{"id":925,"date":"2021-04-01T17:56:12","date_gmt":"2021-04-01T17:56:12","guid":{"rendered":"https:\/\/courses.lumenlearning.com\/wm-managerialaccounting\/?post_type=chapter&#038;p=925"},"modified":"2021-06-02T16:32:17","modified_gmt":"2021-06-02T16:32:17","slug":"production-report-subsequent-department-weighted-average","status":"publish","type":"chapter","link":"https:\/\/courses.lumenlearning.com\/suny-clinton-managerialaccounting\/chapter\/production-report-subsequent-department-weighted-average\/","title":{"raw":"Production Report - Subsequent Department - Weighted Average","rendered":"Production Report &#8211; Subsequent Department &#8211; Weighted Average"},"content":{"raw":"<div class=\"textbox learning-objectives\">\r\n<h3>Learning Outcomes<\/h3>\r\n<ul>\r\n \t<li>Prepare a production cost report for a second or subsequent stage of a multi-step process using the weighted-average method<\/li>\r\n<\/ul>\r\n<\/div>\r\nOnce the mixing department is done converting direct materials (flour and butter) and indirect materials (salt and sugar) into raw shells using direct labor, indirect labor, and other factory overhead, the materials are transferred out into the next stage - in this case, baking, and for purposes of this illustration, we\u2019re going to combine the baking and packaging departments into one cost center.\r\n\r\n<img class=\"aligncenter wp-image-1710 size-full\" src=\"https:\/\/s3-us-west-2.amazonaws.com\/courses-images\/wp-content\/uploads\/sites\/5469\/2021\/01\/14230431\/Screen-Shot-2021-05-14-at-3.59.59-PM.png\" alt=\"A graphic showing the progression from left to right from the Mixing Department to the Baking Department to the Packaging Department to Finished Goods. Under each department is shown the formula Direct Materials + Direct Labor + Factory Overhead (for that department) = Work in Process (for that department). Under Finished Goods, it states Total cost of the batch includes work in process costs from all three departments.\" width=\"953\" height=\"275\" \/>\r\n\r\nBefore we examine subsequent departments, let\u2019s review the Production Cost Report from the first stage of production-- the mixing department for the month of January:\r\n<div align=\"left\">\r\n<table class=\"fin-table acctstatement fw\"><caption>Dad's Perfect Pies\r\nProduction Cost Report - Mixing Department\r\nMonth Ended January 31<\/caption>\r\n<tbody>\r\n<tr>\r\n<th class=\"r\" scope=\"col\"><\/th>\r\n<th class=\"r\" scope=\"col\"><\/th>\r\n<th class=\"r\" scope=\"col\">Equivalent Units<\/th>\r\n<th class=\"r\" scope=\"col\"><\/th>\r\n<\/tr>\r\n<\/tbody>\r\n<tbody>\r\n<tr>\r\n<td><strong>UNITS<\/strong><\/td>\r\n<td class=\"r\">Physical Units<\/td>\r\n<td class=\"r line-single\"><span class=\"u-sr-only\">Single Line<\/span>Direct Materials<\/td>\r\n<td class=\"r line-single\"><span class=\"u-sr-only\">Single Line<\/span>Conversion Costs<\/td>\r\n<td><\/td>\r\n<\/tr>\r\n<tr>\r\n<td colspan=\"1\"><span class=\"u-sr-only\">Subcategory, <\/span><strong>Units to account for:<\/strong><\/td>\r\n<td class=\"r line-single\"><span class=\"u-sr-only\">Single Line<\/span><\/td>\r\n<td class=\"r line-single\"><span class=\"u-sr-only\">Single Line<\/span><\/td>\r\n<td class=\"r line-single\"><span class=\"u-sr-only\">Single Line<\/span><\/td>\r\n<td><\/td>\r\n<\/tr>\r\n<tr>\r\n<td>\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0Beginning work-in-process<\/td>\r\n<td class=\"r\">0<\/td>\r\n<td><\/td>\r\n<td><\/td>\r\n<td><\/td>\r\n<\/tr>\r\n<tr>\r\n<td>\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0Started in production<\/td>\r\n<td class=\"r\">3,000<\/td>\r\n<td><\/td>\r\n<td><\/td>\r\n<td><\/td>\r\n<\/tr>\r\n<tr>\r\n<td>Total units to account for<\/td>\r\n<td class=\"r line-single line-double\"><span class=\"u-sr-only\">Single Line<\/span>3,000<span class=\"u-sr-only\">Double line<\/span><\/td>\r\n<td><\/td>\r\n<td><\/td>\r\n<td><\/td>\r\n<\/tr>\r\n<tr>\r\n<td><\/td>\r\n<td><\/td>\r\n<td><\/td>\r\n<td><\/td>\r\n<td><\/td>\r\n<\/tr>\r\n<tr>\r\n<td colspan=\"5\"><span class=\"u-sr-only\">Subcategory, <\/span><strong>Units accounted for:<\/strong><\/td>\r\n<\/tr>\r\n<tr>\r\n<td>\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0Completed and transferred out<\/td>\r\n<td class=\"r highlight-green\">2,250<\/td>\r\n<td class=\"r\">2,250<\/td>\r\n<td class=\"r\">2,250<\/td>\r\n<td><\/td>\r\n<\/tr>\r\n<tr>\r\n<td>\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0Ending work-in-process<\/td>\r\n<td class=\"r\">750<\/td>\r\n<td class=\"r\">750<\/td>\r\n<td class=\"r\">450<\/td>\r\n<td><\/td>\r\n<\/tr>\r\n<tr>\r\n<td>Total units accounted for<\/td>\r\n<td class=\"r line-single line-double\"><span class=\"u-sr-only\">Single Line<\/span>3,000<span class=\"u-sr-only\">Double line<\/span><\/td>\r\n<td class=\"r line-single line-double\"><span class=\"u-sr-only\">Single Line<\/span>3,000<span class=\"u-sr-only\">Double line<\/span><\/td>\r\n<td class=\"r line-single line-double\"><span class=\"u-sr-only\">Single Line<\/span>2,700<span class=\"u-sr-only\">Double line<\/span><\/td>\r\n<td><\/td>\r\n<\/tr>\r\n<tr>\r\n<td><\/td>\r\n<td><\/td>\r\n<td><\/td>\r\n<td><\/td>\r\n<td><\/td>\r\n<\/tr>\r\n<tr>\r\n<td><strong>COSTS<\/strong><\/td>\r\n<td><\/td>\r\n<td class=\"r\">Direct Materials<\/td>\r\n<td class=\"r\">Conversion Costs<\/td>\r\n<td class=\"r\">Total Costs<\/td>\r\n<\/tr>\r\n<tr>\r\n<td colspan=\"5\"><span class=\"u-sr-only\">Subcategory, <\/span><strong>Costs to account for:<\/strong><\/td>\r\n<\/tr>\r\n<tr>\r\n<td>\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0Beginning work-in-process<\/td>\r\n<td><\/td>\r\n<td class=\"r\">$\u00a0 \u00a0 \u00a0 \u00a0-<\/td>\r\n<td class=\"r\">$\u00a0\u00a0 \u00a0 \u00a0 -<\/td>\r\n<td class=\"r\">$ \u00a0 \u00a0 \u00a0-<\/td>\r\n<\/tr>\r\n<tr>\r\n<td>\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0Costs added during the period<\/td>\r\n<td><\/td>\r\n<td class=\"r\">$ \u00a0 3,000<\/td>\r\n<td class=\"r\">$ \u00a0\u00a03,240<\/td>\r\n<td class=\"r\">$\u00a0 6,240<\/td>\r\n<\/tr>\r\n<tr>\r\n<td>Total costs to account for<\/td>\r\n<td><\/td>\r\n<td class=\"r line-single\"><span class=\"u-sr-only\">Single Line<\/span>$ \u00a0 3,000<\/td>\r\n<td class=\"r line-single\"><span class=\"u-sr-only\">Single Line<\/span>$\u00a0 \u00a03,240<\/td>\r\n<td class=\"r line-single line-double\"><span class=\"u-sr-only\">Single Line<\/span>$ \u00a06,240<span class=\"u-sr-only\">Double line<\/span><\/td>\r\n<\/tr>\r\n<tr>\r\n<td>Divided by: Total EUP<\/td>\r\n<td><\/td>\r\n<td class=\"r\">\u00a0 3,000<\/td>\r\n<td class=\"r\">\u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 2,700<\/td>\r\n<td><\/td>\r\n<\/tr>\r\n<tr>\r\n<td>Cost per equivalent unit<\/td>\r\n<td><\/td>\r\n<td class=\"r line-single line-double\"><span class=\"u-sr-only\">Single Line<\/span>$ \u00a0\u00a0\u00a01.00<span class=\"u-sr-only\">Double line<\/span><\/td>\r\n<td class=\"r line-single line-double\"><span class=\"u-sr-only\">Single Line<\/span>$\u00a0\u00a0\u00a0 1.20<span class=\"u-sr-only\">Double line<\/span><\/td>\r\n<td><\/td>\r\n<\/tr>\r\n<tr>\r\n<td><\/td>\r\n<td><\/td>\r\n<td><\/td>\r\n<td><\/td>\r\n<td><\/td>\r\n<\/tr>\r\n<tr>\r\n<td colspan=\"5\"><span class=\"u-sr-only\">Subcategory, <\/span><strong>Costs accounted for:<\/strong><\/td>\r\n<\/tr>\r\n<tr>\r\n<td>\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0Completed and transferred out<\/td>\r\n<td><\/td>\r\n<td class=\"r\">$\u00a0\u00a0 2,250<\/td>\r\n<td class=\"r\">$\u00a0 \u00a02,700<\/td>\r\n<td class=\"r highlight\">$\u00a0 4,950<\/td>\r\n<\/tr>\r\n<tr>\r\n<td>\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0Ending work-in-process<\/td>\r\n<td><\/td>\r\n<td class=\"r\">$ \u00a0 \u00a0 750<\/td>\r\n<td class=\"r\">$ \u00a0 \u00a0 540<\/td>\r\n<td class=\"r\">$\u00a0 1,290<\/td>\r\n<\/tr>\r\n<tr>\r\n<td>Total costs accounted for<\/td>\r\n<td><\/td>\r\n<td class=\"r line-single line-double\"><span class=\"u-sr-only\">Single Line<\/span>$\u00a0\u00a0 3,000<span class=\"u-sr-only\">Double line<\/span><\/td>\r\n<td class=\"r line-single line-double\"><span class=\"u-sr-only\">Single Line<\/span>$ \u00a0 3,240<span class=\"u-sr-only\">Double line<\/span><\/td>\r\n<td class=\"r line-single line-double\"><span class=\"u-sr-only\">Single Line<\/span>$\u00a0 6,240<span class=\"u-sr-only\">Double line<\/span><\/td>\r\n<\/tr>\r\n<\/tbody>\r\n<\/table>\r\n<span style=\"font-size: 1rem; text-align: initial;\">\u00a0<\/span>\r\n\r\n<\/div>\r\nTake note of the following:\r\n<ul>\r\n \t<li style=\"font-weight: 400;\" aria-level=\"1\">Units transferred out = <span style=\"color: #000000; background-color: #f4f8e0;\">2,250<\/span>. They were transferred out to the baking\/packaging department because they were 100% complete.