18-24 Weighted-average method, spoilage. Chipcity Inc. is a fast-growing manufac

Question

18-24 Weighted-average method, spoilage. Chipcity Inc. is a fast-growing manufacturer of computer forchips. Direct materials are added at the start of the production process. Conversion costs are added evenly during the process. Some units of this product are spoiled as a result of defects not detectable before inspection of finished goods. Spoiled units are disposed of at zero net disposal value. Chipcity uses the weighted-average method of process costing. Summary data for September 2015 are Direct Conversion Costs S 15,300 30% Physical Units (computer chips)Materials Work-in-process, beginning inventory (Sept. 1) Degree of completion of beginning WIP $ 96,000 100% 600

Explanation / Answer

EXPLANATION -- I am sending you the answer for this question by both FIFO as well as weighted average method for better understanding and explanation with journal entries and all the workings required -

Citychip Cost of Production Report Degree of Completion Physical Flow Equivalent Units Units to Account for: D/M Conversion D/M Conversion Added to mfg. Beginning Evenly BWIP 100% 30% 600 Started during April 2,550 Total 3,150 Units Accounted for: Good units completed 2,100     From BWIP 0% 70% 600 0 420 B     Started And Completed 100% 100% 1,500 1,500 1,500 C Normal Spoilage (15% of good units) 100% 100% 315 315 315 Abnormal Spoilage (Final Inspection) 100% 100% 285 285 285 EWIP 100% 40% 450 450 180 D Total 3,150 Calculation of Equivalent Units FIFO Equivalent Units (A) 2,550 2,700 Plus BWIP EU from previous period 600 180 A Weighted Average Equivalent Units (B) 3,150 2,880 Costs to Account for: D/M Conversion Total BWIP $96,000 $15,300 $111,300 Current Costs Added This Period (1) 567,000 230,400 797,400 Total (2) $663,000 $245,700 $908,700 Cost per Equivalent Unit: FIFO (1) / (A) $222.3529 $85.3333 $307.6863 Weighted Average (2) / (B) $210.4762 $85.3125 $295.7887 Costs Accounted for: Fifo Method (Problem 18-25) Costs Associated with Completed Units $160.00 From BWIP $85.00     Costs Assigned to BWIP $96,000.00 $15,300.00 $111,300.00 $245.00     D/M 0.00 0.00     Conversion Costs 35,840.00 35,840.00         Total $96,000.00 $51,140.00 $147,140.00 $245.2333 From Units Started & Completed 333,529.41 128,000.00 461,529.41 $307.6863 Normal Spoilage 70,041.18 26,880.00 96,921.18 $307.6863      Total Cost Associated with Units Transferred-out $499,570.59 $206,020.00 $705,590.59 $335.9955 Abnormal Spoilage $63,370.59 $24,320.00 $87,690.59 $307.6863 Cost Assigned to EWIP Units D/M Costs $100,058.82 $100,058.82 Conversion Costs $15,360.00 15,360.00     Total Cost Assigned to EWIP $100,058.82 $15,360.00 $115,418.82 Total Costs Accounted for $663,000.00 $245,700.00 $908,700.00 $908,700.00 Costs Accounted for: Weighted Average Method (Problem 18-24) Total Cost Associated with Units Transferred-out Costs Associated with Units Completed $442,000.00 $179,156.25 $621,156.25 $295.7887 Normal Spoilage 66,300.00 26,873.44 93,173.44 $295.7887      Total Cost Associated with Units Transferred-out $508,300.00 $206,029.69 $714,329.69 $340.1570 Abnormal Spoilage $59,985.71 $24,314.06 $84,299.78 $295.7887 Cost Assigned to EWIP Units D/M Costs $94,714.29 $94,714.29 Conversion Costs $15,356.25 15,356.25     Total $94,714.29 $15,356.25 $110,070.54 Total Costs Accounted for $663,000.00 $245,700.00 $908,700.00

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