172. Figure 6-22
The following information is available for Department C for the month of August:
Units
Cost
Work in process, August 1 (70% complete)
10,000
Direct materials
$ 36,000
Direct labor
18,000
Manufacturing overhead
24,000
Total work in process, August
1
$ 78,000
Started in production during August
40,000
Costs added:
Direct materials
$108,000
Direct labor
48,000
Manufacturing overhead
61,040
Total costs added during
August
$217,040
Work in process, August 31 (80% complete)
4,000
Units completed and transferred out
42,000
Materials are added at the beginning of the process. Inspection takes place at the 50 percent point in the conversion process to determine spoiled
units. Round unit costs to two decimal places. The company uses the weighted average cost flow assumption.
Refer to Figure 6-22. Department C’s equivalent units of production for materials using the weighted average method is
173. Figure 6-22
The following information is available for Department C for the month of August:
Units
Cost
Work in process, August 1 (70% complete)
10,000
Direct materials
$ 36,000
Direct labor
18,000
Manufacturing overhead
24,000
Total work in process, August 1
$ 78,000
Started in production during August
40,000
Costs added:
Direct materials
$108,000
Direct labor
48,000
Manufacturing overhead
61,040
Total costs added during August
$217,040
Work in process, August 31 (80% complete)
4,000
Units completed and transferred out
42,000
Materials are added at the beginning of the process. Inspection takes place at the 50 percent point in the conversion process to determine spoiled
units. Round unit costs to two decimal places. The company uses the weighted average cost flow assumption.
Refer to Figure 6-22. Department C’s cost per unit for materials using the weighted average method is
174. Figure 6-22
The following information is available for Department C for the month of August:
Units
Cost
Work in process, August 1 (70%
complete)
10,000
Direct materials
$ 36,000
Direct labor
18,000
Manufacturing overhead
24,000
Total work in process, August 1
$ 78,000
Started in production during August
40,000
Costs added:
Direct materials
$108,000
Direct labor
48,000
Manufacturing overhead
61,040
Total costs added during August
$217,040
Work in process, August 31 (80%
complete)
4,000
Units completed and transferred out
42,000
Materials are added at the beginning of the process. Inspection takes place at the 50 percent point in the conversion process to determine spoiled
units. Round unit costs to two decimal places. The company uses the weighted average cost flow assumption.
Refer to Figure 6-22. Department C’s conversion cost per unit using the weighted average method is
175. Refer to Figure 6-22. Department C’s equivalent units of production for conversion using the weighted
average method is
176. Abnormal spoilage is treated differently from normal spoilage in what way?
177. Spoilage in a process costing process means
178. Banzai Corporation produces calculators on an assembly line in a single-step process. Factory overhead is
applied based on direct labor cost. The following data pertains to September 2014:
Current manufacturing costs:
Materials purchased
$150,000
Materials issued to production
120,000
Direct labor
40,000
Factory overhead
30,000
Finished goods for period
180,000
Beginning work in process
-0-
Ending work in process:
Materials
3,000
Direct labor
?
Factory overhead
?
Required:
a.
Prepare traditional journal entries for the following events in September:
1. Purchase of materials on account
2. Requisition of materials into production
3. Usage of direct labor
4. Application of overhead
5. Completion of finished goods
b.
What is the amount of direct labor in ending work in process?
a.
1.
Materials
150,000
Accounts Payable
150,000
2.
Work in Process
120,000
Materials Inventory
120,000
40,000
Wages Payable
40,000
4.
Work in Process
30,000
Factory Overhead
30,000
5.
Finished Goods
180,000
Work in Process
180,000
b.
Ending WIP
= $0 + $120,000 + $40,000 + $30,000 – $180,000
= $10,000
OH rate = ($30,000/$40,000) = 75% of DLC
Let X = Direct labor cost
$3,000 + X + 0.75X =
10,000
1.75X =
$7,000
X =
$4,000
179. The local USPS office sorts letters by zip code. During the month of March, 200,000 letters were sorted.
The cost of sorting includes the following:
Direct labor
$12,000
Overhead
8,000
Total
$20,000
Required:
a.
Explain why process costing is appropriate for this operation.
b.
Calculate the cost per letter for this operation.
c.
There are no direct materials used for the sorting operation. Is the absence of direct materials typical of services? If not, provide examples
of services that use direct materials.