<\/li>\r\n \t<li style=\"font-weight: 400;\" aria-level=\"1\">They carried with them <span style=\"background-color: #ecf5ff;\">$4,950<\/span> in accumulated costs.<\/li>\r\n<\/ul>\r\nPreparing the Production Cost Report for subsequent departments is similar to preparing the report for the first department, with the addition of a column for costs transferred in.\r\n\r\nLet\u2019s make these assumptions for the baking\/packaging department for the month of January:\r\n<ul>\r\n \t<li style=\"font-weight: 400;\" aria-level=\"1\">Jan 14: 750 pie crusts (uncooked) transferred from mixing to baking\/packaging - baked, packaged, quality-checked, and transferred to the cooler on Jan 19.<\/li>\r\n \t<li style=\"font-weight: 400;\" aria-level=\"1\">Jan 20: 750 pie crusts (uncooked) transferred from mixing to baking\/packaging - baked, packaged, quality-checked, and transferred to the cooler on Jan 25.<\/li>\r\n \t<li style=\"font-weight: 400;\" aria-level=\"1\">Jan 26: 750 pie crusts (uncooked) transferred from mixing to baking\/packaging - 500 baked, packaged, quality-checked, and transferred to the cooler on Jan 31, leaving 250 pie crusts 20% through the process.<\/li>\r\n \t<li style=\"font-weight: 400;\" aria-level=\"1\">All direct materials in this combined department (packing materials) are added at the end of the process, so the 250 shells remaining in work-in-process on January 31 are 0% complete as to direct materials.<\/li>\r\n \t<li style=\"font-weight: 400;\" aria-level=\"1\">Costs accumulated in the accounting records are:\r\n<ul>\r\n \t<li style=\"font-weight: 400;\" aria-level=\"2\">$600 in direct materials<\/li>\r\n \t<li style=\"font-weight: 400;\" aria-level=\"2\">$4,100 in labor, factory overhead, and other conversion costs.<\/li>\r\n<\/ul>\r\n<\/li>\r\n<\/ul>\r\nLet\u2019s put together a Production Cost Report one step at a time.\r\n<h3>Step 1 - Calculate Units to Account For<\/h3>\r\nEstablish the total inventory in production by adding units started into production to beginning work in process (what was left only partially finished at the end of the prior month). For this example, we will assume that all pie shells in process were completed in December and the facility was shut down over the holiday break for annual repairs, maintenance, and deep cleaning. So, the beginning inventory of zero plus the 2,250 pie shells transferred in from the mixing department during the month gives us a total number of units to account for of 2,250.\r\n<div align=\"left\">\r\n<table class=\"fin-table acctstatement fw\">\r\n<tbody>\r\n<tr>\r\n<th scope=\"col\">UNITS<\/th>\r\n<th class=\"r\" scope=\"col\">Physical Units<\/th>\r\n<\/tr>\r\n<\/tbody>\r\n<tbody>\r\n<tr>\r\n<td colspan=\"1\"><span class=\"u-sr-only\">Subcategory, <\/span><strong>Units to account for:<\/strong><\/td>\r\n<td class=\"line-single\"><span class=\"u-sr-only\">Single Line<\/span><\/td>\r\n<\/tr>\r\n<tr>\r\n<td>\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0Beginning work-in-process<\/td>\r\n<td class=\"r\">0<\/td>\r\n<\/tr>\r\n<tr>\r\n<td>\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0Transferred in from mixing<\/td>\r\n<td class=\"r\">2,250<\/td>\r\n<\/tr>\r\n<tr>\r\n<td>Total units to account for<\/td>\r\n<td class=\"r line-single line-double\"><span class=\"u-sr-only\">Single Line<\/span>2,250<span class=\"u-sr-only\">Double line<\/span><\/td>\r\n<\/tr>\r\n<\/tbody>\r\n<\/table>\r\n<\/div>\r\n<h3>Step 2 - Calculate Units Accounted For<\/h3>\r\nIn subsequent departments like these, the units are then broken down into three categories: transferred in, direct materials, and conversion costs. The 2,000 units that have been transferred out are 100% complete, so the Equivalent Units and the actual physical units are the same. However, unfinished units (work-in-process) in this department have to be converted to Equivalent Units. In this case, since materials are all added at the end of the process, the Equivalent Units for Direct Materials is 0% of the actual units, but the Equivalent Units for the Conversion Costs allocation is 20% of actual units or 50 EUs.\r\n\r\nFrom our assumptions: Jan 26: 750 pie crusts (uncooked) and transferred from mixing to baking\/packaging - 500 baked, packaged, quality-checked, and transferred to the cooler on Jan 31, leaving 250 pie crusts 20% through the process. 250 * 0.20 = 50 EUs.\r\n<div align=\"left\">\r\n<table class=\"fin-table acctstatement fw\">\r\n<tbody>\r\n<tr>\r\n<td><\/td>\r\n<td><\/td>\r\n<td><\/td>\r\n<td>Equivalent Units<\/td>\r\n<td><\/td>\r\n<\/tr>\r\n<tr>\r\n<td><\/td>\r\n<td class=\"r\">Physical Units<\/td>\r\n<td class=\"r line-single\"><span class=\"u-sr-only\">Single Line<\/span>Transferred In<\/td>\r\n<td class=\"r line-single\"><span class=\"u-sr-only\">Single Line<\/span>Direct Materials<\/td>\r\n<td class=\"r line-single\"><span class=\"u-sr-only\">Single Line<\/span>Conversion Costs<\/td>\r\n<\/tr>\r\n<tr>\r\n<td colspan=\"1\"><span class=\"u-sr-only\">Subcategory, <\/span><strong>Units accounted for:<\/strong><\/td>\r\n<td class=\"r line-single\"><span class=\"u-sr-only\">Single Line<\/span><\/td>\r\n<td class=\"r line-single\"><span class=\"u-sr-only\">Single Line<\/span><\/td>\r\n<td class=\"r line-single\"><span class=\"u-sr-only\">Single Line<\/span><\/td>\r\n<td class=\"r line-single\"><span class=\"u-sr-only\">Single Line<\/span><\/td>\r\n<\/tr>\r\n<tr>\r\n<td>\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0Completed and transferred out<\/td>\r\n<td class=\"r\">2,000<\/td>\r\n<td class=\"r\">2,000<\/td>\r\n<td class=\"r\">2,000<\/td>\r\n<td class=\"r\">2,000<\/td>\r\n<\/tr>\r\n<tr>\r\n<td>\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0Ending work-in-process<\/td>\r\n<td class=\"r\">250<\/td>\r\n<td class=\"r\">250<\/td>\r\n<td class=\"r\">0<\/td>\r\n<td class=\"r\">50<\/td>\r\n<\/tr>\r\n<tr>\r\n<td>Total units accounted for<\/td>\r\n<td class=\"r line-single line-double\"><span class=\"u-sr-only\">Single Line<\/span>2,250<span class=\"u-sr-only\">Double line<\/span><\/td>\r\n<td class=\"r line-single line-double\"><span class=\"u-sr-only\">Single Line<\/span>2,250<span class=\"u-sr-only\">Double line<\/span><\/td>\r\n<td class=\"r line-single line-double\"><span class=\"u-sr-only\">Single Line<\/span>2,000<span class=\"u-sr-only\">Double line<\/span><\/td>\r\n<td class=\"r line-single line-double\"><span class=\"u-sr-only\">Single Line<\/span>2,050<span class=\"u-sr-only\">Double line<\/span><\/td>\r\n<\/tr>\r\n<\/tbody>\r\n<\/table>\r\n<\/div>\r\n&nbsp;\r\n\r\nRemember, Equivalent Units will be used to come up with an overall allocation rate that will then be used to allocate total costs between products completed and transferred out and products still in the process.\r\n<h3>Step 3 - Divide Total Costs by Equivalent Units<\/h3>\r\nFrom the accounting records, we see that total direct materials used in January by the baking\/packaging department were $600 and direct labor and manufacturing overhead totaled $4,100. We divided those amounts by the related Equivalent Units to come up with a cost per EU.\r\n<div align=\"left\">\r\n<table class=\"fin-table acctstatement fw\">\r\n<tbody>\r\n<tr>\r\n<th class=\"r\" scope=\"col\"><\/th>\r\n<th class=\"r\" scope=\"col\">Transferred In<\/th>\r\n<th class=\"r\" scope=\"col\">Direct Materials<\/th>\r\n<th class=\"r\" scope=\"col\">Conversion Costs<\/th>\r\n<th class=\"r\" scope=\"col\">Total Costs<\/th>\r\n<\/tr>\r\n<\/tbody>\r\n<tbody>\r\n<tr>\r\n<td colspan=\"5\"><span class=\"u-sr-only\">Subcategory, <\/span><strong>Costs to account for:<\/strong><\/td>\r\n<\/tr>\r\n<tr>\r\n<td>\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0Beginning work-in-process<\/td>\r\n<td class=\"r\">$ \u00a0 \u00a0 \u00a0 \u00a0 -<\/td>\r\n<td class=\"r\">$ \u00a0 \u00a0 \u00a0 -<\/td>\r\n<td class=\"r\">$\u00a0 \u00a0 \u00a0 \u00a0 -<\/td>\r\n<td class=\"r\">$ \u00a0 \u00a0 \u00a0 -<\/td>\r\n<\/tr>\r\n<tr>\r\n<td>\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0Costs added during the period<\/td>\r\n<td class=\"r\">$ \u00a0 \u00a0 4,950<\/td>\r\n<td class=\"r\">$ \u00a0 \u00a0 600<\/td>\r\n<td class=\"r\">$\u00a0 \u00a0 4,100<\/td>\r\n<td class=\"r\">$ \u00a0 9,650<\/td>\r\n<\/tr>\r\n<tr>\r\n<td>Total costs to account for<\/td>\r\n<td class=\"r line-single\"><span class=\"u-sr-only\">Single Line<\/span>$ \u00a0 \u00a0 4,950<\/td>\r\n<td class=\"r line-single\"><span class=\"u-sr-only\">Single Line<\/span>$ \u00a0 \u00a0 600<\/td>\r\n<td class=\"r line-single\"><span class=\"u-sr-only\">Single Line<\/span>$\u00a0 \u00a0 4,100<\/td>\r\n<td class=\"r line-single line-double\"><span class=\"u-sr-only\">Single Line<\/span>$ \u00a0 9,650<span class=\"u-sr-only\">Double line<\/span><\/td>\r\n<\/tr>\r\n<tr>\r\n<td>Divided by: Total EUP<\/td>\r\n<td class=\"r\">\u00a0 \u00a0 2,250<\/td>\r\n<td class=\"r\">\u00a0 \u00a0 2,000<\/td>\r\n<td class=\"r\">\u00a0 2,050<\/td>\r\n<td><\/td>\r\n<\/tr>\r\n<tr>\r\n<td>Cost per equivalent unit<\/td>\r\n<td class=\"r line-single line-double\"><span class=\"u-sr-only\">Single Line<\/span>$\u00a0 \u00a0 \u00a0 2.20<span class=\"u-sr-only\">Double line<\/span><\/td>\r\n<td class=\"r line-single line-double\"><span class=\"u-sr-only\">Single Line<\/span>$\u00a0 \u00a0 0.30<span class=\"u-sr-only\">Double line<\/span><\/td>\r\n<td class=\"r line-single line-double\"><span class=\"u-sr-only\">Single Line<\/span>$\u00a0 \u00a0 \u00a02.00<span class=\"u-sr-only\">Double line<\/span><\/td>\r\n<td><\/td>\r\n<\/tr>\r\n<\/tbody>\r\n<\/table>\r\n&nbsp;\r\n\r\n<\/div>\r\nNotice that the \u201cTransferred In\u201d column comes right from the mixing department Production Cost Report.