Introduction:
In
To Calculate:
Prepare the company’s process cost summary using the weighted average method.

Explanation of Solution
Solution and Explanation:
Process cost summary is given hereunder:
TAMAR CO. | |||||
PROCESS COST SUMMARY | |||||
DIRECT MATERIAL | |||||
DETAILS | NO OF UNITS | % COMPLETE | EQUIVALENT UNIT | COST $ | |
OPENING BALANCE | 3,000 | 19,800 | |||
COST INCURRED DURING THE MONTH | 496,800 | ||||
516,600 | |||||
UNITS COMPLETED AND TRANSFERRED | 22,200 | 100% | 22,200 | ||
WORK IN PROGRESS | 2,400 | 100% | 2,400 | ||
24,600 | |||||
Per Unit cost of Equivalent units | 21.00 | ||||
COST OF UNITS COMPLETED AND TARNSFERRED | 466,200 | ||||
COST OF WORK IN PROGRESS | 50,400 | ||||
TOTAL | 516,600 | ||||
CONVERSION COST | TOTAL MATERIAL AND CONVERSION | ||||
DETAILS | NO OF UNITS | % COMPLETE | EQUIVALENT UNIT | COST | |
OPENING BALANCE | 3,000 | 221,940 | 241,740 | ||
COST INCURRED DURING THE MONTH | 2,165,940 | 2,662,740 | |||
2,387,880 | 2,904,480 | ||||
UNITS COMPLETED AND TRANSFERRED | 22,200 | 100% | 22,200 | ||
WORK IN PROGRESS | 2,400 | 80% | 1,920 | ||
24,120 | |||||
Per Unit cost of Equivalent units | 99.00 | ||||
COST OF UNITS COMPLETED AND TARNSFERRED | 2,197,800 | 2,664,000 | |||
COST OF WORK IN PROGRESS | 190,080 | 240,480 | |||
TOTAL | 2,387,880 | 2,904,480 |
Conclusion : Process cost summary is given above.
Introduction:
In process costing cost of item produced and held in stock is determined based on their stage of completion. We first calculate Equivalent units to determine the number of units on which costs have to be allocated. The Equivalent units are calculated based on their stage of completion.
To Calculate:
Prepare the

Answer to Problem 4APSA
Solution: Journal Entry is as under:
Account Head | $ | $ |
Finished Goods Inventory | 2,664,000 | |
Production cost account | 2.664,000 | |
Finished Goods transferred from Production process cost account |
Explanation of Solution
Explanation:
Process cost summary is given hereunder:
TAMAR CO. | |||||
PROCESS COST SUMMARY | |||||
DIRECT MATERIAL | |||||
DETAILS | NO OF UNITS | % COMPLETE | EQUIVALENT UNIT | COST $ | |
OPENING BALANCE | 3,000 | 19,800 | |||
COST INCURRED DURING THE MONTH | 496,800 | ||||
516,600 | |||||
UNITS COMPLETED AND TRANSFERRED | 22,200 | 100% | 22,200 | ||
WORK IN PROGRESS | 2,400 | 100% | 2,400 | ||
24,600 | |||||
Per Unit cost of Equivalent units | 21.00 | ||||
COST OF UNITS COMPLETED AND TARNSFERRED | 466,200 | ||||
COST OF WORK IN PROGRESS | 50,400 | ||||
TOTAL | 516,600 | ||||
CONVERSION COST | TOTAL MATERIAL AND CONVERSION | ||||
DETAILS | NO OF UNITS | % COMPLETE | EQUIVALENT UNIT | COST | |
OPENING BALANCE | 3,000 | 221,940 | 241,740 | ||
COST INCURRED DURING THE MONTH | 2,165,940 | 2,662,740 | |||
2,387,880 | 2,904,480 | ||||
UNITS COMPLETED AND TRANSFERRED | 22,200 | 100% | 22,200 | ||
WORK IN PROGRESS | 2,400 | 80% | 1,920 | ||
24,120 | |||||
Per Unit cost of Equivalent units | 99.00 | ||||
COST OF UNITS COMPLETED AND TARNSFERRED | 2,197,800 | 2,664,000 | |||
COST OF WORK IN PROGRESS | 190,080 | 240,480 | |||
TOTAL | 2,387,880 | 2,904,480 |
Conclusion:
Journal Entry is as under:
Account Head | $ | $ |
Finished Goods Inventory | 2,664,000 | |
Production cost account | 2.664,000 | |
Finished Goods transferred from Production process cost account |
Introduction:
In process costing cost of item produced and held in stock is determined based on their stage of completion. We first calculate Equivalent units to determine the number of units on which costs have to be allocated. The Equivalent units are calculated based on their stage of completion.
To Calculate:
We have to identify two major estimates that determine the cost per equivalent unit. We also have to identify if it will influence management bias in any way.

Answer to Problem 4APSA
Solution: Estimate of Work in progress Quantity and estimate of their degree of completion are two major estimates that influence the determination of Equivalent units and the cost per unit.
Explanation of Solution
Explanation:
The Equivalent units is dependent on the estimate of degree of completion of Closing Work in Progress with respect to material and with respect to Conversion. The estimate that closing work in progress is complete 100 % or 80% is very challenging as many times it is difficult to estimate the quantity of Work in progress itself and also to determine its degree of completion.
In some process industries like Paint / Edible Oils / Cocoa Processing – sometimes the Cocoa Beans are grind and assume the form for cocoa Liquor which is stored in different tanks. In each tank they may have gone through different stages of completion but in our estimation we are using one uniform stage of completion for entire work in progress. Estimation of closing work in progress quantity and degree of completion both are sometimes very difficult to estimate in process industry. Many times these industries work 24*7 and material movements is happening as we are doing stock taking also. So getting a fair estimate of Work in progress quantity and their degree of completion is based on certain management estimates.
When Management compensation is linked to any key parameter – say to show higher production and lower inventory then it can lead to under reporting of degree of completion to show lower Quantity. In such a situation bias can lead to distortion of estimates with respect to both quantity in work in progress and also in their degree of completion.
Conclusion:
Estimate of Work in progress quantity at the end of reporting period and also estimate of degree of completion are very subjective estimates.
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