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Copyright © 2012 John Wiley & Sons, Inc. Weygandt, Managerial Accounting, 6/e, Solutions Manual (For Instructor Use Only)
3-1
CHAPTER 3
Process Costing
ASSIGNMENT CLASSIFICATION TABLE
Learning Objectives
Questions
Brief
Exercises
Do It!
Exercises
A
Problems
B
Problems
* 1. Understand who uses
process cost systems.
1, 2, 20 1 1
* 2. Explain the similarities
and differences between
job order cost and
process cost systems.
2, 3, 4, 5 1 1
* 3. Explain the flow of costs
in a process cost system.
6 3 1A 1B
* 4. Make the journal entries
to assign manufacturing
costs in a process
cost system.
6, 7 1, 2, 3 2 2, 4 1A 1B
* 5. Compute equivalent
units.
10, 11,
12, 13
4, 9 3 3, 5, 6, 7, 8,
9, 10, 11, 13,
14, 15
2A, 3A, 4A,
5A, 6A
2B, 3B, 4B,
5B, 6B
* 6. Explain the four steps
necessary to prepare
a production cost report.
8, 9, 14,
15, 18
5, 6, 7, 8 4
3, 5, 6, 7, 8, 9,
10, 11, 13, 14,
15, 16, 17,
18, 19
2A, 3A,
4A, 5A
2B, 3B,
4B, 5B
* 7. Prepare a production
cost report.
16, 17, 19 11 4 7, 12, 13 2A, 3A, 4A,
5A, 6A
2B, 3B, 4B,
5B, 6B
**8.
Compute equivalent units
using the FIFO method.
21, 22 10, 11, 12
16, 17, 18,
19, 20
7A 7B
*Note: All asterisked Questions, Exercises, and Problems relate to material contained in the appendix*to the
chapter.
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3-2
Copyright © 2012 John Wiley & Sons, Inc. Weygandt, Managerial Accounting, 6/e, Solutions Manual (For Instructor Use Only)
ASSIGNMENT CHARACTERISTICS TABLE
Problem
Number
Description
Difficulty
Level
Time
Allotted (min.)
1A Journalize transactions. Moderate 20–30
2A Complete four steps necessary to prepare a production
cost report.
Simple 30–40
3A Complete four steps necessary to prepare a production
cost report.
Simple 30–40
4A
Assign costs and prepare production cost report.
Moderate 20–30
5A Determine equivalent units and unit costs and
assign costs.
Moderate 20–30
6A Compute equivalent units and complete production
cost report.
Moderate 15–25
*7A* Determine equivalent units and unit costs and assign
costs for processes; prepare production cost report.
Moderate 30–40
1B Journalize transactions. Moderate 20–30
2B Complete four steps necessary to prepare a production
cost report.
Simple 30–40
3B Complete four steps necessary to prepare a production
cost report.
Simple 30–40
4B
Assign costs and prepare production cost report.
Moderate 20–30
5B Determine equivalent units and unit costs and
assign costs.
Moderate 20–30
6B Compute equivalent units and complete production
cost report.
Moderate 15–25
*7B Determine equivalent units and unit costs and assign
costs for processes; prepare production cost report.
Moderate 30–40
BLOOM’S TAXONOMY TABLE
Copyright © 2012 John Wiley & Sons, Inc. Weygandt, Managerial Accounting, 6/e, Solutions Manual (For Instructor Use Only)
3-3
Correlation Chart between Bloom’s Taxonomy, Learning Objectives and End
-
of
-
Chapter Exercises and Problems
Learning Objective Knowledge
Comprehension
Application Analysis Synthesis Evaluation
* 1. Understand who uses process cost
systems.
Q3-1
Q3-2
E3-1
Q3-20
DI3-1
* 2. Explain the similarities and differences
between job order cost and process
cost systems.
Q3-2
Q3-3
Q3-4
Q3-5
E3-1
DI3-1
* 3. Explain the flow of costs in a process
cost system.
Q3-6 E3-3
P3-1A
P3-1B P3-1A
P3-1B
* 4. Make the journal entries to assign
manufacturing costs in a process
cost system.
Q3-6 Q3-7
BE3-1
BE3-2
BE3-3
DI3-2
E3-2
E3-4
P3-1A
P3-1B
P3-1A
P3-1B
* 5. Compute equivalent units. Q3-10
Q3-11
Q3-12
Q3-13
BE3-4
BE3-9
DI3-3
E3-3
E3-5
E3-6
E3-7
E3-8
E3-9
E3-10
E3-11
E3-13
E3-14
E3-15
P3-2A
P3-3A
P3-4A
P3-5A
P3-6A
P3-2B
P3-3B
P3-4B
P3-5B
P3-6B
P3-2A
P3-3A
P3-2B
P3-3B
* 6. Explain the four steps necessary
to prepare a production cost report.