\r\n\r\nTotal costs of $9,650 are the $4,950 transferred in from the mixing department plus the $4,700 incurred in baking and packaging.\r\n<h3>Step 4 - Allocate Costs Based on Equivalent Units<\/h3>\r\nRefer back to step 2:\r\n<div align=\"left\">\r\n<table class=\"fin-table acctstatement fw\">\r\n<tbody>\r\n<tr>\r\n<td><\/td>\r\n<td><\/td>\r\n<td><\/td>\r\n<td>Equivalent Units<\/td>\r\n<td><\/td>\r\n<\/tr>\r\n<tr>\r\n<td><\/td>\r\n<td class=\"r\">Physical Units<\/td>\r\n<td class=\"r line-single\"><span class=\"u-sr-only\">Single Line<\/span>Transferred In<\/td>\r\n<td class=\"r line-single\"><span class=\"u-sr-only\">Single Line<\/span>Direct Materials<\/td>\r\n<td class=\"r line-single\"><span class=\"u-sr-only\">Single Line<\/span>Conversion Costs<\/td>\r\n<\/tr>\r\n<tr>\r\n<td colspan=\"1\"><span class=\"u-sr-only\">Subcategory, <\/span><strong>Units accounted for:<\/strong><\/td>\r\n<td class=\"r line-single\"><span class=\"u-sr-only\">Single Line<\/span><\/td>\r\n<td class=\"r line-single\"><span class=\"u-sr-only\">Single Line<\/span><\/td>\r\n<td class=\"r line-single\"><span class=\"u-sr-only\">Single Line<\/span><\/td>\r\n<td class=\"r line-single\"><span class=\"u-sr-only\">Single Line<\/span><\/td>\r\n<\/tr>\r\n<tr>\r\n<td>\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0Completed and transferred out<\/td>\r\n<td class=\"r\">2,000<\/td>\r\n<td class=\"r\">2,000<\/td>\r\n<td class=\"r\">2,000<\/td>\r\n<td class=\"r\">2,000<\/td>\r\n<\/tr>\r\n<tr>\r\n<td>\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0Ending work-in-process<\/td>\r\n<td class=\"r\">250<\/td>\r\n<td class=\"r\">250<\/td>\r\n<td class=\"r\">0<\/td>\r\n<td class=\"r\">50<\/td>\r\n<\/tr>\r\n<tr>\r\n<td>Total units accounted for<\/td>\r\n<td class=\"r line-single line-double\"><span class=\"u-sr-only\">Single Line<\/span>2,250<span class=\"u-sr-only\">Double line<\/span><\/td>\r\n<td class=\"r line-single line-double\"><span class=\"u-sr-only\">Single Line<\/span>2,250<span class=\"u-sr-only\">Double line<\/span><\/td>\r\n<td class=\"r line-single line-double\"><span class=\"u-sr-only\">Single Line<\/span>2,000<span class=\"u-sr-only\">Double line<\/span><\/td>\r\n<td class=\"r line-single line-double\"><span class=\"u-sr-only\">Single Line<\/span>2,050<span class=\"u-sr-only\">Double line<\/span><\/td>\r\n<\/tr>\r\n<\/tbody>\r\n<\/table>\r\n&nbsp;\r\n\r\n<\/div>\r\nMultiply the cost per equivalent unit by the number of equivalent units for each category of units accounted for: Completed and transferred out, and Ending work-in-process.\r\n\r\n<strong>Completed and transferred out<\/strong>\r\n<div align=\"left\">\r\n<table class=\"fin-table acctstatement fw\">\r\n<tbody>\r\n<tr>\r\n<th class=\"r\" scope=\"col\"><\/th>\r\n<th class=\"r\" scope=\"col\">Transferred In<\/th>\r\n<th class=\"r\" scope=\"col\">Direct Materials<\/th>\r\n<th class=\"r\" scope=\"col\">Conversion Costs<\/th>\r\n<th class=\"r\" scope=\"col\">Total Costs<\/th>\r\n<\/tr>\r\n<\/tbody>\r\n<tbody>\r\n<tr>\r\n<td>Equivalent units completed and transferred out<\/td>\r\n<td class=\"r line-single\"><span class=\"u-sr-only\">Single Line<\/span>2,000<\/td>\r\n<td class=\"r line-single\"><span class=\"u-sr-only\">Single Line<\/span>2,000<\/td>\r\n<td class=\"r line-single\"><span class=\"u-sr-only\">Single Line<\/span>2,000<\/td>\r\n<td><\/td>\r\n<\/tr>\r\n<tr>\r\n<td>Cost per equivalent unit<\/td>\r\n<td class=\"r\">$ \u00a02.20<\/td>\r\n<td class=\"r\">$\u00a0 0.30<\/td>\r\n<td class=\"r\">$\u00a0\u00a0 2.00<\/td>\r\n<td><\/td>\r\n<\/tr>\r\n<tr>\r\n<td>Cost allocated to completed units<\/td>\r\n<td class=\"r line-single line-double\"><span class=\"u-sr-only\">Single Line<\/span>$ 4,400<span class=\"u-sr-only\">Double line<\/span><\/td>\r\n<td class=\"r line-single line-double\"><span class=\"u-sr-only\">Single Line<\/span>$ \u00a0 600<span class=\"u-sr-only\">Double line<\/span><\/td>\r\n<td class=\"r line-single line-double\"><span class=\"u-sr-only\">Single Line<\/span>$\u00a0 4,000<span class=\"u-sr-only\">Double line<\/span><\/td>\r\n<td class=\"r line-single line-double\"><span class=\"u-sr-only\">Single Line<\/span>$ \u00a0 9,000<span class=\"u-sr-only\">Double line<\/span><\/td>\r\n<\/tr>\r\n<\/tbody>\r\n<\/table>\r\n&nbsp;\r\n\r\n<\/div>\r\n<strong>Ending work-in-process<\/strong>\r\n<div align=\"left\">\r\n<table class=\"fin-table acctstatement fw\">\r\n<tbody>\r\n<tr>\r\n<th class=\"r\" scope=\"col\"><\/th>\r\n<th class=\"r\" scope=\"col\">Transferred In<\/th>\r\n<th class=\"r\" scope=\"col\">Direct Materials<\/th>\r\n<th class=\"r\" scope=\"col\">Conversion Costs<\/th>\r\n<th class=\"r\" scope=\"col\">Total Costs<\/th>\r\n<\/tr>\r\n<\/tbody>\r\n<tbody>\r\n<tr>\r\n<td>Equivalent units not yet completed<\/td>\r\n<td class=\"r line-single\"><span class=\"u-sr-only\">Single Line<\/span>250<\/td>\r\n<td class=\"r line-single\"><span class=\"u-sr-only\">Single Line<\/span>0<\/td>\r\n<td class=\"r line-single\"><span class=\"u-sr-only\">Single Line<\/span>50<\/td>\r\n<td><\/td>\r\n<\/tr>\r\n<tr>\r\n<td>Cost per equivalent unit<\/td>\r\n<td><\/td>\r\n<td class=\"r\">$\u00a0 2.20<\/td>\r\n<td class=\"r\">$\u00a0 0.30<\/td>\r\n<td class=\"r\">$\u00a0 2.00<\/td>\r\n<td><\/td>\r\n<\/tr>\r\n<tr>\r\n<td>Cost allocated to work-in-process<\/td>\r\n<td class=\"r line-single line-double\"><span class=\"u-sr-only\">Single Line<\/span>$550<span class=\"u-sr-only\">Double line<\/span><\/td>\r\n<td class=\"r line-single line-double\"><span class=\"u-sr-only\">Single Line<\/span>$ \u00a0\u00a0 00<span class=\"u-sr-only\">Double line<\/span><\/td>\r\n<td class=\"r line-single line-double\"><span class=\"u-sr-only\">Single Line<\/span>$ \u00a0 100<span class=\"u-sr-only\">Double line<\/span><\/td>\r\n<td class=\"r line-single line-double\"><span class=\"u-sr-only\">Single Line<\/span>$ \u00a0 650<span class=\"u-sr-only\">Double line<\/span><\/td>\r\n<\/tr>\r\n<\/tbody>\r\n<\/table>\r\n&nbsp;\r\n\r\n<\/div>\r\nNotice that under this Equivalent Units method of allocating costs, no direct materials were allocated to ending work in process because the EUs were zero. However, because we are using the average method instead of the First-in, First-out (FIFO) method, which uses the assumption that the flow of goods through the system is a constant mix, we still have costs left in the \u201ctransferred in\u201d column. Using a FIFO cost-flow assumption, we would have allocated those costs to finished goods first.\r\n\r\nBefore we examine the FIFO method, let\u2019s complete the production cost report for this department and check your understanding of how subsequent departments differ from the first department.