Chapter 6 – Process Costing
143. Indigo Inc., manufactures a product that passes through two processes. The following information is available for the
first department for September.
All materials are added at the beginning of the process.
Beginning work in process consisted of 200 units that were 60% complete with respect to conversion.
Ending work in process consisted of 500 units that were 10% complete with respect to conversion.
During the month, 3,000 units were started in process.
Required:
A.
Prepare a physical flow schedule.
B.
Compute equivalent units using the weighted average method.
C.
How would your answer change in part B if the beginning work in process consisted of
200 units that were 80% complete with respect to conversion?
A.
Physical flow schedule:
Units to account for:
Units in beginning work in process
Units started
Total units to account for
Units accounted for:
Units completed and transferred out:
Started and completed
From beginning work in process
Units in ending work in process
Total units accounted for
B.
Equivalent units:
Units completed
Units in EWIP × Fraction complete:
Materials (500 × 100%)
Conversion (500 × 10%)
Equivalent units of output
C.
The equivalent units calculated under the weighted average method is unaffected by the degree of
144. Delilah, Incorporated, manufactures quality hair care products. The ingredients are combined in the mixing
department and put in 16-ounce containers in the packaging department.
The following information pertains to the mixing department for the month of May:
Units
(Gallons)
Work in process, May 1
(100% complete materials,
75% labor and overhead)
10,000
Chapter 6 – Process Costing
Started during May
50,000
Work in process, May 31
(100% complete materials,
50% labor and overhead)
8,000
The costs in work in process at May 1 in the mixing department were as follows:
Mixing
Department
Work in process, May 1:
Materials
$15,000
Direct labor
20,000
Manufacturing overhead
17,600
Total costs
$52,600
The costs added by the mixing department during the month of May were as follows:
Mixing
Department
Materials
$ 90,000
Direct labor
120,000
Manufacturing overhead
100,000
Total costs added
$310,000
Round unit costs to two decimal places.
Required:
A.
Prepare a physical flow schedule for the mixing department for May.
B.
Using the weighted average method, determine the equivalent units of production for
materials and conversion for the mixing department for May.
C.
Using the weighted average method, determine the cost per equivalent unit of production
for materials and conversion for the mixing department for May.
D.
Using the weighted average method, determine the cost of goods transferred out and the
cost of ending work in process for the mixing department.
A.
Physical flow schedule:
Units to account for:
Units in beginning work in process
Units started during May
Total units to account for
Units accounted for:
Units completed and transferred out:
Started and completed
From beginning work in process
Units in ending work in process
Total units accounted for
Equivalent units of production—materials:
60,000
Chapter 6 – Process Costing
145. AL Corporation produces a product that passes through two departments. For January, the following equivalent unit
schedule was prepared for the first department:
Materials
Conversion
Cost
Units completed
120,000
120,000
Units in EWIP × Fraction complete:
Materials (10,000 × 100%)
10,000
Conversion (10,000 × 40%)
4,000
Equivalent units of output
130,000
124,000
Costs assigned to beginning work in process:
Materials:
$68,000
Conversion:
$33,000
Manufacturing costs incurred during the month:
Materials:
$75,000
Conversion:
$60,000
Required:
A.
Compute the unit cost for January using the weighted average method.
B.
Determine the cost of goods transferred out.
C.
Determine the cost of ending work in process.
Units completed
Units in EWIP × Fraction complete:
Materials (8,000 × 100%)
Conversion (8,000 × 50%)
Total equivalent units
C.
Unit cost for materials:
$1.75
Unit cost for conversion:
$4.60
Costs to account for:
Conversion
Beginning work in process
Costs added
Total costs to account for
Divided by equivalent units
Cost per equivalent unit
D.
Costs of goods transferred out:
$330,200
Cost of ending work in process:
$ 32,400
Costs accounted for:
Units transferred out
(52,000 × $6.35)
Ending work in process:
Materials (8,000 × $1.75)
Conversion (4,000 × $4.60)
Total costs accounted for
Chapter 6 – Process Costing
146. Mermain Inc., manufactures products that pass through two processes. The company uses the weighted average
method to compute unit costs. During March, equivalent units were computed as follows:
Materials
Conversion
Cost
Units completed
50,000
50,000
Units in EWIP × Fraction complete:
Materials (9,000 × 100%)
9,000
Conversion (9,000 × 80%)
7,200
Equivalent units of output
59,000
57,200
Cost was added as follows:
Materials
$ 73,750
Conversion cost
57,200
Total cost
$130,950
Required:
A.
