Process costing assignment, Fall 2015

Hybrid Auto Technologies has two production departments, Assembly and Finishing. This
assignment focuses on the Finishing Department. Roughly assembled products are transferred
from Assembly to Finishing. In Finishing, conversion costs are added uniformly through the
process, and direct materials are added when the conversion process is 50% complete. When the
Finishing process is complete, the products are transferred to Finished Goods.
The table below shows relevant data for the Finishing Department in December.

Beginning WIP, December 1

Physical
Units

Transferred-in
Costs

Direct
Material
s

Conversio
n
Costs

800

$50,000

$0

$15,000

% completion, Beginning WIP

40%

Transferred in during December

3,000

Completed and transferred out during

December

3,100

Ending WIP, December 31

700

% completion, Ending WIP

Costs added during December

60%
$170,000

$20,000

$100,000

1. Using weighted-average process costing, prepare a five-step process costing report that has
the same row and column format as the reports in Exhibits 17-8 and 17-9 in the textbook.
2. Based on your answers to 1., prepare journal entries for all December transactions affecting
Work in ProcessFinishing.
3. Repeat step 1, using FIFO, prepare a five-step process costing report that has the same row
and column format as the reports in Exhibits 17-10 and 17-11 in the textbook. Although
beginning inventory costs often differ in weighted average and FIFO, they need not always
do so. Use the same beginning inventory costs for your FIFO calculations as you did for
weighted average.
4. Suppose that the firm uses weighted average, and the estimate of % completion for Ending
WIP in December was made carelessly, and the actual % completion was 20%. Assume that
all the units completed in the Finishing process were sold during December. Is income
overstated or understated as a result of the error in the % completion estimate? By how
much is it overstated or understated? Present a process costing report using the correct

completion %, and write a one-paragraph explanation of how this estimation error affected
profit.
Presentation guidelines and grading criteria
Your Excel workbook should include three clearly labeled worksheets, one for questions 1 and 2,
one for question 3, and one for question 4. Numbers in the reports should be rounded to the
nearest dollar, except for cost per EU, which should show two decimal places. Highlight the row
showing the cost of units completed and transferred out, which is a key number for journal
entries.
Grading criteria are as follows:
1. Complete format
2.
3.
4.
5.

Correct amounts for ending WIP, Q1

Complete journal entries in correct form, Q2
Correct amounts for ending WIP, Q3
Correct approach to Q4

Points:
3 (1 for each problem that has the 5-step
process costing format)
3 (1 each for TI, DM, CC)
3
3 (1 each for TI, DM, CC)
3 (1 for $ amount profit was incorrectly
reported and 2 for explanation of how
estimation error affected profit)

Spreadsheets should not be hard for users to read! You can lose 6 points for turning in a mess.
You can also lose 6 points if your answers (or cells in your spreadsheets) are not derived from
using formulas in your Excel workbook.

This assignment is due on Wednesday, September 23

at 10:00 am in the dropbox provided on D2L.