Problem 16-5B (80 minutes)
Part 1
SWITCH COMPANY
Process Cost Summary – FIFO Method
For Month Ended January 31
Costs Charged to Production
Costs of beginning work in process
Direct materials……………..………………..….……….………….. $ 7,500
Conversion………………..……………….……………………………. 49,840 $ 57,340
Costs incurred this period
Direct materials……………..………………..….……….………….. 112,500
Unit cost information
Units to account for Units accounted for
Beginning work in process..…………10,000 Completed & transferred out…….. 220,000
0
Equivalent units of production
Direct
Materials Conversion
Units to complete beginning WIP
Direct materials (10,000 x 25%)........ 2,500 EUP
Conversion (10,000 x 40%)………….... 4,000 EUP
Units started and completed…………... 210,000 EUP 210,000 EUP
Problem 16-5B (Concluded)
Cost per EUP
Direct
Materials Conversion
Costs incurred this period…............... $ 112,500 $ 616,000
÷ EUP……………..…………………..….….….. ÷ 232,500 ÷ 226,000
Cost assignment and reconciliation
Costs transferred out
Cost of beginning work in process……………….……….……….. $ 57,340
Costs of units started and completed this period
Direct materials (210,000 EUP x $0.484 per EUP)...............101,640
Conversion (210,000 EUP x $2.726 per EUP)……………….…. 572,460 674,100
Total cost of goods finished this period………….…….………... 743,554
* $106 difference from total costs to account for due to rounding
Part 2
Jan. 31 Finished Goods Inventory……………….………….….………743,554
Financial and Managerial Accounting, 6th Edition
Problem 16-6B (45 minutes)
1. Units in beginning inventory…………..……………………… 62,500
2. Equivalent units of production—FIFO
Direct
Equivalent units of production Materials Conversion
Units to complete beginning Work in Process
Direct materials (62,500 x 60%)…..……….……….…..... 37,500
Units in ending work in process
Direct materials (76,250 x 80%)…..……….……….…..... 61,000
Conversion (76,250 x 20%)………………..………………... _______ 15,250
3. Cost per equivalent unit of direct materials and conversion—FIFO
Direct
Materials Conversion
Costs incurred this period………………..…….…….……… $683,750 $446,050
Problem 16-6B (Concluded)
4. Assignment of costs to output of department—FIFO
Costs of goods transferred out
Cost of beginning work in process inventory…..….…
Direct materials……………..…………………………….…….. $ 99,075
Conversion………………..…………………..……….……….… 53,493 $ 152,568
Costs to complete beginning work in process
Cost of units started and completed this period
Direct materials (175,000 EUP x $2.50 per EUP)...... 437,500
Conversion (175,000 EUP x $2.20 per EUP)............. 385,000
Total cost of units started and completed….….…….. 822,500
Total costs accounted for……………………..………………. $1,282,368
Financial and Managerial Accounting, 6th Edition
Problem 16-7B (80 minutes)
Part 1
BELDA CO.—Cutting Department
Process Cost Summary – FIFO Method
For Month Ended March 31
Costs Charged to Production
Costs of beginning work in process
Direct materials……..…………………..….….……….………….… $ 16,800
Conversion………..…………………………………………………….. 97,720 $ 114,520
Costs incurred this period
Unit cost information
Units to account for Units accounted for
Beginning work in process…..........10,000 Completed & transferred out…....220,00
0
Units started this period…..…….……250,00
Ending work in process………... 40,000
Equivalent units of production
Direct
Materials Conversion
Units to complete beginning WIP
Direct materials (10,000 x 25%)........ 2,500 EUP
Conversion (10,000 x 40%)………….… 4,000 EUP
[Continued on next page]
Problem 16-7B (Continued)
Cost per EUP
Direct
Materials Conversion
Costs incurred this period…............... $ 223,200 $1,233,960
EUP
EUP
Cost assignment and reconciliation
Costs transferred out
Cost of beginning work in process……………….……….……….. $ 114,520
Cost to complete beginning work in process
Direct materials (2,500 EUP x $0.96 per EUP)…..................$ 2,400
Conversion (4,000 EUP x $5.46 per EUP)………….………..….. 21,840 24,240
Total costs accounted for……………………..………………………… $1,571,680
Part 2
Mar. 31 Work in Process Inventory—Blending………….…….…..1,486,960
Work in Process Inventory—Cutting……………….… 1,486,960
Transfer of goods to finished inventory.
Financial and Managerial Accounting, 6th Edition
Problem 16-7B (Concluded)
If equivalent units of production for the production department’s ending
inventory for March are overstated, then total equivalent units of
production is also overstated. This means the cost per equivalent unit for
March is understated and the production manager would be paid a larger
SERIAL PROBLEM — SP 16
1. Features of job order and process costing follow.
Job order costing Process costing
Custom orders Repetitive operations
2. Given the size of her company, and the types of products she sells,
Santana should probably stay with job order costing. The furniture
she makes would be made in small batches, probably to customer
Financial and Managerial Accounting, 6th Edition
COMPREHENSIVE PROBLEM
Comprehensive Problem, Major League Bat Company (110 minutes)
[Instructor note: General Ledger accounts are shown in Part 4.]
Part 1 (Using either weighted-average or FIFO)
July Journal Entries
a. Raw Materials Inventory ………………..…….………….…….125,000
Cash…………………………………..…………….……………... 125,000
Purchased raw materials for cash.
d. Factory Payroll Payable …………………………………………227,250
Cash ……………..…………………..…………….……………... 227,250
Paid factory payroll with cash.
e. Factory Overhead ………………………………………………….80,000
Cash ……………..…………………..…………….……………... 80,000
Paid other overhead with cash.
Comprehensive Problem (Continued)
Part 2 (Using weighted-average)
MAJOR LEAGUE BAT CO.
Process Cost Summary (Weighted Average)
For Month Ended July 31
Costs Charged to Production
Costs of beginning work in process
Direct materials……………..………………..….……….………….. $ 2,660
Conversion………………..……………….……………………………. 5,475 $ 8,135
Costs incurred this period
Unit cost information
Units to account for Units accounted for
Beginning work in process………………..…….….……5,000 Complete & transferred out…..……..11,000
Equivalent units of production
Direct
Materials Conversion
Units completed & transferred out…........11,000 EUP 11,000 EUP
Units of ending work in process
Direct materials (8,000 x 100%)…………...8,000 EUP
Conversion (8,000 x 40%)………….…….….__________ 3,200 EUP
Equivalent units of production 19,000 EUP 14,200 EUP
Direct
[Continued on next page]
Financial and Managerial Accounting, 6th Edition