Q3-8 Q3-9 Q3-14
Q3-15
Q3-18
BE3-5
BE3-6
BE3-7
BE3-8
DI3-4
E3-3
E3-5
E3-6
E3-7
E3-8
E3-9
E3-10
E3-11
E3-13
E3-14
E3-15
E3-16
E3-17
E3-18
E3-19
P3-2A
P3-3A
P3-4A
P3-5A
P3-2B
P3-3B
P3-4B
P3-5B
P3-2A
P3-3A
P3-2B
P3-3B
* 7. Prepare a production cost report. Q3-16
Q3-17
Q3-19
BE3-11
DI3-4
E3-7
E3-11
E3-13
P3-2A
P3-3A
P3-4A
P3-5A
P3-6A
P3-2B
P3-3B
P3-4B
P3-5B
P3-6B
*8. Compute equivalent units using the
FIFO method.
Q3-21
Q3-22
BE3-10
BE3-11
BE3-12
E3-16
E3-17
E3-18
E3-19
E3-20
P3-7A
P3-7B
Broadening Your Perspective BYP3-4 BYP3-1 BYP3-2
BYP3-3
BYP3-7
BYP3-5 BYP3-6
3-4
Copyright © 2012 John Wiley & Sons, Inc. Weygandt, Managerial Accounting, 6/e, Solutions Manual (For Instructor Use Only)
ANSWERS TO QUESTIONS
1. (a) Process cost.
(b) Process cost.
(c) Job order.
(d) Job order.
2. The primary focus of job order cost accounting is on the individual job. In process cost accounting, the
primary focus is on the processes involved in producing homogeneous products.
3. The similarities are: (1) all three manufacturing cost elements—direct materials, direct labor, and
overhead—are the same; (2) the accumulation of the costs of materials, labor, and overhead is
the same; and (3) the flow of costs is the same.
4. The features of process cost accounting are: (1) separate work in process accounts for each
process, (2) production cost reports, (3) product costs computed for each accounting period, and
(4) unit costs computed based on total manufacturing costs.
5. Sam is correct. The flow of costs is the same in process cost accounting as in job order cost
accounting. The method of assigning costs, however, is significantly different.
6. (a) (1) Materials are charged to production on the basis of materials requisition slips.
(2) Labor is usually charged to production on the basis of the payroll register or departmental
payroll summaries.
(b) The criterion used in assigning overhead to processes is to identify the activity that “drives” or
causes the cost. In many companies this activity is machine time, not direct labor.
7. The entry to assign overhead to production is:
July 31 Work in Process—Machining .................................................... 15,000
Work in Process—Assembly ..................................................... 12,000
Manufacturing Overhead ................................................... 27,000
8. To prepare a production cost report, four steps are followed: (a) compute the physical unit flow,
(b) compute equivalent units of production, (c) compute unit production costs, and (d) prepare a cost
reconciliation schedule.
9. Physical units to be accounted for consist of units in process at the beginning of the period plus
units started (or transferred) into production during the period. Units accounted for consist of units
completed and transferred out during the period plus units in process at the end of the period.
10. Equivalent units of production measure the work done during the period, expressed in fully com-
pleted units.
11. Equivalent units of production are the sum of: (1) units completed and transferred out and
(2) equivalent units of ending work in process.
12. Units started into production were 9,600, or (9,000 + 600).
Copyright © 2012 John Wiley & Sons, Inc. Weygandt, Managerial Accounting, 6/e, Solutions Manual (For Instructor Use Only)
3-5
Questions Chapter 3 (Continued)
13. Equivalent Units
Materials
Conversion Costs
Units transferred out
Work in process
500 X 100%
500 X 20%
Total equivalent units
12,000
500
12,500
12,000
100
12,100
14. Units transferred out were 3,200*
Units to be accounted for
Work in process (beginning)
Started into production
Total units
500
3,000
3,500
Units accounted for
Completed and transferred out
Work in process (ending)
Total units
3,200*
300
3,500
*3,500 – 300
15. (a) The cost of the units transferred out is $112,000, or (14,000 X $8).
(b) The cost of the units in ending inventory is $8,500, or [(2,000 X $3) + (500 X $5)].
16. (a) Ann is incorrect. The report is an internal report for management.
(b) There are four sections in a production cost report: (1) number of physical units, (2) equivalent
units determination, (3) unit costs, and (4) cost reconciliation schedule.