\r\n<h3>Complete the Production Report<\/h3>\r\n<div align=\"left\">\r\n<table class=\"fin-table acctstatement fw\"><caption>Dad's Perfect Pies\r\nProduction Cost Report - Baking\/Packaging Department\r\nMonth Ended January 31<\/caption>\r\n<tbody>\r\n<tr>\r\n<td><\/td>\r\n<td><\/td>\r\n<td><\/td>\r\n<td>Equivalent Units<\/td>\r\n<td><\/td>\r\n<td><\/td>\r\n<\/tr>\r\n<tr>\r\n<td colspan=\"1\"><span class=\"u-sr-only\">Subcategory, <\/span><strong>UNITS<\/strong><\/td>\r\n<td class=\"r\">Physical Units<\/td>\r\n<td class=\"r line-single\"><span class=\"u-sr-only\">Single Line<\/span>Transferred In<\/td>\r\n<td class=\"r line-single\"><span class=\"u-sr-only\">Single Line<\/span>Direct Materials<\/td>\r\n<td class=\"r line-single\"><span class=\"u-sr-only\">Single Line<\/span>Conversion Costs<\/td>\r\n<td><\/td>\r\n<\/tr>\r\n<tr>\r\n<td colspan=\"1\"><span class=\"u-sr-only\">Subcategory, <\/span><strong>Units to account for:<\/strong><\/td>\r\n<td class=\"r line-single\"><span class=\"u-sr-only\">Single Line<\/span><\/td>\r\n<td class=\"r line-single\"><span class=\"u-sr-only\">Single Line<\/span><\/td>\r\n<td class=\"r line-single\"><span class=\"u-sr-only\">Single Line<\/span><\/td>\r\n<td class=\"r line-single\"><span class=\"u-sr-only\">Single Line<\/span><\/td>\r\n<td class=\"r\"><\/td>\r\n<\/tr>\r\n<tr>\r\n<td>Beginning work-in-process<\/td>\r\n<td class=\"r\">0<\/td>\r\n<td><\/td>\r\n<td><\/td>\r\n<td><\/td>\r\n<td><\/td>\r\n<\/tr>\r\n<tr>\r\n<td>Transferred in from mixing<\/td>\r\n<td class=\"r\">2,250<\/td>\r\n<td><\/td>\r\n<td><\/td>\r\n<td><\/td>\r\n<td><\/td>\r\n<\/tr>\r\n<tr>\r\n<td>Total units to account for<\/td>\r\n<td class=\"r line-single line-double\"><span class=\"u-sr-only\">Single Line<\/span>2,250<span class=\"u-sr-only\">Double line<\/span><\/td>\r\n<td><\/td>\r\n<td><\/td>\r\n<td><\/td>\r\n<td><\/td>\r\n<\/tr>\r\n<tr>\r\n<td><\/td>\r\n<td><\/td>\r\n<td><\/td>\r\n<td><\/td>\r\n<td><\/td>\r\n<td><\/td>\r\n<\/tr>\r\n<tr>\r\n<td colspan=\"6\"><span class=\"u-sr-only\">Subcategory, <\/span><strong>Units accounted for:<\/strong><\/td>\r\n<\/tr>\r\n<tr>\r\n<td>Completed and transferred out<\/td>\r\n<td class=\"r\">2,000<\/td>\r\n<td class=\"r\">2,000<\/td>\r\n<td class=\"r\">2,000<\/td>\r\n<td class=\"r\">2,000<\/td>\r\n<td><\/td>\r\n<\/tr>\r\n<tr>\r\n<td>Ending work-in-process<\/td>\r\n<td class=\"r\">250<\/td>\r\n<td class=\"r\">250<\/td>\r\n<td class=\"r\">0<\/td>\r\n<td class=\"r\">50<\/td>\r\n<td><\/td>\r\n<\/tr>\r\n<tr>\r\n<td>Total units accounted for<\/td>\r\n<td class=\"r line-single line-double\"><span class=\"u-sr-only\">Single Line<\/span>2,250<span class=\"u-sr-only\">Double line<\/span><\/td>\r\n<td class=\"r line-single line-double\"><span class=\"u-sr-only\">Single Line<\/span>2,250<span class=\"u-sr-only\">Double line<\/span><\/td>\r\n<td class=\"r line-single line-double\"><span class=\"u-sr-only\">Single Line<\/span>2,000<span class=\"u-sr-only\">Double line<\/span><\/td>\r\n<td class=\"r line-single line-double\"><span class=\"u-sr-only\">Single Line<\/span>2,050<span class=\"u-sr-only\">Double line<\/span><\/td>\r\n<td><\/td>\r\n<\/tr>\r\n<tr>\r\n<td><\/td>\r\n<td><\/td>\r\n<td><\/td>\r\n<td><\/td>\r\n<td><\/td>\r\n<td><\/td>\r\n<\/tr>\r\n<tr>\r\n<td>COSTS<\/td>\r\n<td><\/td>\r\n<td class=\"r\">Transferred In<\/td>\r\n<td class=\"r\">Direct Materials<\/td>\r\n<td class=\"r\">Conversion Costs<\/td>\r\n<td class=\"r\">Total Costs<\/td>\r\n<\/tr>\r\n<tr>\r\n<td colspan=\"1\"><span class=\"u-sr-only\">Subcategory, <\/span><strong>Costs to account for:<\/strong><\/td>\r\n<td><\/td>\r\n<td class=\"r line-single\"><span class=\"u-sr-only\">Single Line<\/span><\/td>\r\n<td class=\"r line-single\"><span class=\"u-sr-only\">Single Line<\/span><\/td>\r\n<td class=\"r line-single\"><span class=\"u-sr-only\">Single Line<\/span><\/td>\r\n<td class=\"r line-single\"><span class=\"u-sr-only\">Single Line<\/span><\/td>\r\n<\/tr>\r\n<tr>\r\n<td>Beginning work-in-process<\/td>\r\n<td><\/td>\r\n<td class=\"r\">$ \u00a0 \u00a0 \u00a0 -<\/td>\r\n<td class=\"r\">$ \u00a0 \u00a0\u00a0 -<\/td>\r\n<td class=\"r\">$ \u00a0 \u00a0\u00a0 -<\/td>\r\n<td class=\"r\">$ \u00a0 \u00a0 -<\/td>\r\n<\/tr>\r\n<tr>\r\n<td>Costs added during the period<\/td>\r\n<td><\/td>\r\n<td class=\"r\">$ \u00a0 4,950<\/td>\r\n<td class=\"r\">$\u00a0 \u00a0 600<\/td>\r\n<td class=\"r\">$\u00a0 4,100<\/td>\r\n<td class=\"r\">$ 9,650<\/td>\r\n<\/tr>\r\n<tr>\r\n<td>Total costs to account for<\/td>\r\n<td><\/td>\r\n<td class=\"r line-single\"><span class=\"u-sr-only\">Single Line<\/span>$ \u00a0 4,950<\/td>\r\n<td class=\"r line-single\"><span class=\"u-sr-only\">Single Line<\/span>$\u00a0 \u00a0 600<\/td>\r\n<td class=\"r line-single\"><span class=\"u-sr-only\">Single Line<\/span>$ \u00a04,100<\/td>\r\n<td class=\"r line-single line-double\"><span class=\"u-sr-only\">Single Line<\/span>$ 9,650<span class=\"u-sr-only\">Double line<\/span><\/td>\r\n<\/tr>\r\n<tr>\r\n<td>Divided by: Total EUP<\/td>\r\n<td><\/td>\r\n<td class=\"r\">\u00a0 \u00a0 \u00a0 2,250<\/td>\r\n<td class=\"r\">\u00a0 \u00a0 \u00a0 2,000<\/td>\r\n<td class=\"r\">\u00a0 \u00a0 \u00a0 2,050<\/td>\r\n<td><\/td>\r\n<\/tr>\r\n<tr>\r\n<td>Cost per equivalent unit<\/td>\r\n<td><\/td>\r\n<td class=\"r line-single line-double\"><span class=\"u-sr-only\">Single Line<\/span>$ \u00a0 \u00a02.20<span class=\"u-sr-only\">Double line<\/span><\/td>\r\n<td class=\"r line-single line-double\"><span class=\"u-sr-only\">Single Line<\/span>$\u00a0 \u00a00.30<span class=\"u-sr-only\">Double line<\/span><\/td>\r\n<td class=\"r line-single line-double\"><span class=\"u-sr-only\">Single Line<\/span>$\u00a0 \u00a02.00<span class=\"u-sr-only\">Double line<\/span><\/td>\r\n<td><\/td>\r\n<\/tr>\r\n<tr>\r\n<td><\/td>\r\n<td><\/td>\r\n<td><\/td>\r\n<td><\/td>\r\n<td><\/td>\r\n<td><\/td>\r\n<\/tr>\r\n<tr>\r\n<td colspan=\"6\"><span class=\"u-sr-only\">Subcategory, <\/span><strong>Costs accounted for:<\/strong><\/td>\r\n<\/tr>\r\n<tr>\r\n<td>Completed and transferred out<\/td>\r\n<td><\/td>\r\n<td class=\"r\">$\u00a0 \u00a04,400<\/td>\r\n<td class=\"r\">$ \u00a0 \u00a0 600<\/td>\r\n<td class=\"r\">$\u00a0 4,000<\/td>\r\n<td class=\"r\">$ 9,000<\/td>\r\n<\/tr>\r\n<tr>\r\n<td>Ending work-in-process<\/td>\r\n<td><\/td>\r\n<td class=\"r\">$\u00a0 \u00a0 \u00a0550<\/td>\r\n<td class=\"r\">$\u00a0 \u00a0 \u00a0 \u00a0-<\/td>\r\n<td class=\"r\">$ \u00a0 \u00a0100<\/td>\r\n<td class=\"r\">$\u00a0 \u00a0650<\/td>\r\n<\/tr>\r\n<tr>\r\n<td>Total costs accounted for<\/td>\r\n<td><\/td>\r\n<td class=\"r line-single line-double\"><span class=\"u-sr-only\">Single Line<\/span>$ \u00a0 4,950<span class=\"u-sr-only\">Double line<\/span><\/td>\r\n<td class=\"r line-single line-double\"><span class=\"u-sr-only\">Single Line<\/span>$ \u00a0 \u00a0 600<span class=\"u-sr-only\">Double line<\/span><\/td>\r\n<td class=\"r line-single line-double\"><span class=\"u-sr-only\">Single Line<\/span>$ \u00a04,100<span class=\"u-sr-only\">Double line<\/span><\/td>\r\n<td class=\"r line-single line-double\"><span class=\"u-sr-only\">Single Line<\/span>$ 9,650<span class=\"u-sr-only\">Double line<\/span><\/td>\r\n<\/tr>\r\n<\/tbody>\r\n<\/table>\r\n<\/div>\r\n&nbsp;\r\n\r\nAnd here is a summary of total inventory at the end of January based on the two production reports:\r\n<div align=\"left\">\r\n<table class=\"fin-table acctstatement fw\">\r\n<thead>\r\n<tr class=\"u-sr-only\">\r\n<th scope=\"col\">Description<\/th>\r\n<th scope=\"col\">Amount<\/th>\r\n<th scope=\"col\">Total<\/th>\r\n<\/tr>\r\n<\/thead>\r\n<tbody>\r\n<tr>\r\n<td colspan=\"3\"><span class=\"u-sr-only\">Subcategory, <\/span><strong>Inventory<\/strong><\/td>\r\n<\/tr>\r\n<tr>\r\n<td>\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0Work-in-process<\/td>\r\n<td><\/td>\r\n<td><\/td>\r\n<\/tr>\r\n<tr>\r\n<td>\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0Mixing<\/td>\r\n<td class=\"r\">$ \u00a0 \u00a0 \u00a0 1,290<\/td>\r\n<td><\/td>\r\n<\/tr>\r\n<tr>\r\n<td>\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0Baking\/Packaging<\/td>\r\n<td class=\"r\">650<\/td>\r\n<td class=\"r\">$ \u00a0 \u00a0 \u00a0 1,940<\/td>\r\n<\/tr>\r\n<tr>\r\n<td>\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0Finished Goods<\/td>\r\n<td class=\"r line-single\"><span class=\"u-sr-only\">Single Line<\/span><\/td>\r\n<td class=\"r\">9,000<\/td>\r\n<\/tr>\r\n<tr>\r\n<td>Total Inventory<\/td>\r\n<td><\/td>\r\n<td class=\"r line-single line-double\"><span class=\"u-sr-only\">Single Line<\/span>$\u00a0 \u00a0 \u00a0 10,940<span class=\"u-sr-only\">Double line<\/span><\/td>\r\n<\/tr>\r\n<\/tbody>\r\n<\/table>\r\n<\/div>\r\n&nbsp;\r\n\r\nThus, all the costs from both departments are accounted for and allocated to the proper category.\r\n<div align=\"left\">\r\n<table class=\"fin-table acctstatement fw\">\r\n<thead>\r\n<tr class=\"u-sr-only\">\r\n<th scope=\"col\">Description<\/th>\r\n<th scope=\"col\">Total<\/th>\r\n<\/tr>\r\n<\/thead>\r\n<tbody>\r\n<tr>\r\n<td>Mixing Department<\/td>\r\n<td class=\"r\">$ \u00a0 \u00a0 \u00a0 6,240<\/td>\r\n<\/tr>\r\n<tr>\r\n<td>Baking\/Packaging Department<\/td>\r\n<td class=\"r\">4,700<\/td>\r\n<\/tr>\r\n<tr>\r\n<td>Total costs to be allocated<\/td>\r\n<td class=\"r line-single line-double\"><span class=\"u-sr-only\">Single Line<\/span>$\u00a0 \u00a0 \u00a0 10,940<span class=\"u-sr-only\">Double line<\/span><\/td>\r\n<\/tr>\r\n<\/tbody>\r\n<\/table>\r\n<\/div>\r\n&nbsp;\r\n\r\nNow, check your understanding of the second or subsequent stage of a multi-step process using the weighted-average method of process costing.