Determine the cost of the goods transferred out.
B.
Determine the cost of ending work in process.
C.
Determine the cost of the goods transferred out if materials in ending work in process had
been 90% complete and conversion in ending work in process had been 70% complete.
Round costs per unit to 2 decimals if necessary.
A.
Cost of goods transferred out = ($1.25 + $1.00) × 50,000 = $112,500
Cost of ending work in process:
Materials (9,000 × $1.25)
Conversion (7,200 × $1.00)
7,200
Total cost
Materials equivalent units = 50,000 + (9,000 × .9) = 58,100
Conversion equivalent units = 50,000 + (9,000 × .7) = 56,300
Materials cost per unit = $73,750 / 58,100 = $1.27
Conversion cost per unit = $57,200 / 56,300 = $1.02
Cost of units transferred out = 50,000 × ($1.27 + $1.02) = $114,500
147. Davidson Company manufactures a product that passes through two processes. The following information is
available for the first department for October.
A.
Cost per equivalent unit:
Materials = ($68,000 + $75,000) / 130,000 = $1.10
Conversion = ($33,000 + $60,000) / 124,000 = $0.75
Total unit cost = $1.85 per equivalent unit
Cost of goods transferred out = $1.85 × 120,000 = $222,000
Cost of ending work in process
= (10,000 × $1.10) + (4,000 × $0.75)
= $11,000 + $3,000 = $14,000
Chapter 6 – Process Costing
All materials are added at the beginning of the process.
Beginning work in process consisted of 20,000 units that were 80% complete with respect to conversion.
Ending work in process consisted of 15,000 units that were 40% complete with respect to conversion.
During the month, 90,000 units were started in process.
Required:
A.
Prepare a physical flow schedule.
B.
Compute equivalent units using the FIFO method.
A.
Physical flow schedule:
Units to account for:
Units started
Units accounted for:
Started and completed
B.
Equivalent units:
Units started and completed
148. List the five steps in preparing a production report.
1.
physical unit flow analysis
Chapter 6 – Process Costing
149. Titan Manufacturing uses a process cost system. The following information pertains to operations for the month of
December.
Units
Beginning work-in-process inventory, December 1
7,000
Started in production during December
185,000
Completed production during December
93,500
Ending work-in-process inventory, December 31
98,500
The beginning inventory was 80% complete for materials and 40% complete for conversion costs. The ending inventory
was 85% complete for materials and 30% complete for conversion costs.
Costs pertaining to the month of December are as follows:
Beginning inventory costs are: materials, $38,200; conversion cost $41,400.
Costs incurred during December are: materials used, $462,300; conversion cost $602,700.
Required:
A. Using the weighted average method calculate the total equivalent units of production for direct materials and
conversion cost.
B. Using the weighted average method, calculate the unit cost of materials and conversion for December.
C. Using the weighted average method, calculate the total cost of the units in the ending work–in-process inventory at
December 31.
93,500
93,500
Ending WIP (98,500 × 85%; 98,500 × 30%)
83,725
29,550
Equivalent units of Production
177,225
123,050
93,500
Ending WIP
83,725
Equivalent units of Production
177,225
Unit direct materials cost = ($38,200 +$462,300) / 177,225 = $2.82
Unit conversion cost = ($41,400 + $602,700) / 123,050 = $5.23
93,500
Ending WIP
83,725
Chapter 6 – Process Costing
150. Plemmon Company adds materials at the beginning of the process in the forming department, which is the first of
two stages of its production cycle. Information concerning the materials used in the forming department in April follows:
Materials
Units
Costs
Work in process at April 1
15,000
$ 8,000
Units started during April
60,000
$38,500
Units completed and transferred to next department
during April
65,000
Using the FIFO method, what is the cost of materials in work in process at April 30 (round unit calculations to the nearest
cent)?
