The following example uses a process costing system (product costing). For the first part, you are dealing with "equivalent units" and the second part deals with "costs". Both need to be completed for the FINISHING department. All direct materials are added in the tanning department.

(Things to keep in mind: use the weighted average method of process costing + apply process costing methods to cases with transferred in costs.)

The Lamarie Factory manufactures expensive boots in a two department production environment. Production starts in the tanning department and is completed in the finishing department. All direct materials are added in the tanning department. A partial list of data for the month follows:

Beginning work in process Tanning Finishing

Units not available 4,000

% Complete as to direct materials 100% 100%

% Complete as to conversion costs 40% 60%

Direct materials / Transferred in costs $6,000 $7,000

Conversion costs $18,000 $10,000

Current month production

Units started in production not available not available

Units completed and transferred out 16,000 18,000

Direct materials / Transferred in costs added $18,000 not available

Conversion costs added $32,000 $19,000

Costs transferred out $50,000 not available

Ending work in process

Units not available 2,000

% Complete as to direct materials 100%

% Complete as to conversion costs not available 30%

Please complete:

1. Prepare a units of production schedule for the FINISHING department that details units to account for, units accounted for and equivalent full units of production.
2. Prepare a costs of production schedule for the FINISHING department that details total costs to account for, costs per equivalent full unit of production and total costs accounted for. (Note: there will be a small rounding difference in the cost reconciliation)