Switch co manufactures a single product in one

department

Switch Co. manufactures a single product in one department. Direct labor and overhead are
added evenly throughout the process. Direct materials are added as needed. The company
uses monthly reporting periods for its weighted-average process cost accoun
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product-in-one-department

Switch Co. manufactures a single product in one department. Direct labor and overhead are
added evenly throughout the process. Direct materials are added as needed. The company
uses monthly reporting periods for its weighted-average process cost accounting. During
January, Switch completed and transferred 220,000 units of product to finished goods inventory.
Its 10,000 units of beginning goods in process consisted of $7,500 of direct materials, $14,240
of direct labor, and $35,600 of factory overhead. 40,000 units (50% complete with respect to
direct materials and 30% complete with respect to direct labor and over-head) are in process at
month end. After entries for direct materials, direct labor, and overhead for January, the
company’s Goods in Process Inventory account follows.

Required:Â
1. Prepare the company’s process cost summary for January using the weighted average
method.Â
2. Prepare the journal entry dated January 31 to transfer the cost of completed units to finished
goods inventory.
Analysis Components:Â
3. The cost accounting process depends on several estimates.Â
a. Identify two major estimates that affect the cost per equivalent unit.Â
b. In what direction might you anticipate a bias from management for each estimate in part 3a
(assume that management compensation is based on maintaining low inventory amounts)?
Explain your answer.Â

Switch co manufactures a single product in one department

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