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Comprehensive Problem (Concluded)
Part 4 (Using weighted-average)
Factory Payroll Payable Acct. No. 212
Date Explanation Debit Credit Balance
(d)
Payment
227,250
0
Sales Acct. No. 413
Date Explanation Debit Credit Balance
(h) July sales 625,000 625,000
Cost of Goods Sold Acct. No. 502
Date Explanation Debit Credit Balance
(h) July sales 265,700 265,700
Factory Overhead Acct. No. 540
Date Explanation Debit Credit Balance
Part 5 (Using weighted-average)
Computation of gross profit for July
* $279,575 = $265,700 + $13,875 (underapplied overhead)
Comprehensive Problem (Continued)
Part 2 (Using FIFO)
MAJOR LEAGUE BAT CO.
Process Cost Summary (FIFO)
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
Units started this period..........................................14,000 Ending work in process................... 8,000
Total units to account for........................................19,000 Total units accounted for.................19,000
Equivalent units of production
Direct
Materials Conversion
Direct materials (8,000 x 100%)........ 8,000 EUP
Conversion (8,000 x 40%).................. _________ 3,200 EUP
Equivalent units of production........... 14,000 EUP 10,450 EUP
[Continued on next page]Comprehensive Problem (Continued)
(Using FIFO)
Direct
Cost per EUP (rounded)...................... $3.75 per
EUP
$29.03 per
EUP
Cost assignment and reconciliation
Costs transferred out
Cost of beginning work in process........................................ $ 8,135
Cost to complete beginning work in process
Costs of ending work in process
Direct materials (8,000 EUP x $3.75 per EUP).....................30,000
Conversion (3,200 EUP x $29.03 per EUP)........................... 92,896 122,896
Total costs accounted for........................................................ $363,999*
*Equals $363,950 costs to account for with $49 rounding difference
Part 3 — Journal entries (Using FIFO)
g. Finished Goods Inventory ............................................241,103
Work in Process Inventory...................................... 241,103
Transferred goods to Finished Goods.
Transferred costs to COGS.
Comprehensive Problem (Continued)
Part 4 (Using FIFO)
General ledger accounts
Raw Materials Inventory Acct. No. 132
Date Explanation Debit Credit Balance
Work in Process Inventory Acct. No. 133
Date Explanation Debit Credit Balance
June 30 Balance 8,135
(b) Direct materials 52,440 60,575
*Agrees with $122,896 from process cost summary with $49 rounding difference
Finished Goods Inventory Acct. No. 135
Date Explanation Debit Credit Balance
June 30 Balance 110,000
Comprehensive Problem (Continued)
Part 4—(Using FIFO) concluded
Factory Payroll Payable Acct. No. 212
Date Explanation Debit Credit Balance
(c) Direct labor 202,500 202,500
Sales Acct. No. 413
Date Explanation Debit Credit Balance
(h) July sales 625,000 625,000
Cost of Goods Sold Acct. No. 502
Date Explanation Debit Credit Balance
(h) July sales 265,700 265,700
Factory Overhead Acct. No. 540
Date Explanation Debit Credit Balance
(b) Indirect materials 10,000 10,000
Comprehensive Problem (Concluded)
Part 5 (Using FIFO)
Computation of gross profit for July
Sales....................................................................................................$ 625,000
* $279,575 = $265,700 + $13,875 (underapplied overhead)
Reporting in Action — BTN 20-1
1. These costs are part of getting the products that Apple sells to its
2. These costs would either be expensed as cost of sales or as selling
and administrative expenses. Thus, net income will not be affected.
3. Answers will vary depending on information obtained.
Comparative Analysis — BTN 20-2
1.
Apple Google
($ millions) Current Year Prior Year Current Year Prior Year
Expenses
Cost of goods sold....... $106,606 $ 87,846 $25,858 $20,634
Operating expenses.... 15,305 13,421 20,001 16,781
Total expenses.............. $121,911 $101,267 $45,859 $37,415
2. Apple had a higher ratio in both the current year and the prior year.
