Problem 20-1B (Continued)
d.
June 30 Work in Process Inventory…………………………….……….350,000
Factory Payroll Payable ……………………………..……. 350,000
Used direct labor.
e.
g.
June 30 Factory Overhead ………………………………………………….170,500
Other Accounts ……………………………………………….. 170,500
Incurred other overhead costs.
h.
j.
June 30 Accounts Receivable ………………………….…….…….…….1,000,000
Sales ……………………………………………….……….…….. 1,000,000
Sold finished goods.
June 30 Cost of Goods Sold ……………………………………….……...600,500
Finished Goods Inventory …………………..…….…….. 600,500
Problem 20-2B (50 minutes)
Part 1
(a) and (b) Equivalent units with respect to direct materials and conversion
Direct
Equivalent units of production Materials Conversion
Units completed & transferred out..….………........ 80,000 80,000
Part 2
Cost per equivalent unit of production
Direct
Materials
Conversion
Costs of beginning work in process..……….…... $ 58,000 $ 86,400
Costs incurred this period……….…….……….……. 712,000 1,980,000
Part 3: Assigning product costs to units
Costs transferred out
Direct materials (80,000 EUP x $8.75 per EUP).........$ 700,000
Conversion (80,000 EUP x $25.20 per EUP).............. 2,016,000
Total costs transferred out……………………………….….. $2,716,000
Problem 20-2B (Concluded)
Part 4
MEMORANDUM
TO:
FROM:
DATE:
RE: Percentage of Completion Error Analysis
If the units in ending inventory are 75% complete instead of 25% with respect
to conversion, the number of equivalent units in ending inventory with respect
greater.
Regarding financial statements, this error causes an overstatement of cost of
goods sold and an understatement of net income on the income statement for
Problem 20-3B (75 minutes)
Part 1
BRAUN COMPANY
Process Cost Summary – Weighted Average Method
For Month Ended November 30
Costs Charged to Production
Costs of beginning work in process
Direct materials……………………………..…….…….……….…… $ 6,800
Conversion…………………………………………………………….… 14,500
Unit cost information
Units to account for Units accounted for
Beginning work in process.............7,500 Completed & transferred out……………………………..……………......................100,000
Equivalent units of production
Direct
Materials Conversion
Conversion (12,000 x 25%)…….…….…….. __________ 3,000 EUP
Equivalent units of production.….............112,000 EUP 103,000 EUP
Cost per EUP
Direct
Materials Conversion
Cost of beginning work in process.......... $ 6,800 $ 14,500
Costs incurred this period……………………. 116,400 1,067,000
Costs transferred out
Direct materials (100,000 EUP x $1.10 per EUP)..... $110,000
Conversion (100,000 x $10.50 per EUP)…………….... 1,050,000 $1,160,000
Part 2
Nov. 30 Finished Goods Inventory……………………………….……..1,160,000
Work in Process Inventory……………………….………. 1,160,000
Transfer of goods to finished goods
inventory.
Problem 20-4B (80 minutes)
Part 1
SWITCH CO.
Process Cost Summary – Weighted Average Method
For Month Ended January 31
Costs Charged to Production
Costs of beginning work in process
Direct materials……………………………..…….…….……….…… $ 7,500
Conversion…………………………………………………………….... 49,840
Unit cost information
Units to account for Units accounted for
Beginning work in process.............10,000 Completed & transferred out..... 220,000
Units started this period……….……..250,000 Ending work in process......... 40,000
Total units to account for................260,000 Total units accounted for....... 260,000
Equivalent units of production
Direct
Materials Conversion
Cost per EUP Direct Materials Conversion
Cost of beginning work in process..…..…............. $ 7,500 $ 49,840
Costs incurred this period………………………..…..…... 112,500 616,000
[Continued on next page]Problem 20-4B (Concluded)
Cost assignment and reconciliation
Costs of ending work in process
Part 2
Jan. 31 Finished Goods Inventory……………………………….……..741,400
Part 3
3a. Two major estimates are the: i) overhead allocation rate, and ii)
percentage of completion for materials and conversion.
3b. Management might want an overhead allocation rate that assigns the
least amount of overhead to their respective production process, and