Chapter 6 Problems Weighted Average Method Nonuniform Inputs

Chapter 6 Problems Weighted Average Method, Nonuniform Inputs, Multiple Departments Benson Pharmaceuticals uses a process-costing system to compute the unit costs of the overthe- counter cold remedies that it produces. It has three departments: mixing, encapsulating, and bottling. In mixing. the ingredients for the cold capsules are measured, sifted, and blended (with materials assumed to be uniformly added throughout the process). The mix is transferred out in gallon containers. The encapsulating department takes the powdered mix and places it in capsules (which are necessarily added at the beginning of the process). One gallon of powdered mix converts into 1,500 capsules. After the capsules are filled and polished, they are transferred to bottling, where they are placed in botties that are then affixed with a safety seal, lid, and label. Each bottle receives 50 capsules. During March, the following resuits are available for the first two departments Mixing Encapsulating Beginning inventories: Physical units 10 gallons 4,000 Costs: S252 $32 Materials Labor Overhead Transferred in $282 $20 $140 Current production: Transferred out 140 gallons 208,000 20 gallons 6,000 Ending inventory Costs: $3,636 $1,573 Materials Transferred in Labor 54,618 51,944

Solution

Solution 1:

Solution 2:

Solution 3:

Weighted average method is easier to use because, in FIFO we have to consider equiavalent unit for opening WIP not completed and same is considered as completed during the period. However in FIFO begining WIP is considered to 100% completed.

Weighted average will give same result as FIFO when there is no beginning inventory or when cost per equivalant unit previous period is same as cost per equivalant unit in current period.

Reconciliation of Physical units - Mixing
Particulars	Physical Units	Particulars	Physical Units
Beginning units	10	Unit Completed	140
Unit started	150	Ending Units	20
Total Units	160	Total Units	160