Quick Study 16-21 (15 minutes)
Equivalent units under the FIFO method
Equivalent
EUP for materials—FIFO Units
Equivalent units to complete beginning WIP (2,000 x 30%)............. 600
Equivalent units started and completed*…………..……..………….………15,000
* Units completed – Units in beginning work in process = Units started and completed,
17,000 – 2,000 = 15,000. Units completed = Units in beginning work in process + Units
started – Units in ending work in process, 17,000 = 2,000 + 18,000 – 3,000.
Cost per equivalent unit—FIFO
Direct
Materials
Costs incurred this period…………..……………….…..…….. $27,900
Quick Study 16-22 (15 minutes)
Assignment of direct materials costs to output of department—FIFO
Costs transferred out
Cost of direct materials in beginning WIP……..………. $2,170
Costs to complete beginning WIP…………………..……..
Direct materials (600 EUP x $1.55 per EUP)............. 930
Cost of units started and completed this period
Quick Study 16-23 (10 minutes)
2. Work in Process Inventory………………………..……………50,000
Raw Materials Inventory…………………..………………. 50,000
Direct materials used in production.
Quick Study 16-24 (10 minutes)
1. Work in Process Inventory………………………..……………125,000
Factory Payroll Payable……………….………………..…. 125,000
To record direct labor used in production.
Quick Study 16-25 (15 minutes)
1. Factory Overhead………………..…………………………..……. 9,000
Raw Materials Inventory…………………..………………. 9,000
To record indirect materials used in production.
Financial and Managerial Accounting, 6th Edition
Quick Study 16-26 (10 minutes)
Finished Goods Inventory……………….…………..…………275,000
Work in Process Inventory…………..……….………….. 275,000
Transfer of finished goods from production.
Quick Study 16-27 (5 minutes)
If the company is successful in reducing water usage, its raw materials
EXERCISES
Exercise 16-1 (10 minutes)
1. Process operation 7. Job order operation
Note: Reasonable arguments can be made to classify #7 and #11 as being made
in a process operation, and #8 in a job order operation, in some cases.
Exercise 16-2 (10 minutes)
a. Job order operation. e. Job order operation.
d. Process operation. h. Process operation.
Exercise 16-3 (10 minutes)
Financial and Managerial Accounting, 6th Edition
Exercise 16-4 (30 minutes)
1. Beginning inventory is 100% complete with respect to materials.
Ending inventory is 100% complete with respect to materials.
EUP for Materials
Units of
Product
Goods completed (80,000 EUP x 100%)…..………….……………… 80,000
2. Beginning inventory is 40% complete with respect to materials.
Ending inventory is 75% complete with respect to materials.
Units of
EUP for Materials Product
Goods completed (80,000 EUP x 100%)…..………….……………… 80,000
3. Beginning inventory is 60% complete with respect to materials.
Ending inventory is 30% complete with respect to materials.
Units of
EUP for Materials Product
Goods completed (80,000 EUP x 100%)…..………….……………… 80,000
Exercise 16-5 (30 minutes)
1. Beginning inventory is 100% complete with respect to materials.
Ending inventory is 100% complete with respect to materials.
EUP for Materials
Units of
Product
To complete beginning work in process (24,000 EUP x 0%)......... 0
Units started and completed (56,000 EUP x 100%)……………………. 56,000
2. Beginning inventory is 40% complete with respect to materials.
Ending inventory is 75% complete with respect to materials.
Units of
EUP for Materials Product
To complete beginning work in process (24,000 EUP x 60%)....... 14,400
Units started and completed (56,000 EUP x 100%)……………………. 56,000
3. Beginning inventory is 60% complete with respect to materials.
Ending inventory is 30% complete with respect to materials.
Units of
EUP for Materials Product
To complete beginning work in process (24,000 EUP x 40%)....... 9,600
Total EUP……………….…………………..………………..….…………………….. 70,400
Financial and Managerial Accounting, 6th Edition
Exercise 16-6 (30 minutes)
1.
Equivalent units of production—Weighted average
Direct
Materials Conversion
Units completed & transferred out (295,000 x 100%)...........295,000 295,000
Units of ending work in process
Direct materials, 30,000 x 80%……………………..……….………24,000
2.
Cost per equivalent unit—Weighted average
Direct
Materials Conversion
Costs of beginning work in process…………..……………. $ 44,800 $ 15,300
Costs incurred this period…………..……………….…..…….. 1,231,200 896,700
Cost per equivalent unit of production….……….…........ $4.00 per
EUP
$3.00 per
EUP
3.
Cost assignment—Weighted average
Costs of units transferred out
Direct materials (295,000 EUP x $4.00 per EUP)...... $1,180,000
Conversion (295,000 EUP x $3.00 per EUP)……….…. 885,000
Total costs transferred out……………….……….…………… $2,065,000
Costs of ending work in process
Total costs assigned*…………..………………………………… $2,188,000
*Equals costs to account for of $2,188,000, computed as $60,100 + $1,231,200 + $896,700
1.
Equivalent units of production—FIFO
Direct
Materials Conversion
Units to complete beginning work in process
Direct materials (25,000 x 40%)……………………………………..
Conversion (25,000 x 60%)……………….………………….…….…
Units started and completed (270,000 x 100%)…..……….......
10,000
270,000
15,000
270,000
Units of ending work in process
2.
Cost per equivalent unit—FIFO
Direct
Materials Conversion
Costs incurred this period…………..……………….…..…….. $1,231,200 $896,700
Financial and Managerial Accounting, 6th Edition
Exercise 16-8 (20 minutes)
1. Units transferred out
Units Dept. 1 – units
Units in Beg. inventory 60,000 Beg. Inv 60,000
Units started 322,000 Started 322,000
2. EUP
Equivalent units of production – weighted-average
Direct
Materials Conversion
Units completed & transferred out (300,000 x 100%)……… 300,000 300,000
Units in ending work in process
Exercise 16-9 (20 minutes)
1. Cost per EUP
Cost per equivalent unit – weighted-average
Direct
Materials Conversion
Costs of beginning inventory $118,472 $48,594
Costs incurred this period 850,368 649,296
Exercise 16-9 (continued)
2.
Cost assignment and reconciliation – weighted-average
Costs of units transferred out
Direct materials (300,000 EUP x $2.65 per EUP) $795,000
Conversion costs (300,000 EUP x $2.15 per EUP) 645,000
Total cost of 300,000 units transferred out $1,440,000
Costs of units in ending inventory
Costs to be assigned:
Beginning inventory $167,066
Direct materials – current period 850,368
Conversion costs – current period 649,296
Total costs to be assigned $1,666,730
Dept. 1 – WIP
Beg. Inv 167,066
DM 850,368
Financial and Managerial Accounting, 6th Edition