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Problem 20-7A (Continued)
Cost per EUP
Direct
Materials Conversio
n
Costs incurred this period.................. $ 248,400 $1,082,970
Cost assignment and reconciliation
Costs transferred out
Cost of beginning Work in Process.......................... $ 120,870
Cost to complete beginning Work in Process
Direct materials (0 EUP x $11.50 per EUP).............. $ 0
Part 2
Oct. 31 Work in Process Inventory—Blending................................
1,333,920
Problem 20-7A (Concluded)
Part 3
If equivalent units of production for a production department's ending
inventory for October are understated, then total equivalent units of
production is also understated. This means the cost per equivalent unit for
PROBLEM SET B
Problem 20-1B (45 minutes)
Part 1: Cost of goods transferred and cost of goods sold
Beginning work in process inventory............................................. $156,000
Direct materials used in production............................................... 120,000
Beginning finished goods inventory ............................................. $160,000
Part 2: Summary journal entries
a.
June 30 Raw Materials Inventory ..............................................200,000
b.
June 30 Work in Process Inventory...........................................120,000
c.
June 30 Factory Overhead ........................................................42,000
Problem 20-1B (Continued)
d.
June 30 Work in Process Inventory...........................................350,000
e.
June 30 Factory Overhead.........................................................50,000
f.
June 30 Factory Payroll Payable ..............................................400,000
g.
June 30 Factory Overhead ........................................................170,500
h.
June 30 Work in Process Inventory...........................................262,500
i.
June 30 Finished Goods Inventory............................................638,500
j.
June 30 Accounts Receivable ...................................................1,000,000
June 30 Cost of Goods Sold .....................................................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
Units of ending work in process..........................
Part 2
Cost per equivalent unit of production
Direct
Materials
Conversion
Costs of beginning work in process.................. $ 58,000 $ 86,400
Part 3: Assigning product costs to units
Costs transferred out
Cost of ending work in process
Direct materials (8,000 EUP x $8.75 per EUP)........... 70,000
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
to conversion is understated, and the total equivalent units produced for the
period is also understated. If the correct percentage of completion with
respect to conversion is used, the conversion cost per equivalent unit will be
smaller. However, the cost of conversion in ending Work in Process is larger
because the percentage of equivalent units remaining in ending inventory is
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
September. On the September 30 balance sheet, the Work in Process
inventory and retained earnings are understated; therefore total assets and
equity are also understated.
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
Costs incurred this period $ 21,300
Equivalent units of production
Direct
Materials Conversion
Units completed & transferred out...........100,000 EUP 100,000 EUP
Units of ending work in process
Cost per EUP
Direct
Materials Conversion
Cost of beginning work in process.......... $ 6,800 $ 14,500
[Continued on next page]
Problem 20-3B (Concluded)
Cost assignment and reconciliation
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
Costs of ending work in process
Part 2
