Chapter 08 – Process Costing
8-11
8-24. (20 min.) Compute Equivalent Units—FIFO method: Santiago Company.
Physical
Units
Conversion
Eq. Units
Flow of units:
Units to be accounted for:
Beginning WIP inventory ……………………………………….
22,500
Units started this period …………………………………………
255,000
Total units to account for …………………………………….
277,500
Units accounted for:
Completed and transferred out
From beginning WIP inventory [22,500 x (1 – 40%)]
22,500
13,500
Started and completed currently (217,500a x 100%)
217,500
217,500
Units in ending inventory:
Conversion (37,500 x 70%)…………………………………
37,500
26,250
Total units accounted for …………………………………
277,500
257,250
a 217,500 units started and completed = 240,000 units transferred out – 22,500 beginning
WIP units.
Chapter 08 – Process Costing
8-12
8-25. (20 min.) Compute Equivalent Units and Cost per Equivalent Unit—
Weighted-Average method: Santiago Company.
a.
Physical
Units
Equivalent Units
Materials
Eq. units
Conversion
Costs Eq. units
Flow of units:
Units to be accounted for:
Beginning WIP inventory ……………..……………
22,500
Units started this period……………….………….
255,000
Total units to account for ………….……………
277,500
Units accounted for:
Completed and transferred out ……..……………
240,000
240,000
240,000
Units in ending inventory ……………..……………
37,500
Materials (37,500 x 100%) ………..……………
37,500
Conversion costs (37,500 x 70%) ……………
26,250
Total units accounted for ………….……………
277,500
277,500
266,250
b.
Total
Direct
Materials
Conversion
Costs
Flow of costs:
Costs to be accounted for:
Costs in beginning WIP inventory ……………..…….
$ 63,000
$24,300
$38,700
Current period costs ………………………………..…….
1,360,500
280,950
1,079,550
Total costs to be accounted for …………………….
$1,423,500
$305,250
$1,118,250
Cost per equivalent unit
Materials ($305,250 ÷ 277,500 units) ……………….
$ 1.10
Conversion costs ($1,118,250 ÷ 266,250
units) ………………………………………………….……
$ 4.20
Chapter 08 – Process Costing
8-13
8-26. (35 min.) Compute Costs per Equivalent Unit—Weighted-Average Method:
Matsui Lubricants.
Physical
Units
Equivalent Units
Materials
Eq. units
Conversion
Costs Eq. units
Flow of units:
Units to be accounted for:
Beginning WIP inventory ………………..…………
600
Units started this period ………………….……….
4,000
Total units to account for ……………..…………
4,600
Units accounted for:
Completed and transferred outa …………………
3,400
3,400
3,400
Units in ending inventory ………………..…………
1,200
Materials (1,200 x 40%) …………………………
480
Conversion costs (1,200 x 20%) …..…………
240
Total units accounted for ……………..…………
4,600
3,880
3,640
a 3,400 units transferred out = 4,600 units to account for – 1,200 units in ending WIP
inventory.
Total
Direct
Materials
Conversion
Costs
Flow of costs:
Costs to be accounted for:
Costs in beginning WIP inventory ……….
$ 1,248
$ 976
$ 272
Current period costs …………………………
18,084
11,440
6,644
Total costs to be accounted for ……….
$19,332
$12,416
$6,916
Cost per equivalent unit
Materials ($12,416 ÷ 3,880 units) ……….
$ 3.20
Conversion costs ($6,916 ÷ 3,640 units)
$ 1.90
Chapter 08 – Process Costing
8-14
8-27. (20 min.) Assign Costs to Goods Transferred Out and Ending Inventory—
Weighted-Average Method: Matsui Lubricants.
Total
Direct
Materials
Conversion
Costs
Flow of costs:
Costs to be accounted for:
Costs in beginning WIP inventory ……………...
$ 1,248
$ 976
$ 272
Current period costs ………………………………...
18,084
11,440
6,644
Total costs to be accounted for ……………….
$19,332
$12,416
$6,916
Cost per equivalent unit
Materials ($12,416 ÷ 3,880 units) ……………….
$ 3.20
Conversion costs ($6,916 ÷ 3,640) …………….
$ 1.90
Costs accounted for:
Costs assigned to units transferred out
$17,340
$10,880
a
$6,460
b
Cost of ending WIP inventory …………………….
1,992
1,536
c
456
d
Total costs accounted for ……………………….
