Chapter 18(3): Process Cost Systems
169.
The cost of materials transferred into the Bottling Department of Mountain Springs Water Company is $32,400,
with $26,000 from the Purifying Department, plus additional $6,400 from the materials storeroom. The
conversion
cost for the period in the Bottling Department is $8,750 ($3,750 factory applied and $5,000 direct
labor). The total
costs transferred to finished goods for the period was $31,980. The Bottling Department had a
beginning inventory
of $1,860.
a.
Journalize the cost of transferred-in materials, conversion costs, and the cost transferred
out to finished goods.
b.
Determine the balance of Work in Process—bottling at the end of the period.
170.
The estimated total factory overhead cost and total machine hours for Department 40 for the current year are
$250,000 and 56,250, respectively. During January, the first month of the current year, actual machine hours
used
totaled 5,100 and factory overhead cost incurred totaled $22,000.
(a)
Determine the factory overhead rate based on machine hours.
(b)
Present the entry to apply factory overhead to production in Department 40 for January.
(c)
What is the balance of Factory Overhead—Department 40 at January 31?
(d)
Does the balance of Factory Overhead—Department 40 at January 31 represent over applied or under applied
factory overhead?
Round total cost to nearest dollar value.
171.
A firm produces its products by a continuous process involving three production departments, 1 through 3.
Present
entries to record the following selected transactions related to production during August:
(a)
Materials purchased on account, $120,000
(b)
Material requisitioned for use in Department 1, $125,700, of which
$124,200
entered directly into the product
(c)
Labor cost incurred in Department 1, $195,400, of which $174,000 was
used
directly in the manufacture of the product
(d)
Factory overhead costs for Department 1 incurred on account, $54,700
(e)
Depreciation on machinery in Department 1, $29,200
(f)
Expiration of prepaid insurance chargeable to Department 1, $7,000
(g)
Factory overhead applied to production in Department 1, $106,300
(h)
Output of Department 1 transferred to Department 2, $362,700
172.
Fast-Flow Paints produces mixer base paint through a two–stage process, Mixing and Packaging. The following
events depict the movement of value into and out of production. Journalize each event if appropriate; if not,
provide
a short narrative reason as to why you choose not to journalize the action. Nelson, the production
manager, accepts
an order to continue processing the current run of mixer base paint.
(a)
Materials worth $27,000.00 are withdrawn from raw materials inventory. Of this amount, $25,500.00 will be
issued to the Mixing Department and the balance will be issued to the
Maintenance Department to be used on
production line machines.
(b)
Nelson calculates that labor for the period is $12,500.00. Of this amount, $1,750.00 is for
maintenance and
indirect labor. The remainder is directly associated with mixing.
(c)
Nelson, who is paid a salary but earns about $35.00/hour, spends 1 hour inspecting the
production line.
(d)
The manufacturing overhead drivers for mixing are hours of mixer time at $575.00 per
hour, and material
movements from materials at $125.00 per movement. An inspection of
the machine timers reveals that a total
of 8 hours has been consumed in making this
product. An inspection of “stocking orders” indicates that only
one material movement was utilized to load the raw materials. (Note: All values have been journalized to
Factory
Overhead, you need only apply them to the production run.)
(e)
Within Fast-Flow, items are transferred between departments at a standard cost. This
production run has
created 4,015 gallons of mixer base paint. This paint is transferred to
Packaging at a standard cost of $10.05
per gallon. (Round calculation to nearest whole
dollar.)
(f)
Packaging draws $755.00 of materials for packaging of this production run.
(g)
Packaging documents that 12 hours of direct labor at $10.25 per hour were consumed in
the packaging of this
production run.
(h)
Packaging uses a cost driver of direct labor hours to allocate manufacturing overhead at
the rate of $25.00 per
hour.
(i)
Packaging transfers 4,015 gallons of packaged goods to Finished Goods Inventory at a
standard cost of
$10.34 per gallon. (Round calculation to nearest whole dollar.)
Chapter 18(3): Process Cost Systems
173.
Describe the flow of materials in a process cost accounting system.
174.
Zang Co. manufacturers its products in a continuous process involving two departments, Machining and
Assembly.
