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)
Units started
Ending WIP Inventory (100% complete for DM;
70% complete for DL; 90% complete for OH)
250
8,800
400
Assembly Department: Costs
Beginning WIP Inventory
Current period
Total costs
DM
$ 3,755
100,320
$104,075
DL
$ 690
63,606
$64,296
OH
$ 250
27,681
$27,931
Finishing Department: Units
Beginning WIP Inventory (100% complete for transferred in;
15% complete for DM; 40% complete for conversion)
Units transferred in
Ending WIP Inventory (100% complete for transferred in;
30% complete for DM; 65% complete for conversion)
Total
$ 4,695
191,607
$196,302
100
8,650
200
Finishing Department: Costs
Beginning WIP Inventory
Current period
Total costs
Transferred In
$ 2,176
188,570
$190,746
DM
$
30
15,471
$15,501
Conversion
$
95
21,600
$21,695
Total
$ 2,301
225,641
$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.
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Adapted from Cost Accounting Foundations and Evolutions, 8 th edition by Michael R. Kinney and Cecily A. Raiborn
Chapter 6 (Process Costing) page 238