Unlock document.
This document is partially blurred.
Unlock all pages and 1 million more documents.
Get Access
Chapter 20 - Process Costing
Exercise 20-22 (10 minutes)
1. Work in Process Inventory............................................75,000
Factory Payroll Payable........................................... 75,000
Incurred direct labor costs.
Exercise 20-23 (5 minutes)
1. Factory Overhead ..........................................................38,750
Cash .......................................................................... 38,750
Incurred and paid overhead costs.
Exercise 20-24 (5 minutes)
1. Finished Goods Inventory.............................................135,600
Work in Process Inventory-Assembly.................... 135,600
Transfer goods from production to finished goods.
Exercise 20-25 (25 minutes)
20-1123
Chapter 20 - Process Costing
1.
Oct. 31 Work in Process Inventory............................................522,000
Raw Materials Inventory.......................................... 522,000
Direct materials used in production.
2.
4.
Oct. 31 Finished Goods Inventory ............................................595,000
Work in Process Inventory...................................... 595,000
Transfer goods from production to finished
goods.
5.
Exercise 20-26 (25 minutes)
a. Purchased raw materials on credit at a cost of $52,000.
b. Used direct materials costing $42,000 in production.
20-1124
Chapter 20 - Process Costing
h. Applied overhead to production at the rate of 105% ($33,600/$32,000) of
direct labor cost.
Exercise 20-27 (10 minutes)
A hybrid costing system contains features of both process costing and job
order costing. A hybrid system of processes requires a hybrid costing
system to properly cost products or services.
PROBLEM SET A
Problem 20-1A (45 minutes)
Part 1: Cost of goods transferred and cost of goods sold
Beginning work in process inventory.................................... $ 435,000
Direct materials used in production....................................... 157,500
20-1125
Chapter 20 - Process Costing
Beginning finished goods inventory ..................................... $ 633,000
Plus goods transferred from production .............................. 1,754,500
Part 2: Summary journal entries
a.
May 31 Raw Materials Inventory ...............................................250,000
Accounts Payable .................................................... 250,000
Purchased raw materials.
20-1126
Chapter 20 - Process Costing
Problem 20-1A (Continued)
d.
May 31 Work in Process Inventory ...........................................780,000
Factory Payroll Payable........................................... 780,000
Incurred direct labor costs.
e.
g.
May 31 Factory Overhead ..........................................................87,000
Other Accounts ........................................................ 87,000
Incurred other overhead costs.
h.
j.
May 31 Accounts Receivable ....................................................2,500,000
Sales ......................................................................... 2,500,000
Sold finished goods.
May 31 Cost of Goods Sold .......................................................1,782,500
Finished Goods Inventory ...................................... 1,782,500
To record cost of goods sold for May.
20-1127
Chapter 20 - Process Costing
Problem 20-2A (50 minutes)
Part 1
(a) and (b) Equivalent units with respect to direct materials and conversion
Direct
Equivalent units of production (EUP) Materials Conversion
Units completed and transferred out.................... 700,000 700,000
Units of ending Work in Process..........................
Part 2
Cost per equivalent unit of production
Direct
Materials Conversion
Costs of beginning Work in Process...........................$ 420,000 $ 139,000
Part 3 Assigning product costs to units
Costs transferred out
Direct materials (700,000 EUP x $3.00 per EUP).......$2,100,000
Conversion (700,000 EUP x $4.50 per EUP).............. 3,150,000
(a) Total costs transferred out.................................... $5,250,000
Costs of ending work in process
*This equals the sum of the total direct materials cost and the
total conversion costs ($2,640,000 + $3,393,000 = $6,033,000).
20-1128
Chapter 20 - Process Costing
Problem 20-2A (Concluded)
Part 4
MEMORANDUM
TO:
FROM:
DATE:
RE: Percentage of Completion Error Analysis
If the units in ending inventory are 60% complete instead of 30% with
respect to conversion, the number of equivalent units in ending inventory
with respect to conversion is understated, and the total equivalent units
Regarding financial statements, this error causes an overstatement of cost
of goods sold and an understatement of net income on the income
20-1129
Chapter 20 - Process Costing
Problem 20-3A (75 minutes)
Part 1
Weighted average
Units Fast Co. - units
Units in Beg. inventory 30,000 Beg. Inv 30,000
FAST CO.
Process Cost Summary – Weighted Average Method
For the month ended October 31
Costs Charged to Production
Costs of beginning work in process
Costs incurred this period
Direct materials................................................................. 144,400
Conversion costs.............................................................. 862,400 1,006,800
Total costs to account for................................................... $1,091,100
Unit cost information
20-1130
