Weighted-Average Method

Weighted-average method. Ashworth 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 2012:

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Required

Summarize total assembly department costs for April 2012, and assign total costs to units completed (and transferred out) and to units in ending work in process.

SOLUTION:

Weighted-average method.

Solution Exhibit 17-35A shows equivalent units of work done to date of:

Direct materials 625 equivalent units

Conversion costs 525 equivalent units

Note that direct materials are added when the Assembly Department process is 10% complete. Both the beginning and ending work in process are more than 10% complete and hence are 100% complete with respect to direct materials.

Solution Exhibit 17-35B summarizes the total Assembly Department costs for April 2012, calculates cost per equivalent unit of work done to date for direct materials and conversion costs, and assigns these costs to units completed (and transferred out), and to units in ending work in process using the weighted-average method.

EXHIBIT 17-35A

Steps 1 and 2: Summarize Output in Physical Units and Compute Output in Equivalent Units;

Weighted-Average Method of Process Costing, Assembly Department of Ashworth Handcraft for April 2012.

(Step 1) (Step 2)

Equivalent Units

Physical Direct Conversion

Flow of Production Units Materials Costs

Work in...