Prepare journal entries to record the following transactions related to production during June:
(a)
Materials purchased on account, $180,000
(b)
Materials requisitioned by: Machining, $73,000 direct and $9,000 indirect materials;
Assembly, $4,900 indirect materials
(c)
Direct labor used by Machining, $23,000; Assembly, $47,000
(d)
Depreciation expenses: Machining, $4,500; Assembly, $7,800
(e)
Factory overhead applied: Machining, $9,700; Assembly, $11,300
(f)
Machining Department transferred $98,300 to Assembly Department;
Assembly
Department transferred $83,400 to finished goods
(g)
Sold goods on account, $100,000; cost of goods sold, $68,000
175.
The cost of energy consumed in producing good units in the Bottling Department of Mountain Springs Water
Company was $36,850 and $39,060 for June and July, respectively. The number of equivalent units produced
in
June and July was 55,000 and 62,000 liters, respectively. Evaluate the change in the cost of energy between
the
two months.
176.
The inventory at June 1 and costs charged to Work in Process—Department 60 during June are as follows:
3,800 units, 80% completed ($25,000 materials, $35,400 conversion) $ 60,400
Direct materials, 32,000 units 368,000
Direct labor 244,000
Factory overhead 188,000
Total cost to be accounted for $860,400
During June, 32,000 units were placed into production and 31,200 units were completed, including those in
inventory
on June 1. On June 30, the inventory of work in process consisted of 4,600 units which were 40%
completed. Inventories are costed by the average cost method and all materials are added at the beginning of the
process.
Determine the following, presenting your computations:
(a)
Equivalent units of production for conversion cost
(b)
Conversion cost per equivalent unit and material cost per equivalent unit.
(c)
Total and unit cost of finished goods completed in the current period
(d)
Total cost of work in process inventory at June 30
Chapter 18(3): Process Cost Systems
177.
On March 1, Upton Company’s Packaging Department had work in process inventory of 8,820 units, which
had
been transferred in from the Finishing Department. These units had accumulated costs of $315,000 in
previous
departments and $16,000 for conversion costs in the Packaging Department.
During March, 30,000 units were transferred into the department. These units had accumulated costs of
$770,000
in the previous departments. The Packaging Department incurred $54,000 in conversion costs during
the month.
On March 31, 700 units remained in ending inventory. These units were 80% complete with respect
to conversion
costs.
Calculate the cost per equivalent unit for transferred-in costs and for conversion costs for the Packaging
Department using the average cost method.
178.
On August 1, Jones Corporation’s Packaging Department had work in process inventory of 8,000 units that were
75% complete with respect to materials and 30% complete with respect to conversion costs. The cost of these
units was $99,525 ($62,000 transferred-in from previous departments, $28,775 in materials, and $8,750 in labor
and
overhead). During August, 125,000 units were transferred into the department. These units had
accumulated costs
in previous departments of $1,418,560. The packaging department incurred costs of $799,225
for materials and $498,010 for conversion costs in August and transferred 131,000 units out of the department.
The 2,000 units
remaining in ending inventory are 50% complete with respect to materials and 20% complete
with respect to
conversion costs. Jones uses the average cost method to cost its inventories.
(a)
Calculate the cost per equivalent unit for transferred-in costs, materials, and conversion costs.
(b)
Calculate the cost of the units transferred out of the department.
(c)
Calculate the cost of the ending inventory.
179.
Discuss how equivalent units are computed under the average cost method.
180.
Kamin Company’s Mixing Department had a beginning inventory of 4,000 units which had accumulated
conversion
costs of $55,000. During the period, the Mixing Department accumulated conversion costs of
$92,000 and started
8,000 new units. Ending inventory was 2,500 units which were 40% complete with respect
to conversion costs. Kamin uses the average cost method to cost inventories.
Calculate the cost per equivalent unit for conversion costs in the Mixing Department.
181.
Movie studio
182.
Gasoline refinery
183.
Home construction
184.
Paper manufacturer
185.
Flour mill
186.
a process costing method that costs each period’s equivalent units of work with that period’s costs per equivalent unit
187.
measure of the work done during a production period, expressed in terms of fully complete units of output
188.
conversion costs
189.
summary of the activity in a processing department for a specific period
190.
costing system used by a company producing computer chips
191.
prime costs
192.
costs incurred in a previous process that are carried forward as part of the product’s cost when it moves to the next
department
193.
costing system used by a company producing custom window treatments
194.
measures the quantity of output of production relative to the inputs
195.
provides information for controlling and improving operations
196.
focuses on reducing time, cost, and poor quality within the process
197.
the portion of whole units that are complete with respect to materials or conversion costs
198.
work centers for processing in a just-in-time system