Problem 8-57 (Static) Prepare a Production Cost Report and Adjust Inventory Balances: Weighted-Average Method (LO 8-3, 4)

The records of Fremont Corporations initial and unaudited accounts show the following ending inventory balances, which must be adjusted to actual costs.

	Units	Unaudited Costs
Work-in-process inventory	120,000	$	793,152
Finished goods inventory	20,000		337,560

As the auditor, you have learned the following information. Ending work-in-process inventory is 40 percent complete with respect to conversion costs. Materials are added at the beginning of the manufacturing process, and overhead is applied at the rate of 80 percent of the direct labor costs. There was no finished goods inventory at the start of the period. The following additional information is also available.

		Costs
	Units	Direct Materials			Direct Labor
Beginning inventory (80% complete as to labor)	80,000	$	240,000		$	546,000
Units started	400,000
Current costs			1,560,000			2,208,000
Units completed and transferred to finished goods inventory	360,000

Required:

a. Prepare a production cost report for Fremont using the weighted-average method. (Hint: You will need to calculate equivalent units for three categories: materials, labor, and overhead.)

b. Show the journal entry required to correct the difference between the unaudited records and actual ending balances of Work-in-Process Inventory and Finished Goods Inventory. Debit or credit Cost of Goods Sold for any difference.

c. If the adjustment in requirement (b) is not made, will the companys income and inventories be overstated or understated?

Complete this question by entering your answers in the tabs below.

• Required A
• Required B
• Required C

Prepare a production cost report for Fremont using the weighted-average method. (Hint: You will need to calculate equivalent units for three categories: materials, labor, and overhead.) (Round "Cost per equivalent unit" to 2 decimal places.)

FREMONT CORPORATION
Production Cost ReportWeighted-Average
	Physical Units	Total Costs	Materials	Labor	Overhead
Flow of Production Units
Units to be accounted for:
Beginning WIP inventory
Units started this period
Total units to be accounted for
Units accounted for:
Units completed and transferred out:
From beginning inventory
Started and completed currently
Total transferred out
Units in ending WIP inventory
Total units accounted for
Costs to be accounted for:
Costs in beginning WIP inventory
Current period costs
Total costs to be accounted for
Cost per equivalent unit:
Materials
Labor
Overhead
Costs accounted for:
Costs assigned to units transferred out:
Materials
Labor
Overhead
Total costs of units transferred out
Costs assigned to ending WIP inventory:
Materials
Labor
Overhead
Total ending WIP inventory
Total costs accounted for

• Required A
• Required B