180. The Tolstoy Corporation uses JIT manufacturing. There are several manufacturing cells set up within one
of its factories. One of the cells makes welders. The cost of production for the month of December is as follows:
Cell labor
$10,000
Direct materials
25,000
Overhead
20,000
Total
$55,000
During December, Tolstoy Corporation produced and sold 500 welders.
Required:
a.
Why can process costing be used to compute the cost of the welders?
b.
Calculate the unit cost of a welder..
The welders are a homogeneous, mass-produced product. Each product produced receives the same dose of manufacturing costs.
b.
Unit cost = $110 ($55,000/500)
a.
A process costing approach can be used for the sorting operation because it is a repetitive, homogeneous service.
b.
Cost per letter is $0.10. ($20,000/200,000)
c.
Although many services may not use direct materials, it would be difficult to argue that it is typical. For example, dentists, doctors, and
funeral directors all use direct materials in providing services. In some cases, the cost of materials can be significant.
181. Suburbia Company manufactures a product through a continuous single-step process. All materials are
added at the beginning of processing. Production and cost data for the company for February 2014 are as
follows:
Production data:
In process, beginning of month (20% converted)
1,000 units
Started during February
5,000 units
Completed and transferred to finished goods
4,500 units
In process, end of month (60% converted)
1,500 units
Manufacturing costs:
Work in process, beginning
$14,730
Materials
$45,000
Direct labor cost
$102,960
Factory overhead cost
$51,480
Required:
Prepare a cost of production report for February 2014. Use FIFO process costing.
Summary of units in process:
Beginning
1,000
Units started
5,000
In process
6,000
Completed
(4,500)
Ending
1,500
Equivalent units in process:
Materials
Conversion
Units completed
4,500
4,500
Equivalent units in process
6,000
5,400
Less: Eq. units in beg. inv.
1,000
200
Equivalent units manufactured
5,000
5,200
Total costs to be accounted for:
Materials
Conversion
Total
Beginning WIP
$ 14,730
Current costs
$45,000
$154,440
199,440
Total costs in process
$214,170
Costs per equivalent unit
$9.00
$ 29.70
$38.70
Accounting for total costs:
Transferred out:
Beginning WIP:
Add: Conversion (800 ´ $29.70)
23,760
$ 38,490
Started and finished (3,500 ´ $38.70)
135,450
Total transferred out
$173,940
Ending WIP:
Materials (1,500 ´ $9.00)
$ 13,500
Conversion (900 ´ $29.70)
26,730
Ending WIP
40,230
Total cost accounted for
$214,170
182. Xavier Corporation manufactures a plastic toy product in a two-stage production process. Plastic material
is brought into the Forming Department where it is shaped. Shaped products are then moved to the Finishing
Department where metal is added. The following data is given for the Forming Department for November:
Units for November:
Work in process, beginning inventory November 1
300 units
Direct materials (100% complete)
Conversion (40% complete)
Units started in November:
2,200 units
Work in process, ending inventory November 30
500 units
Direct materials (100% complete)
Conversion (25%)
Costs for November:
Work in process, beginning inventory
Direct materials
$7,100
Conversion
$4,525
Costs added during November:
Direct materials
$70,400
Conversion
$40,100
Round to two decimal places.
Required:
a.
How many units were transferred to Finishing?
b.
How many units were started and completed during November?
c.
How many equivalent units of conversion does it take to complete the beginning inventory in the current period?
d.
What is the FIFO cost assigned to the ending inventory?
e.
What is the FIFO cost assigned to the units transferred out?
f.
Show the T-account for the forming process.
Forming
(Weighted Average)
a.
2,500 – 500 = 2,000
Units started and completed = Units transferred out – Beginning inventory
Transferred out = 300 + 2,200 – 500 = 2,000
Started and completed = 2,000 – 300 = 1,700
c.
300 – 120 = 180 (60%)
d.
(500 ´ $32*) + (125 ´ $20*) = $18,500
183. Triton Manufacturing Company began June 2014 with 10,000 units of inventory in process, 20 percent
completed. During the period, 50,000 units were completed and transferred to the finished goods warehouse.
Ending inventory consisted of 5,000 units, 70 percent completed. Materials were added at the beginning of the
process.
Required:
Calculate the equivalent units for:
a.
Materials costs under the weighted average process cost method.
b.
Conversion costs under the weighted average process cost method.
c.
Materials costs under the FIFO process cost method.
d.
Conversion costs under the FIFO process cost method.
a. and b.
Materials
Conversion
Units completed
50,000
50,000
Add: Equiv. units in end. inv.
