Chapter 4: Process-Costing Systems

Weighted-average method of process costing

Steps 1 and 2: Summarize output in physical units and calculate equivalent
units.
(Step 2)
(Step 1) Equivalent units
Physical Direct Conversion
Flow of production units materials costs
Work in progress, opening 300
+ Started during current period 2200
= To account for
2500
Completed and transferred out during Fachbereich Elektrische
current period 2000 2000 2000 Energietechnik

+ Work in progress, closing 500 500 125 Dipl.-Kffr.

= Accounted for (physical units) Sabine Katterbach
= Work done to date (equivalent units)
2500 2500 2125
Center for Business Education

Steps 3, 4 and 5: Compute equivalent unit costs, summarize total costs to Telefon
account for, and assign these costs to units completed and units in closing 02921 378-3368
E-Mail
work in progress using the weighted-average method.
katterbach.sabine@fh-swf.de

Total
production Direct Conversion Standort Soest
costs materials costs Lübecker Ring 2
59494 Soest
Step 3: Compute equivalent-unit costs
Work in progress, opening 9625 7500 2125
+ Costs added in current period 112500 70000 42500
= Costs incurred to date =77500 =44625
: Equivalent units of work done to date :2500 :2125
= Equivalent-unit costs of work done to =31 21
date
Fachhochschule
Südwestfalen
Step 4: Summarize total costs Sitz: Iserlohn
Total costs to account for =122125
Hagen
Iserlohn
Step 5: Assignment of costs 2000*31 2000*21=
Completed and transferred out =104000 Meschede
=62000 42000 Soest
+ Work in progress, closing +18125 500*31= 125*21=
= Total costs accounted for www.fh-swf.de
=122125 15500 2625

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112500
Chapter 4: Process-Costing Systems
FIFO method of process costing
Steps 1 and 2: Summarize output in physical units and calculate equivalent
units.
(Step 2)
(Step 1) Equivalent units
Physical Direct Conversion
Flow of production units materials costs
Work in progress, opening 300
+ Started during current period 2200
= To account for 2500
Completed and transferred out during 2000
current period
a) From opening WIP -300 0 180
b) Started and completed 1700 1700 1700
+ Work in progress, closing 500 500 125
= Accounted for (physical units)
= Work done in current period (equivalent
2500 2200 2005
units)

Steps 3, 4 and 5: Compute equivalent unit costs, summarize total costs to

account for, and assign these costs to units completed and units in closing
work in progress using the FIFO method.
Total
production Direct Conversion
costs materials costs
Step 3: Compute equivalent-unit costs
Work in progress, opening
9625 7500 2125
Costs added in current period 112500 70000 42500
: Equivalent units of work done in current :2200 :2005
period
= Equivalent-unit costs of work done in =31,81 =21,20
current period
Step 4: Summarize total costs
Total costs to account for
=122125
Step 5: Assignment of costs
Completed and transferred out
a) From opening WIP 9625 7500 2125
21,20*180=
b) Work done in current period to 3816 0
complete opening WIP 3816
c) Started and completed 31,81*1700 21,20*1700
90117
Total costs of units completed and =54077 =36040
transferred out
31,81*500= 21,20*125=
+ Work in progress, closing 18555
= Total costs accounted for 15905 2650
=122113
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