$264,000
$264,000
120,000
$ 2.20
$ 102,500
1,000,000
$1,102,500
$1,102,500
105,000
$ 10.50
Costs before adding normal spoilage
Normal spoilage (12,600# units, 7560# units)
(A) Total costs of good units completed and
transferred out
(B) Abnormal spoilage (2,400# units, 1,440# units)
(C) Work in process, ending (30,000# units, 21,000# units)
(A)+(B)+(C) Total costs accounted for
$ 952,500
107,100
1,059,600
20,400
286,500
$1,366,500
(75,000 $2.20) +
(12,600 2.20) +
(2,400# 2.20) +
(30,000 2.20) +
$264,000 +
(75,000 10.50)
(7,560 10.50)
(1,440 10.50)
(21,000 10.50)
$1,102,500
#Equivalent units of direct materials and conversion costs calculated in Step 2 in Panel A above.