17. The production cost report provides the basis for evaluating: (1) the productivity of a department,
(2) whether unit and total costs are reasonable, and (3) whether current performance is meeting
planned objectives.
18. The per unit conversion cost is $11.25. [Conversion costs = $6,000 – $2,400 = $3,600. Equivalent units
for conversion costs are 320 (800 X 40%); $3,600 ÷ 320 = $11.25.]
19. Operations costing is similar to process costing in that standardized methods are used to manufacture
the product. At the same time, the product may have some customized individual features that
require the use of a job order cost system.
20. In deciding which system to use, a cost-benefit tradeoff occurs. In a job order system, detailed
information related to the cost of the product is involved. The cost of implementing this system is
often expensive. In a process cost system, an average cost of the product will suffice and therefore
the cost to implement is less. In summary, the cost of implementing the system must be balanced
against the benefits provided from the additional information.
*21. Units transferred out were 2,800 (2,000 + 800).
*22. (a) The cost of the units transferred out is $120,000 (12,000 X $10).
(b) The cost of the units in ending inventory is $9,500 [(2,000 X $3) + (500 X $7)].
3-6
Copyright © 2012 John Wiley & Sons, Inc. Weygandt, Managerial Accounting, 6/e, Solutions Manual (For Instructor Use Only)
SOLUTIONS TO BRIEF EXERCISES
BRIEF EXERCISE 3-1
Mar. 31 Raw Materials Inventory ................................. 45,000
Accounts Payable .................................... 45,000
31 Factory Labor .................................................. 60,000
Wages Payable ........................................ 60,000
BRIEF EXERCISE 3-2
Mar. 31 Work in Process—Assembly Department ..... 24,000
Work in Process—Finishing Department ...... 21,000
Raw Materials Inventory .......................... 45,000
31 Work in Process—Assembly Department ..... 35,000
Work in Process—Finishing Department ...... 25,000
Factory Labor ........................................... 60,000
BRIEF EXERCISE 3-3
Mar. 31 Work in Process—Assembly Department
($35,000 X 200%) ......................................... 70,000
Work in Process—Finishing Department
($25,000 X 200%) ......................................... 50,000
Manufacturing Overhead ......................... 120,000
BRIEF EXERCISE 3-4
Materials
Conversion Costs
Jan
u
ary
March
July
45,000 (35,000 + 10,000)
48,000 (40,000 + 8,000)
61,000 (45,000 + 16,000)
39,000 (35,000 + 4,000
a
)
46,000 (40,000 + 6,000
b
)
49,000 (45,000 + 4,000
c
)
a. 10,000 X 40%
b. 8,000 X 75%
c. 16,000 X 25%
Copyright © 2012 John Wiley & Sons, Inc. Weygandt, Managerial Accounting, 6/e, Solutions Manual (For Instructor Use Only)
3-7
BRIEF EXERCISE 3-5
Total mater
i
als
costs
$36,000
÷
Equivalent units
of materials
10,000
=
Unit materials
cost
$3.60
Total conve
r
sion
costs
$54,000
÷
Equivalent units
of conversion costs
12,000
=
Unit conve
r
sion
cost
$4.50
Unit materials
cost
$3.60
+
Unit conversion
cost
$4.50
=
Total manufactu
r
ing
cost per unit
$8.10
BRIEF EXERCISE 3-6
Assignment of Costs
Equivalent Units
Unit Cost
Transferred out
Transferred out 40,000 $11 $440,000
Work in process, 4/30
Materials
Conversion costs
Total costs
5,000
2,000
$ 4
$ 7
$20,000
14,000
34,000
$474,000
BRIEF EXERCISE 3-7
Total mater
i
als
costs
$16,000
÷
Equivalent units
of materials
20,000
=
Unit materials
cost
$.80
Total conve
r
sion
*costs*
$47,500
÷
Equivalent units
of conversion costs
19,000
=
Unit conve
r
sion
cost
$2.50
*$29,500 + $18,000
3-8
Copyright © 2012 John Wiley & Sons, Inc. Weygandt, Managerial Accounting, 6/e, Solutions Manual (For Instructor Use Only)
BRIEF EXERCISE 3-8
Costs a
c
counted for
Transferred out
Work in process
Materials
Conversion costs
Total costs
(18,000 X $3.30)
(2,000 X $.80)
(1,000* X $2.50)
$1,600
2,500
$59,400
4,100
$63,500
*2,000 X 50%
BRIEF EXERCISE 3-9
(a)
Materials
(b)
Conversion Costs
Units tran
s
ferred out
Work in process, November 30
Materials (7,000 X 100%)
Conversion costs (7,000 X 40%)
Total equivalent units
8,000
7,000
15,000
8,000
2,800
10,800
*BRIEF EXERCISE 3-10
