Chapter 08 – Process Costing
8-61
8-52. (continued)
Cost of units transferred to finished goods:
Product
Unit
Material
Cost
Stitching
Department
Unit Cost
Customizing
Department
Unit Cost
Unit Cost
Rookie ……
$30
+
$ 42
+
$ –0–
=
$ 72
Novice ……
36
+
42
+
36
=
114
Hiker ………
45
+
42
+
36
=
123
Expert …….
75
+
42
+
36
=
153
b.
Work-in-Process Ending Inventory Balances are (note the number of units is equal to the
difference between the units started and units completed):
Stitching Department:
Material cost
Number
of Units
Unit
Cost
Total Cost
Rookie …………………
60
$30
$ 1,800
Novice …………………
30
36
1,080
Hiker ……………………
20
45
900
Expert ………………….
30
75
2,250
Total material cost ……
$ 6,030
Conversion costs ……..
56*
42
2,352
Total ………………………
$ 8,382
Chapter 08 – Process Costing
8-62
8-52. (continued)
Customizing Department:
Material cost
Number
of Units
Unit
Cost
Total Cost
Novice …………………………..
10
$36
360
Hiker …………………………….
20
45
900
Expert …………………………..
20
75
1,500
Total material cost……………..
$ 2,760
Conversion costs ………………
From Stitching ………………..
50
42
2,100
From Customizing …………..
10*
36
360
Total conversion costs ….
$2,460
Total ………………………………..
$ 5,220
* 50 units, 20% complete.
Chapter 08 – Process Costing
8-63
8-53. (50 min.) Process Costing and Ethics – Increasing Production to Boost
Profits: Pacific Siding, Inc.
Chapter 08 – Process Costing
8-64
8-53. (continued)
b. See the revised data entry section and production cost report below:
Data Entry Section
Unit Information
Percent Complete
Units
(board
Direct
Direct
feet)
materials
labor
Overhead
Units in beginning WIP inventory (all completed this period)
250,000
n/a
n/a
n/a
Units started and completed during the period
140,000
100%
100%
100%
Units started and partially completed during the period
225,000
80%
85%
90%
Direct
Direct
Cost Information
materials
labor
Overhead
Costs in beginning WIP inventory
$76,000
$90,000
$150,000
Costs incurred during the period
$95,000
$102,000
$150,000
Chapter 08 – Process Costing
8-65
8-53. (continued)
Revised Production Cost Report
Month Ending March 31
Step 1: Summary of Physical Units and Equivalent Unit Calculations
Physical
Units to be accounted for
Units
Units in beginning WIP inventory
250,000
Units started during the period
365,000
Total units to be accounted for
615,000
Equivalent Units
Direct
Direct
Units accounted for
materials
labor
Overhead
Units completed and transferred out
390,000
390,000
390,000
390,000
Units in ending WIP inventory
225,000
180,000
191,250
202,500
Total units accounted for
615,000
570,000
581,250
592,500
Step 2: Summary of Costs to be Accounted for
Direct
Direct
Costs to be accounted for
materials
labor
Overhead
Total
Costs in beginning WIP inventory
$76,000
$90,000
$150,000
$316,000
Costs incurred during the period
95,000
102,000
150,000
347,000
Total costs to be accounted for
$171,000
$192,000
$300,000
$663,000
Step 3: Calculation of Cost per Equivalent Unit
Chapter 08 – Process Costing
8-66
8-53. (continued)
Direct
Direct
materials
labor
Overhead
Total
Total costs to be accounted for (a)
$171,000
$192,000
$300,000
Total equivalent units accounted for
570,000
581,250
592,500
Cost per equivalent unit (a) / (b)
$0.3000
$0.3303
$0.5063
$1.1366
Step 4: Assign Costs to Units Transferred Out and Units in Ending WIP Inventory
Direct
Direct
materials
labor
Overhead
Total
Costs assigned to units transferred out
$117,000
$128,826
$197,468
$443,294
Costs assigned to ending WIP inventory
54,000
63,174
102,532
219,706
Total costs accounted for
$171,000
$192,000
$300,000
$663,000