Beginning work in process
Started
Total
Less completed
Ending work in process (complete as to material)
Unit cost (See calculation below)
Materials cost in ending work in process
Units started and finished during month
(60,000 started − 10,000 in ending WIP)
Units in process, April 30 (Complete as to materials)
Equivalent production for materials
Materials cost:
Costs added during June
Total materials cost for period
$38,500 / 60,000 units = cost per equivalent unit
151. The Roberto Company had computed the flow of units for Department A for the month of May as follows:
Work in process, May 1:
10,000
Started into production during May
39,000
Units to be accounted for
49,000
Beginning
Added during the
work in process
current month
Materials
$20,800
$ 97,500
Labor
5,200
34,920
Factory overhead
4,800
32,980
Total
$30,800
$165,400
Equivalent units of Production
Unit direct materials cost = ($38,200 +$462,300) / 177,225 = $2.82
Unit conversion cost = ($41,400 + $602,700) / 123,050 = $5.23
$236,104.50 + $154,546.50 = $390,651.00
Chapter 6 – Process Costing
Materials are added at the beginning of the process. There were 8,000 units of work in process at
May 31. The work in process at May 1 was 70% complete as to direct labor and factory overhead costs and the work in
process at May 31 was 60% complete as to direct labor and factory overhead costs. What was the cost of the goods
transferred out and in ending work in process using the FIFO method?
Materials needed
Started and finished during month:
All costs added
Ending work in process:
All materials added
$97,500 / 39,000
$34,920 / 38,800
Factory overhead
$32,980 / 38,800
Total
Beginning units in process:
Prior month’s cost
Current cost to complete:
Units started and completed during month
(31,000 × $4.25)
Total cost transferred
Materials (8,000 × $2.50)
152. Garrison Inc. manufactures product where all manufacturing inputs are applied uniformly. The company produced
the following physical flow schedule for July:
Chapter 6 – Process Costing
Units to account for:
Units in BWIP (60% complete)
17,000
Units started
46,000
Total units to account for
63,000
Units accounted for:
Units completed:
From BWIP
17,000
Started and completed
38,000
55,000
Units, EWIP (65% completed)
8,000
Total units accounted for
63,000
Required: Prepare a schedule of equivalent units using the FIFO method.
Units started and completed
Units in BWIP × Fraction to be completed:
17,000 × 40%
Units in EWIP × Fraction complete:
8,000 × 65%
Equivalent units of output
153. Describe the differences between process costing and job-order costing.
154. Describe how process costing for services differs from process costing for manufactured goods.
155. Explain the role of the departmental production report in process costing and name the five steps for completing the
departmental production report.
156. Explain how nonuniform inputs and multiple departments affect process costing.
Chapter 6 – Process Costing
157. Describe the differences in the ways that prior-period costs and output are treated under the weighted average method
and the FIFO method?
the units.
You Decide
158. The controller has asked you do determine what method you think would be the best approach to dealing with
beginning work-in-process; weighted average costing method or FIFO costing method. Explain the differences between
the two methods. Which method would you recommend?
Choose the most likely used costing system for the industries listed below.
a.
Process Costing
b.
Job Order Costing
159. Costing system used by a chemical manufacturer.
160. Costing system used by an architectural firm.
Chapter 6 – Process Costing
161. Costing system used by a home builder.
162. Costing system used by a manufacturer of custom furniture.
163. Costing system used by a tire manufacturer.
164. Costing system used by a food manufacturer.
Select the appropriate definition for each of the items listed below
a.
parallel processing
b.
sequential processing
c.
process costing
d.
weighted-average costing method
165. partially completed units can be worked on simultaneously in different processes then brought together in a final
process for completion
166. units pass through one process before they can be worked on in the next processes
167. works well whenever relatively homogeneous products pass through a series of processes and receive similar
amounts of manufacturing costs
168. combines beginning inventory costs and work done with current-period costs and work to calculate this period’s unit
cost
Match the five steps involved in creating the department production report with the steps below in the proper order.
a.
step 1 in preparing a Production Report
b.
step 2 in preparing a Production Report
c.
step 3 in preparing a Production Report
d.
step 4 in preparing a Production Report
e.
step 5 in preparing a Production Report
169. calculation of equivalent units
170. cost reconciliation
171. physical flow analysis
Chapter 6 – Process Costing
a
172. computation of unit cost
c
173. valuation of inventories
Select the appropriate definition for each of the items listed below
a.
equivalent units of production
b.
transferred-in costs
c.
FIFO costing methods
d.
Production report
174. Complete units that could have been produced given the total amount of manufacturing effort expended for the
period under consideration.
a
175. The costs transferred from a prior process to a subsequent process.
176. Separates work and costs of the equivalent units in beginning inventory from work and costs of the equivalent units
produced during the current period.
c
177. The document that summarizes the manufacturing activity that takes place in a process department for a given period
of time.