Costs to Be
Assigned
Assignment of Costs
Equivalent
Units
Unit
Cost
Total Costs
Assigned
Transferred out
Work in process, 3/1
Started and completed
0
30,000
$ 0
$18
$
0
540,000
540,000
$594,000
Work in process, 3/31
Materials
Conversion costs
5,000
2,000
$ 6
$12
$ 30,000
24,000
54,000
$594,000
Copyright © 2012 John Wiley & Sons, Inc. Weygandt, Managerial Accounting, 6/e, Solutions Manual (For Instructor Use Only)
3-9
*BRIEF EXERCISE 3-11
Equivalent Units
Materials
Conversion
Costs
Units accounted for
Completed and transferred out
Work in process, March 1
Started and completed
Work in process, March 31
Total units
-0-
30,000
5,000
35,000
-0-
30,000
2,000
32,000
SANDERSON COMPANY
(Partial) Production Cost Report
For the Month Ended March 31
COSTS
Materials
Conve
r
sion
Costs
Total
Unit costs
Total costs (a)
Equivalent units (b)
Unit costs (a) ÷ (b)
Costs to be accounted for
In process, March 1
Costs in March
Total costs
Costs accounted for
Transferred out
In process, March 1
Started and completed
(30,000 units X $18)
In process, March 31
Materials (5,000 X $6)
Conversion costs
(2,000 X $12)
Total costs
$210,000
35,000
$ 6
*
$384,000
32,000
$ 12
$ 30,000
24,000
**
$594,000
$ 18
$ 0
594,000
$594,000
$ 0
540,000
54,000
$594,000
*35,000 equivalent units X $6 per unit
**32,000 equivalent units X $12 per unit
3-10
Copyright © 2012 John Wiley & Sons, Inc. Weygandt, Managerial Accounting, 6/e, Solutions Manual (For Instructor Use Only)
*BRIEF EXERCISE 3-12
Total mater
i
als
costs
1
$75,000
1
÷
Equivalent units
of materials
20,000
=
Unit materials
cost
$3.75
1
$8,000 + $67,000 = $75,000
Total conve
r
sion
costs
2
$38,000
2
÷
Equivalent units
of conversion costs
19,000
=
Unit co
nve
r
sion
cost
$2.00
2
$20,000 + $18,000
SOLUTIONS FOR DO IT! REVIEW EXERCISES
DO IT! 3-1
1. False
2. False
3. True
4. False
DO IT! 3-2
Work in Process—Mixing ................................................... 10,000
Work in Process—Packaging ............................................ 28,000
Raw Materials Inventory ............................................. 38,000
(To record materials used)
Work in Process—Mixing ................................................... 8,000
Work in Process—Packaging ............................................ 36,000
Factory Labor .............................................................. 44,000
(To assign factory labor to production)
Work in Process—Mixing ................................................... 12,000
Work in Process—Packaging ............................................ 54,000
Manufacturing Overhead ............................................ 66,000
(To assign overhead to production)
Copyright © 2012 John Wiley & Sons, Inc. Weygandt, Managerial Accounting, 6/e, Solutions Manual (For Instructor Use Only)
3-11
DO IT! 3-2 (Continued)
Work in Process—Packaging ............................................ 21,000
Work in Process—Mixing ........................................... 21,000
(To record transfer of units to the Packaging
Department)
Finished Goods Inventory ................................................. 106,000
Work in Process—Packaging .................................... 106,000
(To record transfer of units to finished goods)
DO IT! 3-3
(a) Since materials are entered at the beginning of the process, the equiva-
lent units of ending work in process are 12,000.
20,000 units + 12,000 units = 32,000 equivalent units of production for
materials.
(b) Since ending work in process is only 70% complete as to conversion
costs, the equivalent units of ending work in process for conversion
costs are 8,400 (70% X 12,000 units).
20,000 units + 8,400 units = 28,400 equivalent units of production for
conversion costs.
DO IT! 3-4
(a) 0 (Work in process, March 1) + 26,000* (Started into production) = 26,000
*22,000 + 4,000
(b) Equivalent units of production:
Materials Conversion
Units transferred out ................. 22,000 22,000
Work in process, March 31 ....... 4,000 1,600 (4,000 X 40%)
Total ............................................ 26,000 23,600
DO IT! 3-4 (Continued)
(c) Cost reconciliation schedule
Costs accounted for
Transferred out (22,000 X $18) ............ $396,000