\r\n<div class=\"textbox tryit\">\r\n<h3>Practice Question<\/h3>\r\n[ohm_question hide_question_numbers=1]219051[\/ohm_question]\r\n\r\n<\/div>","rendered":"<div class=\"textbox learning-objectives\">\n<h3>Learning Outcomes<\/h3>\n<ul>\n<li>Prepare a production cost report for a second or subsequent stage of a multi-step process using the weighted-average method<\/li>\n<\/ul>\n<\/div>\n<p>Once the mixing department is done converting direct materials (flour and butter) and indirect materials (salt and sugar) into raw shells using direct labor, indirect labor, and other factory overhead, the materials are transferred out into the next stage &#8211; in this case, baking, and for purposes of this illustration, we\u2019re going to combine the baking and packaging departments into one cost center.<\/p>\n<p><img loading=\"lazy\" decoding=\"async\" class=\"aligncenter wp-image-1710 size-full\" src=\"https:\/\/s3-us-west-2.amazonaws.com\/courses-images\/wp-content\/uploads\/sites\/5469\/2021\/01\/14230431\/Screen-Shot-2021-05-14-at-3.59.59-PM.png\" alt=\"A graphic showing the progression from left to right from the Mixing Department to the Baking Department to the Packaging Department to Finished Goods. Under each department is shown the formula Direct Materials + Direct Labor + Factory Overhead (for that department) = Work in Process (for that department). Under Finished Goods, it states Total cost of the batch includes work in process costs from all three departments.\" width=\"953\" height=\"275\" \/><\/p>\n<p>Before we examine subsequent departments, let\u2019s review the Production Cost Report from the first stage of production&#8211; the mixing department for the month of January:<\/p>\n<div style=\"text-align: left;\">\n<table class=\"fin-table acctstatement fw\">\n<caption>Dad&#8217;s Perfect Pies<br \/>\nProduction Cost Report &#8211; Mixing Department<br \/>\nMonth Ended January 31<\/caption>\n<tbody>\n<tr>\n<th class=\"r\" scope=\"col\"><\/th>\n<th class=\"r\" scope=\"col\"><\/th>\n<th class=\"r\" scope=\"col\">Equivalent Units<\/th>\n<th class=\"r\" scope=\"col\"><\/th>\n<\/tr>\n<\/tbody>\n<tbody>\n<tr>\n<td><strong>UNITS<\/strong><\/td>\n<td class=\"r\">Physical Units<\/td>\n<td class=\"r line-single\"><span class=\"u-sr-only\">Single Line<\/span>Direct Materials<\/td>\n<td class=\"r line-single\"><span class=\"u-sr-only\">Single Line<\/span>Conversion Costs<\/td>\n<td><\/td>\n<\/tr>\n<tr>\n<td colspan=\"1\"><span class=\"u-sr-only\">Subcategory, <\/span><strong>Units to account for:<\/strong><\/td>\n<td class=\"r line-single\"><span class=\"u-sr-only\">Single Line<\/span><\/td>\n<td class=\"r line-single\"><span class=\"u-sr-only\">Single Line<\/span><\/td>\n<td class=\"r line-single\"><span class=\"u-sr-only\">Single Line<\/span><\/td>\n<td><\/td>\n<\/tr>\n<tr>\n<td>\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0Beginning work-in-process<\/td>\n<td class=\"r\">0<\/td>\n<td><\/td>\n<td><\/td>\n<td><\/td>\n<\/tr>\n<tr>\n<td>\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0Started in production<\/td>\n<td class=\"r\">3,000<\/td>\n<td><\/td>\n<td><\/td>\n<td><\/td>\n<\/tr>\n<tr>\n<td>Total units to account for<\/td>\n<td class=\"r line-single line-double\"><span class=\"u-sr-only\">Single Line<\/span>3,000<span class=\"u-sr-only\">Double line<\/span><\/td>\n<td><\/td>\n<td><\/td>\n<td><\/td>\n<\/tr>\n<tr>\n<td><\/td>\n<td><\/td>\n<td><\/td>\n<td><\/td>\n<td><\/td>\n<\/tr>\n<tr>\n<td colspan=\"5\"><span class=\"u-sr-only\">Subcategory, <\/span><strong>Units accounted for:<\/strong><\/td>\n<\/tr>\n<tr>\n<td>\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0Completed and transferred out<\/td>\n<td class=\"r highlight-green\">2,250<\/td>\n<td class=\"r\">2,250<\/td>\n<td class=\"r\">2,250<\/td>\n<td><\/td>\n<\/tr>\n<tr>\n<td>\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0Ending work-in-process<\/td>\n<td class=\"r\">750<\/td>\n<td class=\"r\">750<\/td>\n<td class=\"r\">450<\/td>\n<td><\/td>\n<\/tr>\n<tr>\n<td>Total units accounted for<\/td>\n<td class=\"r line-single line-double\"><span class=\"u-sr-only\">Single Line<\/span>3,000<span class=\"u-sr-only\">Double line<\/span><\/td>\n<td class=\"r line-single line-double\"><span class=\"u-sr-only\">Single Line<\/span>3,000<span class=\"u-sr-only\">Double line<\/span><\/td>\n<td class=\"r line-single line-double\"><span class=\"u-sr-only\">Single Line<\/span>2,700<span class=\"u-sr-only\">Double line<\/span><\/td>\n<td><\/td>\n<\/tr>\n<tr>\n<td><\/td>\n<td><\/td>\n<td><\/td>\n<td><\/td>\n<td><\/td>\n<\/tr>\n<tr>\n<td><strong>COSTS<\/strong><\/td>\n<td><\/td>\n<td class=\"r\">Direct Materials<\/td>\n<td class=\"r\">Conversion Costs<\/td>\n<td class=\"r\">Total Costs<\/td>\n<\/tr>\n<tr>\n<td colspan=\"5\"><span class=\"u-sr-only\">Subcategory, <\/span><strong>Costs to account for:<\/strong><\/td>\n<\/tr>\n<tr>\n<td>\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0Beginning work-in-process<\/td>\n<td><\/td>\n<td class=\"r\">$\u00a0 \u00a0 \u00a0 \u00a0&#8211;<\/td>\n<td class=\"r\">$\u00a0\u00a0 \u00a0 \u00a0 &#8211;<\/td>\n<td class=\"r\">$ \u00a0 \u00a0 \u00a0&#8211;<\/td>\n<\/tr>\n<tr>\n<td>\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0Costs added during the period<\/td>\n<td><\/td>\n<td class=\"r\">$ \u00a0 3,000<\/td>\n<td class=\"r\">$ \u00a0\u00a03,240<\/td>\n<td class=\"r\">$\u00a0 6,240<\/td>\n<\/tr>\n<tr>\n<td>Total costs to account for<\/td>\n<td><\/td>\n<td class=\"r line-single\"><span class=\"u-sr-only\">Single Line<\/span>$ \u00a0 3,000<\/td>\n<td class=\"r line-single\"><span class=\"u-sr-only\">Single Line<\/span>$\u00a0 \u00a03,240<\/td>\n<td class=\"r line-single line-double\"><span class=\"u-sr-only\">Single Line<\/span>$ \u00a06,240<span class=\"u-sr-only\">Double line<\/span><\/td>\n<\/tr>\n<tr>\n<td>Divided by: Total EUP<\/td>\n<td><\/td>\n<td class=\"r\">\u00a0 3,000<\/td>\n<td class=\"r\">\u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 2,700<\/td>\n<td><\/td>\n<\/tr>\n<tr>\n<td>Cost per equivalent unit<\/td>\n<td><\/td>\n<td class=\"r line-single line-double\"><span class=\"u-sr-only\">Single Line<\/span>$ \u00a0\u00a0\u00a01.00<span class=\"u-sr-only\">Double line<\/span><\/td>\n<td class=\"r line-single line-double\"><span class=\"u-sr-only\">Single Line<\/span>$\u00a0\u00a0\u00a0 1.20<span class=\"u-sr-only\">Double line<\/span><\/td>\n<td><\/td>\n<\/tr>\n<tr>\n<td><\/td>\n<td><\/td>\n<td><\/td>\n<td><\/td>\n<td><\/td>\n<\/tr>\n<tr>\n<td colspan=\"5\"><span class=\"u-sr-only\">Subcategory, <\/span><strong>Costs accounted for:<\/strong><\/td>\n<\/tr>\n<tr>\n<td>\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0Completed and transferred out<\/td>\n<td><\/td>\n<td class=\"r\">$\u00a0\u00a0 2,250<\/td>\n<td class=\"r\">$\u00a0 \u00a02,700<\/td>\n<td class=\"r highlight\">$\u00a0 4,950<\/td>\n<\/tr>\n<tr>\n<td>\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0Ending work-in-process<\/td>\n<td><\/td>\n<td class=\"r\">$ \u00a0 \u00a0 750<\/td>\n<td class=\"r\">$ \u00a0 \u00a0 540<\/td>\n<td class=\"r\">$\u00a0 1,290<\/td>\n<\/tr>\n<tr>\n<td>Total costs accounted for<\/td>\n<td><\/td>\n<td class=\"r line-single line-double\"><span class=\"u-sr-only\">Single Line<\/span>$\u00a0\u00a0 3,000<span class=\"u-sr-only\">Double line<\/span><\/td>\n<td class=\"r line-single line-double\"><span class=\"u-sr-only\">Single Line<\/span>$ \u00a0 3,240<span class=\"u-sr-only\">Double line<\/span><\/td>\n<td class=\"r line-single line-double\"><span class=\"u-sr-only\">Single Line<\/span>$\u00a0 6,240<span class=\"u-sr-only\">Double line<\/span><\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<p><span style=\"font-size: 1rem; text-align: initial;\">\u00a0<\/span><\/p>\n<\/div>\n<p>Take note of the following:<\/p>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\">Units transferred out = <span style=\"color: #000000; background-color: #f4f8e0;\">2,250<\/span>. They were transferred out to the baking\/packaging department because they were 100% complete.<\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\">They carried with them <span style=\"background-color: #ecf5ff;\">$4,950<\/span> in accumulated costs.<\/li>\n<\/ul>\n<p>Preparing the Production Cost Report for subsequent departments is similar to preparing the report for the first department, with the addition of a column for costs transferred in.<\/p>\n<p>Let\u2019s make these assumptions for the baking\/packaging department for the month of January:<\/p>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\">Jan 14: 750 pie crusts (uncooked) transferred from mixing to baking\/packaging &#8211; baked, packaged, quality-checked, and transferred to the cooler on Jan 19.