PROCESS COSTING SAMPLE PROBLEM

adapted from Cost Accounting Foundations and Evolutions, 8 th edition by Michael R. Kinney and Cecily A. Raiborn
Chapter 6 (Process Costing) page 238

Plaid-Clad manufactures golf bags in a two-department process: Assembly and Finishing. The Assembly
Department uses weighted average costing; the percentage of completion of overhead in this department is
unrelated to direct labor. The Finishing Department adds hardware to the assembled bags and uses FIFO
costing; overhead is applied in this department on a direct labor basis. For June, the following production
data and costs were gathered:

Assembly Department: Units

Beginning WIP Inventory (100% complete for DM;
40% complete for DL; 30% complete for OH) 250
Units started 8,800
Ending WIP Inventory (100% complete for DM;
70% complete for DL; 90% complete for OH) 400

Assembly Department: Costs

DM DL OH Total
Beginning WIP Inventory $ 3,755 $ 690 $ 250 $ 4,695
Current period 100,320 63,606 27,681 191,607
Total costs $104,075 $64,296 $27,931 $196,302

Finishing Department: Units

Beginning WIP Inventory (100% complete for transferred in;
15% complete for DM; 40% complete for conversion) 100
Units transferred in 8,650
Ending WIP Inventory (100% complete for transferred in;
30% complete for DM; 65% complete for conversion) 200

Finishing Department: Costs

Transferred In DM Conversion Total
Beginning WIP Inventory $ 2,176 $ 30 $ 95 $ 2,301
Current period 188,570 15,471 21,600 225,641
Total costs $190,746 $15,501 $21,695 $227,942

Required:
1. Prepare a cost of production report for the Assembly Department.
2. Prepare a cost of production report for the Finishing Department.
3. Prepare T-accounts to show the flow of costs through the Assembly and Finishing Departments.
4. Prepare the journal entries for the Finishing Department for June.

___________________________________________________
Adapted from Cost Accounting Foundations and Evolutions, 8 th edition by Michael R. Kinney and Cecily A. Raiborn
Chapter 6 (Process Costing) page 238