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Process Costing: Average Costing Method and Two Time Periods
P8. Box Corporation produces a line of beverage boxes. The production process has been automated, so the product can now be produced in one operation rather than in the three operations that were needed before the company purchased the automated machinery. All direct materials are added at the beginning of the process, and conver- sion costs are incurred uniformly throughout the process. Operating data for July and August follow.
Beginning work in process inventory: Units (July: 20% complete)
July
20,000
August
?
Direct materials
$20,000
$6,000
Conversion costs Production during the month:
$30,000
Units started
70,000
90,000
$34,000
$59,000
Conversion costs
$96,000
$130,800
Ending work in process inventory:
Units (July: 40% complete; August: 60% complete) 10,000 25,000
1. Using the average costing method, prepare process cost reports for July and August.
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