<\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\">Jan 20: 750 pie crusts (uncooked) transferred from mixing to baking\/packaging &#8211; baked, packaged, quality-checked, and transferred to the cooler on Jan 25.<\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\">Jan 26: 750 pie crusts (uncooked) transferred from mixing to baking\/packaging &#8211; 500 baked, packaged, quality-checked, and transferred to the cooler on Jan 31, leaving 250 pie crusts 20% through the process.<\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\">All direct materials in this combined department (packing materials) are added at the end of the process, so the 250 shells remaining in work-in-process on January 31 are 0% complete as to direct materials.<\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\">Costs accumulated in the accounting records are:\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"2\">$600 in direct materials<\/li>\n<li style=\"font-weight: 400;\" aria-level=\"2\">$4,100 in labor, factory overhead, and other conversion costs.<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n<p>Let\u2019s put together a Production Cost Report one step at a time.<\/p>\n<h3>Step 1 &#8211; Calculate Units to Account For<\/h3>\n<p>Establish the total inventory in production by adding units started into production to beginning work in process (what was left only partially finished at the end of the prior month). For this example, we will assume that all pie shells in process were completed in December and the facility was shut down over the holiday break for annual repairs, maintenance, and deep cleaning. So, the beginning inventory of zero plus the 2,250 pie shells transferred in from the mixing department during the month gives us a total number of units to account for of 2,250.<\/p>\n<div style=\"text-align: left;\">\n<table class=\"fin-table acctstatement fw\">\n<tbody>\n<tr>\n<th scope=\"col\">UNITS<\/th>\n<th class=\"r\" scope=\"col\">Physical Units<\/th>\n<\/tr>\n<\/tbody>\n<tbody>\n<tr>\n<td colspan=\"1\"><span class=\"u-sr-only\">Subcategory, <\/span><strong>Units to account for:<\/strong><\/td>\n<td class=\"line-single\"><span class=\"u-sr-only\">Single Line<\/span><\/td>\n<\/tr>\n<tr>\n<td>\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0Beginning work-in-process<\/td>\n<td class=\"r\">0<\/td>\n<\/tr>\n<tr>\n<td>\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0Transferred in from mixing<\/td>\n<td class=\"r\">2,250<\/td>\n<\/tr>\n<tr>\n<td>Total units to account for<\/td>\n<td class=\"r line-single line-double\"><span class=\"u-sr-only\">Single Line<\/span>2,250<span class=\"u-sr-only\">Double line<\/span><\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/div>\n<h3>Step 2 &#8211; Calculate Units Accounted For<\/h3>\n<p>In subsequent departments like these, the units are then broken down into three categories: transferred in, direct materials, and conversion costs. The 2,000 units that have been transferred out are 100% complete, so the Equivalent Units and the actual physical units are the same. However, unfinished units (work-in-process) in this department have to be converted to Equivalent Units. In this case, since materials are all added at the end of the process, the Equivalent Units for Direct Materials is 0% of the actual units, but the Equivalent Units for the Conversion Costs allocation is 20% of actual units or 50 EUs.<\/p>\n<p>From our assumptions: Jan 26: 750 pie crusts (uncooked) and transferred from mixing to baking\/packaging &#8211; 500 baked, packaged, quality-checked, and transferred to the cooler on Jan 31, leaving 250 pie crusts 20% through the process. 250 * 0.20 = 50 EUs.<\/p>\n<div style=\"text-align: left;\">\n<table class=\"fin-table acctstatement fw\">\n<tbody>\n<tr>\n<td><\/td>\n<td><\/td>\n<td><\/td>\n<td>Equivalent Units<\/td>\n<td><\/td>\n<\/tr>\n<tr>\n<td><\/td>\n<td class=\"r\">Physical Units<\/td>\n<td class=\"r line-single\"><span class=\"u-sr-only\">Single Line<\/span>Transferred In<\/td>\n<td class=\"r line-single\"><span class=\"u-sr-only\">Single Line<\/span>Direct Materials<\/td>\n<td class=\"r line-single\"><span class=\"u-sr-only\">Single Line<\/span>Conversion Costs<\/td>\n<\/tr>\n<tr>\n<td colspan=\"1\"><span class=\"u-sr-only\">Subcategory, <\/span><strong>Units accounted for:<\/strong><\/td>\n<td class=\"r line-single\"><span class=\"u-sr-only\">Single Line<\/span><\/td>\n<td class=\"r line-single\"><span class=\"u-sr-only\">Single Line<\/span><\/td>\n<td class=\"r line-single\"><span class=\"u-sr-only\">Single Line<\/span><\/td>\n<td class=\"r line-single\"><span class=\"u-sr-only\">Single Line<\/span><\/td>\n<\/tr>\n<tr>\n<td>\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0Completed and transferred out<\/td>\n<td class=\"r\">2,000<\/td>\n<td class=\"r\">2,000<\/td>\n<td class=\"r\">2,000<\/td>\n<td class=\"r\">2,000<\/td>\n<\/tr>\n<tr>\n<td>\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0Ending work-in-process<\/td>\n<td class=\"r\">250<\/td>\n<td class=\"r\">250<\/td>\n<td class=\"r\">0<\/td>\n<td class=\"r\">50<\/td>\n<\/tr>\n<tr>\n<td>Total units accounted for<\/td>\n<td class=\"r line-single line-double\"><span class=\"u-sr-only\">Single Line<\/span>2,250<span class=\"u-sr-only\">Double line<\/span><\/td>\n<td class=\"r line-single line-double\"><span class=\"u-sr-only\">Single Line<\/span>2,250<span class=\"u-sr-only\">Double line<\/span><\/td>\n<td class=\"r line-single line-double\"><span class=\"u-sr-only\">Single Line<\/span>2,000<span class=\"u-sr-only\">Double line<\/span><\/td>\n<td class=\"r line-single line-double\"><span class=\"u-sr-only\">Single Line<\/span>2,050<span class=\"u-sr-only\">Double line<\/span><\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/div>\n<p>&nbsp;<\/p>\n<p>Remember, Equivalent Units will be used to come up with an overall allocation rate that will then be used to allocate total costs between products completed and transferred out and products still in the process.<\/p>\n<h3>Step 3 &#8211; Divide Total Costs by Equivalent Units<\/h3>\n<p>From the accounting records, we see that total direct materials used in January by the baking\/packaging department were $600 and direct labor and manufacturing overhead totaled $4,100. We divided those amounts by the related Equivalent Units to come up with a cost per EU.<\/p>\n<div style=\"text-align: left;\">\n<table class=\"fin-table acctstatement fw\">\n<tbody>\n<tr>\n<th class=\"r\" scope=\"col\"><\/th>\n<th class=\"r\" scope=\"col\">Transferred In<\/th>\n<th class=\"r\" scope=\"col\">Direct Materials<\/th>\n<th class=\"r\" scope=\"col\">Conversion Costs<\/th>\n<th class=\"r\" scope=\"col\">Total Costs<\/th>\n<\/tr>\n<\/tbody>\n<tbody>\n<tr>\n<td colspan=\"5\"><span class=\"u-sr-only\">Subcategory, <\/span><strong>Costs to account for:<\/strong><\/td>\n<\/tr>\n<tr>\n<td>\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0Beginning work-in-process<\/td>\n<td class=\"r\">$ \u00a0 \u00a0 \u00a0 \u00a0 &#8211;<\/td>\n<td class=\"r\">$ \u00a0 \u00a0 \u00a0 &#8211;<\/td>\n<td class=\"r\">$\u00a0 \u00a0 \u00a0 \u00a0 &#8211;<\/td>\n<td class=\"r\">$ \u00a0 \u00a0 \u00a0 &#8211;<\/td>\n<\/tr>\n<tr>\n<td>\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0Costs added during the period<\/td>\n<td class=\"r\">$ \u00a0 \u00a0 4,950<\/td>\n<td class=\"r\">$ \u00a0 \u00a0 600<\/td>\n<td class=\"r\">$\u00a0 \u00a0 4,100<\/td>\n<td class=\"r\">$ \u00a0 9,650<\/td>\n<\/tr>\n<tr>\n<td>Total costs to account for<\/td>\n<td class=\"r line-single\"><span class=\"u-sr-only\">Single Line<\/span>$ \u00a0 \u00a0 4,950<\/td>\n<td class=\"r line-single\"><span class=\"u-sr-only\">Single Line<\/span>$ \u00a0 \u00a0 600<\/td>\n<td class=\"r line-single\"><span class=\"u-sr-only\">Single Line<\/span>$\u00a0 \u00a0 4,100<\/td>\n<td class=\"r line-single line-double\"><span class=\"u-sr-only\">Single Line<\/span>$ \u00a0 9,650<span class=\"u-sr-only\">Double line<\/span><\/td>\n<\/tr>\n<tr>\n<td>Divided by: Total EUP<\/td>\n<td class=\"r\">\u00a0 \u00a0 2,250<\/td>\n<td class=\"r\">\u00a0 \u00a0 2,000<\/td>\n<td class=\"r\">\u00a0 2,050<\/td>\n<td><\/td>\n<\/tr>\n<tr>\n<td>Cost per equivalent unit<\/td>\n<td class=\"r line-single line-double\"><span class=\"u-sr-only\">Single Line<\/span>$\u00a0 \u00a0 \u00a0 2.20<span class=\"u-sr-only\">Double line<\/span><\/td>\n<td class=\"r line-single line-double\"><span class=\"u-sr-only\">Single Line<\/span>$\u00a0 \u00a0 0.30<span class=\"u-sr-only\">Double line<\/span><\/td>\n<td class=\"r line-single line-double\"><span class=\"u-sr-only\">Single Line<\/span>$\u00a0 \u00a0 \u00a02.00<span class=\"u-sr-only\">Double line<\/span><\/td>\n<td><\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<p>&nbsp;<\/p>\n<\/div>\n<p>Notice that the \u201cTransferred In\u201d column comes right from the mixing department Production Cost Report.