$19,332
$12,416
$6,916
Costs transferred out total $17,340, and costs in ending inventory total $1,992.
a $10,880 = 3,400 EU x $3.20 per EU.
b $6,460 = 3,400 EU x $1.90 per EU.
c $1,536 = 480 EU x $3.20 per EU.
d $456 = 240 EU x $1.90 per EU.
Chapter 08 – Process Costing
8-15
8-28. (35 min.) Compute Costs per Equivalent Unit—FIFO Method: Matsui
Lubricants.
Physical
Units
Equivalent Units
Materials
Eq. units
Conversion
Costs Eq. units
Flow of units:
Units to be accounted for:
Beginning WIP inventory ………………………………..
600
Units started this period ………………………………….
4,000
Total units to account for ……………………………..
4,600
Units accounted for:
Completed and transferred outa ………………………
3,400
From beginning WIP inventory
Materials (600 x (1 – 60%))
240
Conversion (600 x (1 – 53%))
282
Started and completed currently (2,800 x 100%)
2,800
2,800
Units in ending inventory ………………………………..
1,200
Materials (1,200 x 40%) ………………………………
480
Conversion costs (1,200 x 20%) …………………..
240
Total units accounted for ……………………………..
4,600
3,520
3,322
a 3,400 units transferred out
= 4,600 units to account for – 1,200 units in ending WIP inventory.
Total
Direct
Materials
Conversion
Costs
Flow of costs:
Costs to be accounted for:
Costs in beginning WIP inventory …………….…
$ 1,248
$ 976
$ 272
Current period costs …………………………………
18,084
11,440
6,644
Total costs to be accounted for …………….…
$19,332
$12,416
$6,916
Cost per equivalent unit
Materials ($11,440 ÷ 3,520 units) …………….…
$ 3.25
Conversion costs ($6,644 ÷ 3,322) …………..…
$ 2.00
Chapter 08 – Process Costing
8-16
8-29. (20 min.) Assign Costs to Goods Transferred Out and Ending Inventory—
FIFO Method: Matsui Lubricants.
Physical
Units
Equivalent Units
Materials
Eq. units
Conversion Costs
Eq. units
Flow of units:
Units to be accounted for:
Beginning WIP inventory …………………..………
600
Units started this period…………………….…….
4,000
Total units to account for ……………….………
4,600
Units accounted for:
Completed and transferred outa …………………
3,400
From beginning WIP inventory
Materials (600 x (1 – 60%))
240
Conversion (600 x (1 – 53%))
282
Started and completed currently
(2,800 x 100%) …………………………….………
2,800
2,800
Units in ending inventory …………………..………
1,200
Materials (1,200 x 40%) …………………………
480
Conversion costs (1,200 x 20%) ……..………
240
Total units accounted for ……………….………
4,600
3,520
3,322
a 3,400 units transferred out = 4,600 units to account for – 1,200 units in ending WIP
inventory.
Chapter 08 – Process Costing
8-17
8-29. (continued)
Total
Direct
Materials
Conversion
Costs
Flow of costs:
Costs to be accounted for:
Costs in beginning WIP inventory ……….………
$ 1,248
$ 976
$ 272
Current period costs …………………………..
18,084
11,440
6,644
Total costs to be accounted for ……….………
$19,332
$12,416
$6,916
Cost per equivalent unit
Materials ($11,440 ÷ 3,520 units) ……….………
$ 3.25
Conversion costs ($6,644 ÷ 3,322) ……..………
$ 2.00
Costs accounted for:
Costs assigned to units transferred
out:
Costs from beginning WIP inventory ..………
$ 1,248
$ 976
$ 272
Current costs added to complete
beginning WIP inventory …………………………..
1,344
Materials ($3.25 x 240) …………..………
780
Conversion costs ($2.00 x 282) .………
564
Current costs of units started and
completed:
14,700
Materials ($3.25 x 2,800) ……………………
9,100
Conversion costs ($2.00 x 2,800) ..………
5,600
Total costs transferred out …………………………..
$ 17,292
$10,856
$6,436
Cost of ending WIP inventory ………………..………
2,040
Materials ($3.25 x 480) ………………………
1,560
Conversion costs ($2.00 x 240) …..………
480
Total costs accounted for ……………….………
$19,332
$12,416
$6,916
Ending inventory is slightly higher under the FIFO method because the unit costs are
higher under FIFO.