5,000
3,500
Equivalent units
(a) 55,000
(b) 53,500
c. and d.
Equivalent units in process
55,000
53,500
Less: Equiv. units in beg. inv.
10,000
2,000
Equivalent units
(c) 45,000
(d) 51,500
* calculation of cost per unit
Equivalent units in process:
Materials
Conversion
Units completed
2,000
2,000
Add: Eq. units in end. inv.
500
125
Equivalent units in process
2,500
2,125
Less: Eq. units in beg. inv.
300
120
Equivalent units manufactured
2,200
2,005
Total costs to be accounted for:
Materials
Conversion
Total
Beginning WIP
$ 11,625
Current costs
$70,400
$40,100
110,500
Total costs in process
$122,125
Costs per equivalent unit
$32.00
$20.00
$ 52.00
e.
$11,625 + (180 ´ $20) + (1,700 ´ $52) = $103,625
Forming
Beg. 11,625
Transfer 103,625
DM 70,400
Conv 40,100
End 18,500
184. Victory, Inc., manufactures a product that passes through two processes: Mixing and Packaging. All
manufacturing costs are added uniformly in the Mixing Department. Information for the Mixing Department for
October follows:
Work in process, October 1:
Units (30% complete)
7,500
Direct materials
$2,000
Direct labor
$1,500
Overhead
$1,188
During October, 150,000 units were completed and transferred to Packaging. The following costs were incurred by the Mixing Department during
October:
Direct materials
$25,000
Direct labor
15,000
Overhead
6,000
There were 12,000 units that were 70 percent complete remaining in the Mixing Department at October 31. Use the weighted average method and
round unit costs to two decimal places.
Required:
a.
Determine the equivalent units of production for October.
b.
Determine the total costs to account for in October.
c.
Determine the total cost per equivalent unit of production.
d.
Calculate the cost of goods transferred to the Packaging Department.
e.
Calculate the cost of October’s ending work in process for the Mixing Department.
158,400
Units accounted for:
Physical Flow
Equiv. Units
Units completed
150,000
150,000
Units in EWIP (70% complete)
12,000
8,400
Total units accounted for
162,000
158,400
b.
$50,688
Costs to account for:
Manufacturing Costs
Beginning work in process
$ 4,688
Costs added
46,000
Total costs to account for
$50,688
c.
$0.32
($50,688/158,400)
d.
$48,000
(150,000 ´ $0.32)
e.
$2,688
(8,400 ´ $0.32)
185. GanMaoling Corporation produces a product that passes through two departments. For May, the following
equivalent unit schedule was prepared for the first department:
Materials
Conversion
Units completed
180,000
180,000
Units, EWIP ´ percentage complete:
15,000 ´ 100%
15,000
15,000 ´ 40%
6,000
Equivalent units of output
195,000
186,000
Costs assigned to beginning work in process:
Materials:
$51,000
Conversion:
$24,750
Manufacturing costs incurred during the month:
Materials:
$56,250
Conversion:
$45,000
Required:
a.
Compute the unit cost for May using the weighted average method.
b.
Determine the cost of goods transferred out.
c.
Determine the cost of ending work in process.
a.
Cost per equivalent unit:
Materials = ($51,000 + $56,250)/195,000 = $0.55
Conversion = ($24,750 + $45,000)/186,000 = $0.375
Cost of goods transferred out = $0.925 ´ 180,000 = $166,500
c.
Cost of ending work in process
= (15,000 ´ $0.55) + (6,000 ´ $0.375)
= $8,250 + $2,250 = $10,500
186. Countryview Company manufactures a product that passes through two processes. The following
information is available for the first department for June:
•
All materials are added at the beginning of the process.
•
Beginning work in process consisted of 7,000 units that were 90 percent complete with respect to conversion.
•
Ending work in process consisted of 3,000 units that were 40 percent complete with respect to conversion.
•
There were 35,000 units started in process during the month.
Required:
a.
Prepare a physical flow schedule.
b.
Compute equivalent units using the weighted average method.
Units to account for:
Units, beginning work in process
Units started
Units accounted for:
Units completed and transferred out:
Started and completed
Units, ending work in process
Total units accounted for
b.
Equivalent units:
Materials
Conversion
Units completed
39,000
39,000
Units EWIP ´ fraction complete:
Conversion (3,000 ´ 40%)
1,200
Equivalent units of output
42,000
40,200
187. Xanadu Company manufactures a product that passes through two departments, Assembly and Finishing.
In the Finishing Department, materials are added at the end of the process. Conversion costs are incurred
uniformly throughout the process. During the month of January, the Finishing Department received 60,000 units
from the Assembly Department. The transferred-in cost of the 60,000 units was $69,900.