<\/p>\n<p>Total costs of $9,650 are the $4,950 transferred in from the mixing department plus the $4,700 incurred in baking and packaging.<\/p>\n<h3>Step 4 &#8211; Allocate Costs Based on Equivalent Units<\/h3>\n<p>Refer back to step 2:<\/p>\n<div style=\"text-align: left;\">\n<table class=\"fin-table acctstatement fw\">\n<tbody>\n<tr>\n<td><\/td>\n<td><\/td>\n<td><\/td>\n<td>Equivalent Units<\/td>\n<td><\/td>\n<\/tr>\n<tr>\n<td><\/td>\n<td class=\"r\">Physical Units<\/td>\n<td class=\"r line-single\"><span class=\"u-sr-only\">Single Line<\/span>Transferred In<\/td>\n<td class=\"r line-single\"><span class=\"u-sr-only\">Single Line<\/span>Direct Materials<\/td>\n<td class=\"r line-single\"><span class=\"u-sr-only\">Single Line<\/span>Conversion Costs<\/td>\n<\/tr>\n<tr>\n<td colspan=\"1\"><span class=\"u-sr-only\">Subcategory, <\/span><strong>Units accounted for:<\/strong><\/td>\n<td class=\"r line-single\"><span class=\"u-sr-only\">Single Line<\/span><\/td>\n<td class=\"r line-single\"><span class=\"u-sr-only\">Single Line<\/span><\/td>\n<td class=\"r line-single\"><span class=\"u-sr-only\">Single Line<\/span><\/td>\n<td class=\"r line-single\"><span class=\"u-sr-only\">Single Line<\/span><\/td>\n<\/tr>\n<tr>\n<td>\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0Completed and transferred out<\/td>\n<td class=\"r\">2,000<\/td>\n<td class=\"r\">2,000<\/td>\n<td class=\"r\">2,000<\/td>\n<td class=\"r\">2,000<\/td>\n<\/tr>\n<tr>\n<td>\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0Ending work-in-process<\/td>\n<td class=\"r\">250<\/td>\n<td class=\"r\">250<\/td>\n<td class=\"r\">0<\/td>\n<td class=\"r\">50<\/td>\n<\/tr>\n<tr>\n<td>Total units accounted for<\/td>\n<td class=\"r line-single line-double\"><span class=\"u-sr-only\">Single Line<\/span>2,250<span class=\"u-sr-only\">Double line<\/span><\/td>\n<td class=\"r line-single line-double\"><span class=\"u-sr-only\">Single Line<\/span>2,250<span class=\"u-sr-only\">Double line<\/span><\/td>\n<td class=\"r line-single line-double\"><span class=\"u-sr-only\">Single Line<\/span>2,000<span class=\"u-sr-only\">Double line<\/span><\/td>\n<td class=\"r line-single line-double\"><span class=\"u-sr-only\">Single Line<\/span>2,050<span class=\"u-sr-only\">Double line<\/span><\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<p>&nbsp;<\/p>\n<\/div>\n<p>Multiply the cost per equivalent unit by the number of equivalent units for each category of units accounted for: Completed and transferred out, and Ending work-in-process.<\/p>\n<p><strong>Completed and transferred out<\/strong><\/p>\n<div style=\"text-align: left;\">\n<table class=\"fin-table acctstatement fw\">\n<tbody>\n<tr>\n<th class=\"r\" scope=\"col\"><\/th>\n<th class=\"r\" scope=\"col\">Transferred In<\/th>\n<th class=\"r\" scope=\"col\">Direct Materials<\/th>\n<th class=\"r\" scope=\"col\">Conversion Costs<\/th>\n<th class=\"r\" scope=\"col\">Total Costs<\/th>\n<\/tr>\n<\/tbody>\n<tbody>\n<tr>\n<td>Equivalent units completed and transferred out<\/td>\n<td class=\"r line-single\"><span class=\"u-sr-only\">Single Line<\/span>2,000<\/td>\n<td class=\"r line-single\"><span class=\"u-sr-only\">Single Line<\/span>2,000<\/td>\n<td class=\"r line-single\"><span class=\"u-sr-only\">Single Line<\/span>2,000<\/td>\n<td><\/td>\n<\/tr>\n<tr>\n<td>Cost per equivalent unit<\/td>\n<td class=\"r\">$ \u00a02.20<\/td>\n<td class=\"r\">$\u00a0 0.30<\/td>\n<td class=\"r\">$\u00a0\u00a0 2.00<\/td>\n<td><\/td>\n<\/tr>\n<tr>\n<td>Cost allocated to completed units<\/td>\n<td class=\"r line-single line-double\"><span class=\"u-sr-only\">Single Line<\/span>$ 4,400<span class=\"u-sr-only\">Double line<\/span><\/td>\n<td class=\"r line-single line-double\"><span class=\"u-sr-only\">Single Line<\/span>$ \u00a0 600<span class=\"u-sr-only\">Double line<\/span><\/td>\n<td class=\"r line-single line-double\"><span class=\"u-sr-only\">Single Line<\/span>$\u00a0 4,000<span class=\"u-sr-only\">Double line<\/span><\/td>\n<td class=\"r line-single line-double\"><span class=\"u-sr-only\">Single Line<\/span>$ \u00a0 9,000<span class=\"u-sr-only\">Double line<\/span><\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<p>&nbsp;<\/p>\n<\/div>\n<p><strong>Ending work-in-process<\/strong><\/p>\n<div style=\"text-align: left;\">\n<table class=\"fin-table acctstatement fw\">\n<tbody>\n<tr>\n<th class=\"r\" scope=\"col\"><\/th>\n<th class=\"r\" scope=\"col\">Transferred In<\/th>\n<th class=\"r\" scope=\"col\">Direct Materials<\/th>\n<th class=\"r\" scope=\"col\">Conversion Costs<\/th>\n<th class=\"r\" scope=\"col\">Total Costs<\/th>\n<\/tr>\n<\/tbody>\n<tbody>\n<tr>\n<td>Equivalent units not yet completed<\/td>\n<td class=\"r line-single\"><span class=\"u-sr-only\">Single Line<\/span>250<\/td>\n<td class=\"r line-single\"><span class=\"u-sr-only\">Single Line<\/span>0<\/td>\n<td class=\"r line-single\"><span class=\"u-sr-only\">Single Line<\/span>50<\/td>\n<td><\/td>\n<\/tr>\n<tr>\n<td>Cost per equivalent unit<\/td>\n<td><\/td>\n<td class=\"r\">$\u00a0 2.20<\/td>\n<td class=\"r\">$\u00a0 0.30<\/td>\n<td class=\"r\">$\u00a0 2.00<\/td>\n<td><\/td>\n<\/tr>\n<tr>\n<td>Cost allocated to work-in-process<\/td>\n<td class=\"r line-single line-double\"><span class=\"u-sr-only\">Single Line<\/span>$550<span class=\"u-sr-only\">Double line<\/span><\/td>\n<td class=\"r line-single line-double\"><span class=\"u-sr-only\">Single Line<\/span>$ \u00a0\u00a0 00<span class=\"u-sr-only\">Double line<\/span><\/td>\n<td class=\"r line-single line-double\"><span class=\"u-sr-only\">Single Line<\/span>$ \u00a0 100<span class=\"u-sr-only\">Double line<\/span><\/td>\n<td class=\"r line-single line-double\"><span class=\"u-sr-only\">Single Line<\/span>$ \u00a0 650<span class=\"u-sr-only\">Double line<\/span><\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<p>&nbsp;<\/p>\n<\/div>\n<p>Notice that under this Equivalent Units method of allocating costs, no direct materials were allocated to ending work in process because the EUs were zero. However, because we are using the average method instead of the First-in, First-out (FIFO) method, which uses the assumption that the flow of goods through the system is a constant mix, we still have costs left in the \u201ctransferred in\u201d column. Using a FIFO cost-flow assumption, we would have allocated those costs to finished goods first.<\/p>\n<p>Before we examine the FIFO method, let\u2019s complete the production cost report for this department and check your understanding of how subsequent departments differ from the first department.<\/p>\n<h3>Complete the Production Report<\/h3>\n<div style=\"text-align: left;\">\n<table class=\"fin-table acctstatement fw\">\n<caption>Dad&#8217;s Perfect Pies<br \/>\nProduction Cost Report &#8211; Baking\/Packaging Department<br \/>\nMonth Ended January 31<\/caption>\n<tbody>\n<tr>\n<td><\/td>\n<td><\/td>\n<td><\/td>\n<td>Equivalent Units<\/td>\n<td><\/td>\n<td><\/td>\n<\/tr>\n<tr>\n<td colspan=\"1\"><span class=\"u-sr-only\">Subcategory, <\/span><strong>UNITS<\/strong><\/td>\n<td class=\"r\">Physical Units<\/td>\n<td class=\"r line-single\"><span class=\"u-sr-only\">Single Line<\/span>Transferred In<\/td>\n<td class=\"r line-single\"><span class=\"u-sr-only\">Single Line<\/span>Direct Materials<\/td>\n<td class=\"r line-single\"><span class=\"u-sr-only\">Single Line<\/span>Conversion Costs<\/td>\n<td><\/td>\n<\/tr>\n<tr>\n<td colspan=\"1\"><span class=\"u-sr-only\">Subcategory, <\/span><strong>Units to account for:<\/strong><\/td>\n<td class=\"r line-single\"><span class=\"u-sr-only\">Single Line<\/span><\/td>\n<td class=\"r line-single\"><span class=\"u-sr-only\">Single Line<\/span><\/td>\n<td class=\"r line-single\"><span class=\"u-sr-only\">Single Line<\/span><\/td>\n<td class=\"r line-single\"><span class=\"u-sr-only\">Single Line<\/span><\/td>\n<td class=\"r\"><\/td>\n<\/tr>\n<tr>\n<td>Beginning work-in-process<\/td>\n<td class=\"r\">0<\/td>\n<td><\/td>\n<td><\/td>\n<td><\/td>\n<td><\/td>\n<\/tr>\n<tr>\n<td>Transferred in from mixing<\/td>\n<td class=\"r\">2,250<\/td>\n<td><\/td>\n<td><\/td>\n<td><\/td>\n<td><\/td>\n<\/tr>\n<tr>\n<td>Total units to account for<\/td>\n<td class=\"r line-single line-double\"><span class=\"u-sr-only\">Single Line<\/span>2,250<span class=\"u-sr-only\">Double line<\/span><\/td>\n<td><\/td>\n<td><\/td>\n<td><\/td>\n<td><\/td>\n<\/tr>\n<tr>\n<td><\/td>\n<td><\/td>\n<td><\/td>\n<td><\/td>\n<td><\/td>\n<td><\/td>\n<\/tr>\n<tr>\n<td