Chapter 20, Problem 4BPSB

To determine

Introduction:

Process costing system: Process costing systems is a system to assign the costs where the production goes through different processes. A product may take several processes to complete and when these processes are separable, the process costing system is applied to ascertain the cost of each process.

Equivalent units: Equivalent unit is the product unit that is physically not completed but it is measured as equivalent to completed unit.

Weighted average method: Weighted average method is one of the methods of process costing, under this method the cost of beginning work in process is mixed with the current period cost and weighted cost and equivalent units are calculated. In other words, the weighted average method does not teat the beginning work in process cost separately.

Requirement-1:

To prepare: The process cost summary using weighted average method

To determine

Requirement-2:

To prepare: The journal entry to record the transfer of completed good to finished goods inventory

To determine

Requirement-3a:

To indicate: Two major estimates that affect the cost per equivalent units

To determine

Requirement-3b:

To indicate: The bias from management to estimate the Percentage for equivalent units