Chapter 08 – Process Costing
8-18
8-30. (35 min.) Compute Costs per Equivalent Unit—Weighted-Average Method:
Pacific Ink.
Physical
Units
Equivalent Units
Materials
Eq. units
Conversion Costs
Eq. units
Flow of units:
Units to be accounted for:
Beginning WIP inventory …………………………..
48,000
Units started this perioda
84,000
Total units to account for …………………..…..
132,000
Units accounted for:
Completed and transferred out (given) ………..
102,000
102,000
102,000
Units in ending inventory …………………………..
30,000
Materials (30,000 x 80%) …………………..…..
24,000
Conversion costs (30,000 x 40%) ……….…..
12,000
Total units accounted for …………………..…..
132,000
126,000
114,000
a 84,000 units started this period = 132,000 units to account for – 48,000 units in
beginning work-in-process inventory.
Total
Direct
Materials
Conversion
Costs
Flow of costs:
Costs to be accounted for:
Costs in beginning WIP inventory ………….…..
$ 744,960
$ 304,920
$ 440,040
Current period costs …………………………….…..
5,371,440
2,343,600
3,027,840
Total costs to be accounted for …………..…..
$6,116,400
$2,648,520
$3,467,880
Cost per equivalent unit
Materials ($2,648,520 ÷ 126,000 units) …..…..
$ 21.02
Conversion costs ($3,467,880 ÷ 114,000).…..
$ 30.42
Chapter 08 – Process Costing
8-19
8-31. (20 min.) Assign Costs to Goods Transferred Out and Ending Inventory—
Weighted-Average Method: Pacific Ink.
Total
Direct
Materials
Conversion
Costs
Flow of costs:
Costs to be accounted for:
Costs in beginning WIP inventory ………….……
$ 744,960
$ 304,920
$ 440,040
Current period costs …………………………………
5,371,440
2,343,600
3,027,840
Total costs to be accounted for ………….……
$6,116,400
$2,648,520
$3,467,880
Cost per equivalent unit
Materials ($2,648,520 ÷ 126,000 units) ….……
$ 21.02
Conversion costs ($3,467,880 ÷ 114,000) ……
$ 30.42
Costs accounted for:
Costs assigned to units transferred out
$5,246,880
$2,144,040
a
$3,102,840
b
Cost of ending WIP inventory ……………….……
869,520
504,480
c
365,040
d
Total costs accounted for ………………….……
$6,116,400
$2,648,520
$3,467,880
Costs transferred out total $5,246,880 and costs in ending inventory total $869,520.
a $2,144,040 = 102,000 EU x $21.02 per EU.
b $3,102,840 = 102,000 EU x $30.42 per EU.
c $504,480 = 24,000 EU x $21.02 per EU.
d $365,040 = 12,000 EU x $30.42 per EU.
Chapter 08 – Process Costing
8-20
8-32. (35 min.) Compute Costs per Equivalent Unit—FIFO Method: Pacific Ink.
Physical
Units
Equivalent Units
Materials
Eq. units
Conversion
Costs Eq.
units
Flow of units:
Units to be accounted for:
Beginning WIP inventory ………………………
48,000
Units started this perioda
84,000
Total units to account for …………………..
132,000
Units accounted for:
Completed and transferred out
102,000
From beginning WIP inventory
Materials (48,000 x (1 – 30%)) ……
33,600
Conversion (48,000 x (1 – 30%)) ..
33,600
Started and completed …………………….
54,000
54,000
Units in ending inventory ………………………
30,000
Materials (30,000 x 80%) …………………..
24,000
Conversion costs (30,000 x 40%) ……….
12,000
Total units accounted for …………………..
132,000
111,600
99,600
a 84,000 units started this period = 132,000 units to account for – 48,000 units in
beginning work-in-process inventory.
Total
Direct
Materials
Conversion
Costs
Flow of costs:
Costs to be accounted for:
Costs in beginning WIP inventory ………….…..
$ 744,960
$ 304,920
$ 440,040
Current period costs …………………………….…..
5,371,440
2,343,600
3,027,840
Total costs to be accounted for …………..…..
$6,116,400
$2,648,520
$3,467,880
Cost per equivalent unit
Materials ($2,343,600 ÷ 111,600 units) …..…..
$ 21.00
Conversion costs ($3,027,840 ÷ 99,600) ..…..
$ 30.40