Tamar Co. manufactures a single product in one department. All direct materials are added at the beginning of the manufacturing process. Conversion costs are added evenly throughout the process. During May, the company completed and transferred 25,200 units of product to finished goods inventory. Its 3,600 units of beginning work in process consisted of $20,400 of direct materials and $248,940 of conversion costs. It has 2,700 units (100% complete with respect to direct materials and 80% complete with respect to conversion) in process at month-end. During the month, $677,100 of direct material costs and $2,350,260 of conversion costs were charged to production. 1. Prepare the company’s process cost summary for May using the weighted-average method.
2. Prepare the journal entry dated May 31 to transfer the cost of completed units to finished goods inventory. (Do not round intermediate calculations.)

Required 1

Process cost summary for May

Inputs

                                                     Units            Dollars

Beginning Work In Process        3,600        $269,340

Started                                       24,300      $3,027,360

Totals                                         27,900      $3,296,700

Output

                                                     Units            Dollars

Transfer to Finished Goods      25,200     $3,024,000

Closing  Work In Process            2,700         $272,700

Total                                            27,900     $3,296,700

Required 2

May 31

Finished Goods Inventory 3,024,000 (debit)

Work In Process 3,024,000 (credit)

Explanation:

Equivalent Units of Production Calculation

Materials

Units Completed and Transferred ( 25,200 × 100%) = 25,200

Units in Closing Work In Process ( 2,700 × 100%)     =    2,700

Total Equivalent Units of Production                          =  27,900

Conversion Cost

Units Completed and Transferred ( 25,200 × 100%) = 25,200

Units in Closing Work In Process ( 2,700 × 80%)       =    2,160

Total Equivalent Units of Production                          =  27,360

Calculation of Cost per Equivalent Unit of Production

Cost per Equivalent Unit = Total Cost / Total Equivalent Units of Production

Materials = ( $20,400 + $677,100) / 27,900

               = $25.00

Conversion Cost = ( $248,940 + $2,350,260) / 27,360

                            = $95.00

Total Cost per Equivalent Unit = $120.00

The cost of completed units to finished goods inventory = 25,200 × $120.00 = $3,024,000.