Chapter 08 – Process Costing
b. The report to management should include the following items:
8-44. (60 min.) Prepare a Production Cost Report and Adjust Inventory Balances—Weighted-Average Method:
Elmhurst Parts.
a.
Elmhurst Parts
Production Cost Report—Weighted-Average
Chapter 08 – Process Costing
8-42
8-44. (continued)
Costs
Details
Total costs
Materials
Labor
Overhead
Costs to be accounted for: (Section 3)
Costs in beginning WIP inventory ……………….
$ 1,222,800
$ 240,000
$ 546,000
$ 436,800
Current period costs …………………………………
5,534,400
1,560,000
2,208,000
1,766,400
Total costs to be accounted for ……………………..
$6,757,200
$1,800,000
$2,754,000
$2,203,200
Cost per equivalent unit: (Section 4)
Materials ($1,800,000 480,000) ……………..
$3.75
Labor ($2,754,000 408,000) ………………….
$6.75
Overhead ($2,203,200 408,000) …………….
$5.40
Costs accounted for: (Section 5)
Costs assigned to units transferred out:
Materials ($3.75 x 360,000) ……………………
$1,350,000
$1,350,000
Labor ($6.75 x 360,000) …………………………
2,430,000
$2,430,000
Overhead ($5.40 x 360,000) …………………..
1,944,000
$1,944,000
Total costs of units transferred out ……………..
5,724,000
Costs assigned to ending WIP inventory:
Materials ($3.75 x 120,000) ……………………
450,000
450,000
Labor ($6.75 x 48,000) …………………………..
324,000
324,000
Overhead ($5.40 x 48,000) …………………….
259,200
259,200
Total ending WIP inventory………………………..
1,033,200
Total costs accounted for ……………………………..
$6,757,200
$1,800,000
$2,754,000
$2,203,200
Chapter 08 – Process Costing
8-43
8-44. (continued)
b. Adjustment required:
Work in
Process
Finished
Goods
Per problem statement ……….………………….
$793,152
$337,560
Correct …………………………....………………………..
1,033,200
318,000
a
Difference …………………………..
$(240,048)
$ 19,560
Journal entry:
Work in Process …………….…………….
240,048
Finished Goods …………..………………
19,560
Cost of Goods Sold ……..……………………
220,488
Additional computations:
a20,000 units of finished goods inventory ($3.75 + 6.75 + 5.40) = $318,000
Chapter 08 – Process Costing
8-44
8-45. (40 min.) Prepare a Production Cost Report and Show Cost Flows Through
Accounts—FIFO method: Recyclers, Inc.
Recyclers, Inc.
Production Cost Report—FIFO
a.
Flow of Production Units
(Section 2)
Compute Equivalent
Units
(Section 1)
Physical units
Conversion
costs
Units to be accounted for:
Beginning WIP inventory …………………………..
300
Units started this period …………………………...
2,700
Total units to be accounted for ……………………..
3,000
Units accounted for:
Units completed and transferred out:
From beginning inventory ………………………
300
120
(40%)a
Started and completed currently ……………..
2,550
2,550
Units in ending WIP inventory ……………………
150
30
(20%)
Total units accounted for ……………………………..
3,000
2,700
a40% = 100% – 60% already done at the beginning of the period.
Chapter 08 – Process Costing
8-45
8-45. (continued)
Costs
Total costs
Conversion
costs
Costs to be accounted for: (Section 3)
Costs in beginning WIP inventory ………………….
$ 168
$ 168
Current period costs ……………………………………
10,800
10,800
Total costs to be accounted for ………………………..
$10,968
$10,968
Cost per equivalent unit: (Section 4)
Conversion costs ($10,800 2,700) ………………
$4.00
Costs accounted for: (Section 5)
Costs assigned to units transferred out:
Costs from beginning inventory ………………….
$ 168
$ 168
Current costs added to complete beginning
WIP inventory:
Conversion costs ($4.00 x 120) ………………
480
480
Total costs from beginning inventory ……………..
$ 648
Current costs of units started and completed:
Conversion costs ($4.00 x 2,550) ………………
10,200
10,200
Total costs of units started and completed ……..
$10,200
Total costs of units transferred out ………………..
$10,848
Costs assigned to ending WIP inventory:
Conversion costs ($4.00 x 30) …………………..
120
120
Total ending WIP inventory ………………………….
$ 120
Total costs accounted for ………………………………..
$10,968
$10,968
b.
Work in Process
Beginning inventory:
Conversion costs
168
This period’s costs:
Conversion costs
10,800
10,848a
To Finished Goods Inventory
Ending inventory
120
All costs have been accounted for.
Various Payables
Finished Goods Inventory
10,800
10,848
Chapter 08 – Process Costing
8-46
8-46. (60 min.) FIFO Process Costing: Pantanal, Inc.
Pantanal, Inc.
