100. Williams Corporation’s Department A has the following information:
% Completed Costs
Beginning work in process: 6,000 units
Direct Materials 80 $43,708
Conversion 40 35,550
New Units Started: 28,000 units
Direct Materials 112,000
Conversion 88,200
Ending work in process: 2,000 units
Direct Materials 60
Conversion 50
Required:
1. Use the FIFO method to calculate:
(a) Equivalent units.
(b) Cost per unit, rounded to three decimal places.
(c) Cost completed and transferred out, rounded to the nearest whole dollar.
(d) Cost in the ending work-in–process inventory, rounded to the nearest whole dollar.
2. Use the weighted-average method to answer items (a) through (d) in requirement 1.
101. Marshall Company uses the weighted-average process costing in accounting for its
production activities. Materials are added at the beginning of the process and conversion costs
are incurred uniformly throughout the process.
August’s production records indicate the following information:
Quantities:
Beginning work in process inventory (40%) 2,000 units
Started during August 11,000 units
Completed and transferred out 10,000 units
Ending work in process inventory (20%) ?
Beginning WIP inventory costs:
Direct materials $500
Direct labor 400
Factory overhead 240
August production costs:
Direct materials $4,440
Direct labor 8,000
Factory overhead 4,610
Required:
Prepare a production cost report for the Marshall Company. In your report, combine direct labor
and factory overhead into a single cost pool for conversion costs.
102. DowntonTractor Company manufactures small tractors on an assembly-line basis. The
units are started in Department Y. On January 1 of this year, the Work–in-Process inventory of
Department Y consisted of 200 units 100% complete as to materials and 20% complete as to
conversion. During the month, 800 units were started and 500 units were completed and
transferred out. The Work–in-Process on January 31 was 100% complete as to materials and 20%
complete as to conversion.
Costs in process at the beginning of the period amounted to $100,000 for materials and $25,000
for conversion. Costs added during the period were materials costs of $200,000 and conversion
costs of $143,000.
Required:
Prepare a production cost report using the weighted–average method.
103. Atlantic Manufacturing Company uses process costing. All materials are added at the
beginning of the process. The normal spoilage rate is calculated as 10% of good units completed.
The cost of the beginning work–in-process in the Month of May is $3,000,000, including
$1,600,000 of input of materials, 100,000 units, and $1,400,000 for conversion costs. The
beginning work-in–process is 70% complete.
During May, the input includes $7,400,000 for materials, 800,000 units started and $4,190,000 for
conversion costs. There were 700,000 good units finished. In addition, the ending work–in–
process in May is 100,000 units with 60% complete. The abnormal spoilage is 30,000 units. All
spoilage occurred when all processing was complete, at the final inspection.
Required:
Use the weighted-average method to calculate:
(a) The dollar value of abnormal spoilage.
(b) The cost of the good units finished.
(c) The cost of ending work–in-process inventory.
104. NYI Corporation manufactures decorative window glass in two sequential departments.
These data pertain to the month of August:
Department 1 Department 2
Direct Materials used for production $55,000 $32,000
Direct Labor 160,000 320,000
Applied factory overhead 340,000 250,000
Cost of goods completed and transferred 850,000 740,000
Required:
Prepare journal entries to record these events:
1. Incurrence of direct materials and direct labor. Application of factory overhead in department
1.
2. Transfer of products from department 1 to department 2.
3. Incurrence of direct materials and direct labor. Application of factory overhead in department
2.
4. Transfer of complete products from department 2 to finished goods inventory.
105. Chen Manufacturing uses backflush costing. Chen has the following information for the
most recent month of activity:
Purchase of direct materials $725,000
Direct materials used $705,000
Conversion cost incurred $1,450,000
Direct materials standard cost $20 per unit
Conversion cost at standard $40 per unit
Units produced 35,000 units
Units sold 33,000 units
Required:
1. Prepare the journal entries for purchase of materials, conversion costs, the completion of
product during the month, the sale of product, and the closing entries for conversion costs and
material costs.
2. What is the final amount for cost of goods sold?
3. Under what conditions is backflush costing used in practice?
Finished Goods 1,980,000
106. You are engaged in the audit of the December 31, financial statements of Epworth
Products Corporation. You are attempting to verify the costing of the work–in-process and
finished goods ending inventories that were recorded on Epworth’s books as follows:
Units Cost
Work-in-process (50 percent complete
as to labor and overhead 300,000 $860,960
Materials are added to production at the beginning of the manufacturing process, and overhead
is applied to each product at the rate of 60 percent of direct labor costs. Epworth uses the FIFO
costing method. A review of Epworth’s January inventory cost records disclosed the following
information:
Units Materials Labor
Work-in-process beginning inventory
(80% complete for labor & overhead) 200,000 $200,000 $315,000
Units started 1,000,000
Units completed 900,000
Current period costs 1,300,000 1,991,375
Required:
Prepare a production cost report to verify the inventory balances. What is the amount of potential
understatement or overstatement of the ending work–in-process account?
