Weighted-average method. McKnight Handcraft is a manufacturer of picture frames for large retailers. Every picture frame passes through two departments: the assembly department and the finishing department. This problem focuses on the assembly department. The process-costing system at Ashworth has a single direct-cost category (direct materials) and a single indirect-cost category (conversion costs). Direct materials are added when the assembly department process is 10% complete. Conversion costs are added evenly during the assembly department’s process.
Ashworth uses the weighted-average method of process costing. Consider the following data for the assembly department in April 2014:
Physical Unit Direct Materials Conversion Costs
Work in Process, April 1* 60 $1530 $156
Started during April 2014 510
Completed during April 2014 450
Work in process, April 30 ** 120
Total costs added during April 2014 $17,850 $11,544
*Degree of completion: direct materials, 100%; conversion costs, 40%.
*Degree of completion: direct materials, 100%; conversion costs, 15%.
1. Summarize the total assembly department costs for April 2014, and assign them to units completed (and transferred out) and to units in ending work in process.
2. What issues should a manager focus on when reviewing the equivalent units calculation?
3. Complete the problem using the FIFO method of process costing