Assembling Department
Production Cost Report—FIFO
Flow of Production Units
(Section 1)
(Section 2)
COMPUTE EQUIVALENT UNITS
Physical units
Prior
department
costs
Materials
Conversion
Units to be accounted for:
Beginning WIP inventory …………………….…….
12,500
Units started this period …………………………..
127,500
Total units to be accounted for ………………..…….
140,000
Units accounted for:
Units completed and transferred out:
From beginning inventory ……………………….
12,500
–0–
5,000
(40)%
a
7,500
(60%)
b
Started and completed currently ……….…….
107,500
107,500
107,500
107,500
Units in ending WIP inventory …………………….
20,000
20,000
18,000
(90%)
10,000
(50%)
Total units accounted for ………………………..…
140,000
127,500
130,500
125,000
a40% = 100% – 60% already done at the beginning of the period.
b60% = 100% – 40% already done at the beginning of the period.
Chapter 08 – Process Costing
8-47
8-46. (continued)
Costs
DETAILS
Total Costs
Prior
department
costs
Materials
Conversion
Costs to be accounted for: (Section 3)
Costs in beginning WIP inventory ……………….
$323,400
$ 98,000
$ 164,400
$ 61,000
Current period costs …………………………………
3,306,600
2,142,000
939,600
225,000
Total costs to be accounted for ……………………..
$3,630,000
$2,240,000
$1,104,000
$286,000
Cost per equivalent unit: (Section 4)
Prior department costs ($2,142,000 127,500)
$16.80
Materials ($939,600 130,500) ………………….
$7.20
Conversion ($225,000 125,000) ………………
$1.80
Chapter 08 – Process Costing
8-48
8-46. (continued)
Details
Total Costs
Prior
department
costs
Materials
Conversion
Costs accounted for: (Section 5)
Costs assigned to units transferred out:
Costs from beginning WIP inventory …………………………….
$ 323,400
$ 98,000
$ 164,400
$ 61,000
Current costs added to complete beginning WIP inventory:
Prior department costs ……………………………………………
–0–
–0–
Materials ($7.20 x 5,000) ………………………………………..
36,000
36,000
Conversion ($1.80 x 7,500) …………………………………….
13,500
13,500
Total costs from beginning inventory …………………………….
$ 372,900
Current costs of units started and completed:
Prior department costs ($16.80 x 107,500) ……………………
$1,806,000
1,806,000
Materials ($7.20 x 107,500) ………………………………………..
774,000
774,000
Conversion ($1.80 x 107,500) ……………………………………..
193,500
193,500
Total costs of units started and completed ……………………….
$2,773,500
Total costs of units transferred out ……………………………………..
$3,146,400
Costs assigned to ending WIP inventory:
Prior department costs ($16.80 x 20,000) …………………………
$ 336,000
336,000
Materials ($7.20 x 18,000) ……………………………………………..
129,600
129,600
Conversion ($1.80 x 10,000) ………………………………………….
18,000
18,000
Total ending WIP inventory ……………………………………………….
$ 483,600
Total costs accounted for ………………………………………………….
$3,630,000
$2,240,000
$1,104,000
$286,000
Chapter 08 – Process Costing
8-49
8-47. (50 min.) Prepare a Production Cost Report—Weighted-Average Method:
Saline Solutions.
a. 60 percent complete. The key to this problem is to set up the production cost report to
the extent you can and then fill in the missing information.
Physical
Units
Equivalent Units
Materials
Conversion
Flow of units:
Units to be accounted for:
Beginning WIP inventory ………………………..…
50,000
Units started this period …………………………..
490,000
Total units to account for ……………………..…
540,000
Units accounted for:
Completed and transferred out ………………..…
470,000
470,000
470,000
Units in ending inventory ………………………..…
70,000
Mixing (70,000 units x 100%) ……………….…
70,000
Finishing (70,000 units x ??% [i]) ………….…
42,000
h
Total units accounted for ………………….…
540,000
540,000
b
512,000
Total
Direct
Materials
Conversion
Costs
Flow of costs:
Costs to be accounted for:
Costs in beginning WIP inventory …………….…
$482,424
$438,400
d
$ 44,024
e
Current period costs …………………………………
5,043,976
3,449,600
1,594,376
Total costs to be accounted for …………….…
$5,526,400
$3,888,000
$1,638,400
f
Cost per equivalent unit
Materials ($3,888,000 ÷ 540,000 units) …….…
$ 7.20
a
Conversion ($1,638,400 ÷ 512,000 [g]) …….…
$ 3.20
a
Costs accounted for:
Costs assigned to units transferred out …….…
$4,888,000
$3,384,000
$1,504,000
Costs of ending WIP inventory ………………..…
638,400
504,000
134,400
Total costs accounted for …………………….…
$5,526,400
$3,888,000
$1,638,400
Chapter 08 – Process Costing
8-50
8-47. (continued)
Notes:
a. Given.
b. Because the units are fully complete with respect to materials, the equivalent
units are equal to the physical units.