Costs added by Finishing during January included the following:
Direct materials
$35,200
Direct labor
56,000
Overhead
25,600
On January 1, the Finishing Department had 10,000 units in inventory that were 30 percent complete with respect to conversion costs. On January 31,
12,000 units were in inventory, one-third complete with respect to conversion costs. The costs associated with the 10,000 units in beginning
inventory were as follows:
Transferred in
$11,650
Direct labor
8,750
Overhead
4,000
Required:
Prepare a cost of production report using the weighted average method.
Xanadu Company
Finishing Department
For the Month of January
Unit Information
Units to account for:
Units, BWIP
10,000
Units started
60,000
Units to account for
70,000
Phys. flow
Trans. in
Materials
Conversion
Units completed
58,000
58,000
58,000
58,000
Units, EWIP
12,000
12,000
–
4,000
Units accounted for
70,000
70,000
58,000
62,000
Cost Information
Costs to account for:
Materials
Conversion
Total
BWIP
$11,650
$ –
$12,750
$ 24,400
Costs added in dept.
69,900
35,200
81,600
186,700
Costs to acct for
$81,550
$35,200
$94,350
$211,100
Cost per equiv. unit
$1.165
$0.607
$1.522
$3.294
Costs accounted for:
Trans. out
EWIP
Total
Goods transferred out:
(58,000 ´ $3.294)
$191,052
–
$191,052
Trans. in (12,000 ´ $1.165)
–
$13,980
13,980
Conversion (4,000 ´ $1.522)
6,088
6,088
188. Lakeside Corporation produces two types of product: Normal and Extra. Two work orders for two batches
of the products are shown below, along with some additional cost information:
Normal
Extra
Work Order 5
Work Order 6
Direct materials (actual costs)
$180,000
$300,000
Applied conversion costs:
Mixing
?
?
Cooking
$48,000
$48,000
Bottling
$40,000
$30,000
Batch size (bottles)
5,000
5,000
In the Mixing Department, conversion costs are applied on the basis of direct labor hours. Budgeted conversion costs for the department for the year
were $200,000 for labor and $600,000 for overhead. Budgeted direct labor hours were 5,000. It takes 6 minutes to mix the ingredients needed for
each bottle.
Normal and Extra flow through the Mixing Department, followed by the Cooking and Bottling departments.
Required:
a.
What are the conversion costs applied to Normal and Extra from the Mixing Department for each batch?
b.
Calculate the cost per bottle for Normal and Extra.
c.
Prepare the journal entries that record the costs of a batch of 5,000 bottles of Normal.
a.
($200,000 + $600,000)/5,000 = $160 per DLH
Normal = $160 ´ 5,000 ´ 6/60 = $80,000
Extra = $160 ´ 5,000 ´ 6/60 = $80,000
Normal
Extra
Direct materials
$180,000
$300,000
Mixing
80,000
80,000
Cooking
48,000
48,000
Bottling
40,000
30,000
$348,000
$458,000
Cost per bottle
$69.60
$91.60
189. The Painting Department of Salacious Company reported the following information for the month of
September:
Conversion
Units
Percentage Completed
Units started
28,000
Completed and transferred
27,000
Work in process, 9/1
10,000
80%
Work in process, 9/30
8,000
30%
Labor and
Materials
Overhead
Transferred-In
Costs for September:
Work in process, 9/1
$ 51,720
$ 65,048
$ 80,624
Added during the month
$145,880
$194,224
$234,320
All materials are added at the beginning of the process. Inspection occurs 60 percent of the way through the process. Normal spoilage is 10 percent of
the good units completed. (Round to two decimal places.)
Required:
a.
What are the weighted average equivalent units for materials, transferred-in and conversion?
b.
What are the FIFO equivalent units for materials, transferred-in, and conversion?
c.
What is the weighted average cost per unit for conversion?
d.
What is the weighted average cost per unit for materials?
e.
What is the cost assigned to ending work in process using weighted average?
f.
What is the cost assigned to transferred out using weighted average?
g.
Show the entries to the following T-account:
Work in Process-Painting
(Weighted Average)
T-I
Materials
Conversion
Transferred out
27,000
27,000
27,000
27,000
0.60)
Total
38,000
38,000
38,000
31,200
