Fast Co. produces its product through two processing departments. Direct materials are added at the start of production in the Cutting department, and conversion costs are added evenly throughout each process. The company uses monthly reporting periods for its weighted-average process costing system. The Work in Process Inventory-Cutting account has a balance of $98,300 as of October 1, which consists of $21,300 of direct materials and $77,000 of conversion costs.

During the month, the Cutting department incurred the following costs:

Direct materials $ 204,050
Conversion 837,960

At the beginning of the month, 39,000 units were in process. During October, the company started 158,000 units and transferred 168,000 units to the Assembly department. At the end of the month, the Cutting department's work in process inventory consisted of 29,000 units that were 80% complete with respect to conversion costs.

Prepare the Cutting department's process cost summary for October using the weighted average method.

First we find the Equivalent units, Then total costs and then allocate the costs to the different units such as finished Goods and WIP ending.

Explanation:

Fast Co.

Process Cost Summary

Particulars                 Units         %of Completion        Equivalent Units

                                                     Mat.    Con. Costs      Mat.    Con. Costs

Units Transferred   168,000        100       100               168,000  168,000

Ending Inventory    29,000         100        80               29,000     23,200

Total Equivalent Units                                                 197,000      191,200

                                      Materials               Conversion Costs    Total

WIP Opening                $21,300                  $ 77,000                 98300

Costs Added               $ 204,050                $ 835,960             1040010

Total Costs                  $ 225,350                 $ 912,960           1138310 (a)

Material Cost Per unit = $ 225,350/197,000= $ 1.144

Conversion Costs Per Unit = $ 912,960/ 191,200 = $ 4.77

Total Units Transferred to Finished Goods = 168,000

Total Cost of F.G = Materials $ 1.144* 168,000= $ 191520

Total Cost of F.G = Conversion $ 4.77* 168,000= $ 801360

Costs Transferred To Finished Goods = $191520+$ 801360= $ 992880

Cost oF ending WIP units

Materials 29000*$ 1.144= $33 176

Conversion 23,200 * $4.77= 110664

Total Costs= $ 1443840

Total Costs Of Cutting Department= Costs Of Finished Goods + Costs Of WIP Ending

Total Costs Of Cutting Department=$ 992880+$ 1443840=$1136720(b)

If we see we find that $1138310 (a) and $1136720(b) are almost equal . There is a slight difference( 1590) because of the rounding off decimal numbers.