colspan=\"6\"><span class=\"u-sr-only\">Subcategory, <\/span><strong>Units accounted for:<\/strong><\/td>\n<\/tr>\n<tr>\n<td>Completed and transferred out<\/td>\n<td class=\"r\">2,000<\/td>\n<td class=\"r\">2,000<\/td>\n<td class=\"r\">2,000<\/td>\n<td class=\"r\">2,000<\/td>\n<td><\/td>\n<\/tr>\n<tr>\n<td>Ending work-in-process<\/td>\n<td class=\"r\">250<\/td>\n<td class=\"r\">250<\/td>\n<td class=\"r\">0<\/td>\n<td class=\"r\">50<\/td>\n<td><\/td>\n<\/tr>\n<tr>\n<td>Total units accounted for<\/td>\n<td class=\"r line-single line-double\"><span class=\"u-sr-only\">Single Line<\/span>2,250<span class=\"u-sr-only\">Double line<\/span><\/td>\n<td class=\"r line-single line-double\"><span class=\"u-sr-only\">Single Line<\/span>2,250<span class=\"u-sr-only\">Double line<\/span><\/td>\n<td class=\"r line-single line-double\"><span class=\"u-sr-only\">Single Line<\/span>2,000<span class=\"u-sr-only\">Double line<\/span><\/td>\n<td class=\"r line-single line-double\"><span class=\"u-sr-only\">Single Line<\/span>2,050<span class=\"u-sr-only\">Double line<\/span><\/td>\n<td><\/td>\n<\/tr>\n<tr>\n<td><\/td>\n<td><\/td>\n<td><\/td>\n<td><\/td>\n<td><\/td>\n<td><\/td>\n<\/tr>\n<tr>\n<td>COSTS<\/td>\n<td><\/td>\n<td class=\"r\">Transferred In<\/td>\n<td class=\"r\">Direct Materials<\/td>\n<td class=\"r\">Conversion Costs<\/td>\n<td class=\"r\">Total Costs<\/td>\n<\/tr>\n<tr>\n<td colspan=\"1\"><span class=\"u-sr-only\">Subcategory, <\/span><strong>Costs to account for:<\/strong><\/td>\n<td><\/td>\n<td class=\"r line-single\"><span class=\"u-sr-only\">Single Line<\/span><\/td>\n<td class=\"r line-single\"><span class=\"u-sr-only\">Single Line<\/span><\/td>\n<td class=\"r line-single\"><span class=\"u-sr-only\">Single Line<\/span><\/td>\n<td class=\"r line-single\"><span class=\"u-sr-only\">Single Line<\/span><\/td>\n<\/tr>\n<tr>\n<td>Beginning work-in-process<\/td>\n<td><\/td>\n<td class=\"r\">$ \u00a0 \u00a0 \u00a0 &#8211;<\/td>\n<td class=\"r\">$ \u00a0 \u00a0\u00a0 &#8211;<\/td>\n<td class=\"r\">$ \u00a0 \u00a0\u00a0 &#8211;<\/td>\n<td class=\"r\">$ \u00a0 \u00a0 &#8211;<\/td>\n<\/tr>\n<tr>\n<td>Costs added during the period<\/td>\n<td><\/td>\n<td class=\"r\">$ \u00a0 4,950<\/td>\n<td class=\"r\">$\u00a0 \u00a0 600<\/td>\n<td class=\"r\">$\u00a0 4,100<\/td>\n<td class=\"r\">$ 9,650<\/td>\n<\/tr>\n<tr>\n<td>Total costs to account for<\/td>\n<td><\/td>\n<td class=\"r line-single\"><span class=\"u-sr-only\">Single Line<\/span>$ \u00a0 4,950<\/td>\n<td class=\"r line-single\"><span class=\"u-sr-only\">Single Line<\/span>$\u00a0 \u00a0 600<\/td>\n<td class=\"r line-single\"><span class=\"u-sr-only\">Single Line<\/span>$ \u00a04,100<\/td>\n<td class=\"r line-single line-double\"><span class=\"u-sr-only\">Single Line<\/span>$ 9,650<span class=\"u-sr-only\">Double line<\/span><\/td>\n<\/tr>\n<tr>\n<td>Divided by: Total EUP<\/td>\n<td><\/td>\n<td class=\"r\">\u00a0 \u00a0 \u00a0 2,250<\/td>\n<td class=\"r\">\u00a0 \u00a0 \u00a0 2,000<\/td>\n<td class=\"r\">\u00a0 \u00a0 \u00a0 2,050<\/td>\n<td><\/td>\n<\/tr>\n<tr>\n<td>Cost per equivalent unit<\/td>\n<td><\/td>\n<td class=\"r line-single line-double\"><span class=\"u-sr-only\">Single Line<\/span>$ \u00a0 \u00a02.20<span class=\"u-sr-only\">Double line<\/span><\/td>\n<td class=\"r line-single line-double\"><span class=\"u-sr-only\">Single Line<\/span>$\u00a0 \u00a00.30<span class=\"u-sr-only\">Double line<\/span><\/td>\n<td class=\"r line-single line-double\"><span class=\"u-sr-only\">Single Line<\/span>$\u00a0 \u00a02.00<span class=\"u-sr-only\">Double line<\/span><\/td>\n<td><\/td>\n<\/tr>\n<tr>\n<td><\/td>\n<td><\/td>\n<td><\/td>\n<td><\/td>\n<td><\/td>\n<td><\/td>\n<\/tr>\n<tr>\n<td colspan=\"6\"><span class=\"u-sr-only\">Subcategory, <\/span><strong>Costs accounted for:<\/strong><\/td>\n<\/tr>\n<tr>\n<td>Completed and transferred out<\/td>\n<td><\/td>\n<td class=\"r\">$\u00a0 \u00a04,400<\/td>\n<td class=\"r\">$ \u00a0 \u00a0 600<\/td>\n<td class=\"r\">$\u00a0 4,000<\/td>\n<td class=\"r\">$ 9,000<\/td>\n<\/tr>\n<tr>\n<td>Ending work-in-process<\/td>\n<td><\/td>\n<td class=\"r\">$\u00a0 \u00a0 \u00a0550<\/td>\n<td class=\"r\">$\u00a0 \u00a0 \u00a0 \u00a0&#8211;<\/td>\n<td class=\"r\">$ \u00a0 \u00a0100<\/td>\n<td class=\"r\">$\u00a0 \u00a0650<\/td>\n<\/tr>\n<tr>\n<td>Total costs accounted for<\/td>\n<td><\/td>\n<td class=\"r line-single line-double\"><span class=\"u-sr-only\">Single Line<\/span>$ \u00a0 4,950<span class=\"u-sr-only\">Double line<\/span><\/td>\n<td class=\"r line-single line-double\"><span class=\"u-sr-only\">Single Line<\/span>$ \u00a0 \u00a0 600<span class=\"u-sr-only\">Double line<\/span><\/td>\n<td class=\"r line-single line-double\"><span class=\"u-sr-only\">Single Line<\/span>$ \u00a04,100<span class=\"u-sr-only\">Double line<\/span><\/td>\n<td class=\"r line-single line-double\"><span class=\"u-sr-only\">Single Line<\/span>$ 9,650<span class=\"u-sr-only\">Double line<\/span><\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/div>\n<p>&nbsp;<\/p>\n<p>And here is a summary of total inventory at the end of January based on the two production reports:<\/p>\n<div style=\"text-align: left;\">\n<table class=\"fin-table acctstatement fw\">\n<thead>\n<tr class=\"u-sr-only\">\n<th scope=\"col\">Description<\/th>\n<th scope=\"col\">Amount<\/th>\n<th scope=\"col\">Total<\/th>\n<\/tr>\n<\/thead>\n<tbody>\n<tr>\n<td colspan=\"3\"><span class=\"u-sr-only\">Subcategory, <\/span><strong>Inventory<\/strong><\/td>\n<\/tr>\n<tr>\n<td>\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0Work-in-process<\/td>\n<td><\/td>\n<td><\/td>\n<\/tr>\n<tr>\n<td>\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0Mixing<\/td>\n<td class=\"r\">$ \u00a0 \u00a0 \u00a0 1,290<\/td>\n<td><\/td>\n<\/tr>\n<tr>\n<td>\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0Baking\/Packaging<\/td>\n<td class=\"r\">650<\/td>\n<td class=\"r\">$ \u00a0 \u00a0 \u00a0 1,940<\/td>\n<\/tr>\n<tr>\n<td>\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0Finished Goods<\/td>\n<td class=\"r line-single\"><span class=\"u-sr-only\">Single Line<\/span><\/td>\n<td class=\"r\">9,000<\/td>\n<\/tr>\n<tr>\n<td>Total Inventory<\/td>\n<td><\/td>\n<td class=\"r line-single line-double\"><span class=\"u-sr-only\">Single Line<\/span>$\u00a0 \u00a0 \u00a0 10,940<span class=\"u-sr-only\">Double line<\/span><\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/div>\n<p>&nbsp;<\/p>\n<p>Thus, all the costs from both departments are accounted for and allocated to the proper category.<\/p>\n<div style=\"text-align: left;\">\n<table class=\"fin-table acctstatement fw\">\n<thead>\n<tr class=\"u-sr-only\">\n<th scope=\"col\">Description<\/th>\n<th scope=\"col\">Total<\/th>\n<\/tr>\n<\/thead>\n<tbody>\n<tr>\n<td>Mixing Department<\/td>\n<td class=\"r\">$ \u00a0 \u00a0 \u00a0 6,240<\/td>\n<\/tr>\n<tr>\n<td>Baking\/Packaging Department<\/td>\n<td class=\"r\">4,700<\/td>\n<\/tr>\n<tr>\n<td>Total costs to be allocated<\/td>\n<td class=\"r line-single line-double\"><span class=\"u-sr-only\">Single Line<\/span>$\u00a0 \u00a0 \u00a0 10,940<span class=\"u-sr-only\">Double line<\/span><\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/div>\n<p>&nbsp;<\/p>\n<p>Now, check your understanding of the second or subsequent stage of a multi-step process using the weighted-average method of process costing.<\/p>\n<div class=\"textbox tryit\">\n<h3>Practice Question<\/h3>\n<p><iframe loading=\"lazy\" id=\"ohm219051\" class=\"resizable\" src=\"https:\/\/ohm.lumenlearning.com\/multiembedq.php?id=219051&theme=oea&iframe_resize_id=ohm219051\" width=\"100%\" height=\"150\"><\/iframe><\/p>\n<\/div>\n\n\t\t\t <section class=\"citations-section\" role=\"contentinfo\">\n\t\t\t <h3>Candela Citations<\/h3>\n\t\t\t\t\t <div>\n\t\t\t\t\t\t <div id=\"citation-list-925\">\n\t\t\t\t\t\t\t <div class=\"licensing\"><div class=\"license-attribution-dropdown-subheading\">CC licensed content, Original<\/div><ul class=\"citation-list\"><li>Production Report - Subsequent Department - Weighted Average. <strong>Authored by<\/strong>: Joseph Cooke. <strong>Provided by<\/strong>: Lumen Learning. <strong>License<\/strong>: <em><a target=\"_blank\" rel=\"license\" href=\"https:\/\/creativecommons.org\/licenses\/by\/4.0\/\">CC BY: Attribution<\/a><\/em><\/li><\/ul><\/div>\n\t\t\t\t\t\t <\/div>\n\t\t\t\t\t <\/div>\n\t\t\t <\/section>","protected":false},"author":364389,"menu_order":8,"template":"","meta":{"_candela_citation":"[{\"type\":\"original\",\"description\":\"Production Report - Subsequent Department - Weighted Average\",\"author\":\"Joseph Cooke\",\"organization\":\"Lumen 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