Problem 20-3A (Concluded)
Equivalent units of production
Direct
Materials
Direct
Labor
Factory
Overhead
Units completed & transferred out ….
17,000 EUP
17,000 EUP
17,000 EUP
Units of ending goods in process
Direct materials (5,000 x 100%) ……..
5,000 EUP
Direct labor (5,000 x 35%) ……………..
1,750 EUP
Factory overhead (5,000 x 35%) …….
__________
__________
1,750 EUP
Equivalent units of production ……….
22,000 EUP
18,750 EUP
18,750 EUP
Cost per EUP
Direct
Materials
Direct
Labor
Factory
Overhead
Cost of beginning goods in process .
$ 2,500
$ 2,650
$ 3,710
Costs incurred this period ………………
168,000
199,850
279,790
Total costs …………………………………….
$170,500
$202,500
$283,500
÷ EUP …………………………………………….
22,000 EUP
18,750 EUP
18,750 EUP
Cost per EUP …………………………………
$7.75 per
EUP
$10.80 per
EUP
$15.12 per
EUP
Cost assignment and reconciliation
Costs transferred out
Direct materials (17,000 EUP x $7.75 per EUP) ……
$131,750
Direct labor (17,000 EUP x $10.80 per EUP) ………..
183,600
Factory overhead (17,000 x $15.12 per EUP) ……….
257,040
$572,390
Costs of ending goods in process
Direct materials (5,000 EUP x $7.75 per EUP) ……..
38,750
Direct labor (1,750 EUP x $10.80 per EUP) ………….
18,900
Factory overhead (1,750 EUP x $15.12 per EUP) …
26,460
84,110
Total costs accounted for …………………………………….
$656,500
Part 3
If equivalent units of production for the production department’s ending
inventory for March are understated, then total equivalent units of production
Fundamental Accounting Principles, 21st Edition
1164
Problem 20-4A (75 minutes)
Part 1
FAST CO.
Process Cost Summary – Weighted Average Method
For the month ended October 31
Costs charged to Production
Costs of beginning goods in process
Direct materials ……………………………………………………….
$ 59,450
Direct labor ……………………………………………………………...
172,800
Factory overhead ……………………………………………………..
103,680
$ 335,930
Costs incurred this period
Direct materials ……………………………………………………….
102,050
Direct labor ……………………………………………………………...
408,200
Factory overhead ……………………………………………………..
244,920
755,170
Total costs to account for …………………………………………..
$1,091,100
Unit cost information
Units to account for
Units accounted for
Beginning goods in process ….……………………….
30,000
Completed & transferred out ..…………
150,000
Units started this period ………..…………………
140,000
Ending goods in process ….…………
20,000
Total units to account for …………………………..
170,000
Total units accounted for ….…………
170,000
Equivalent units of production
Direct
Materials
Direct
Labor
Factory
Overhead
Units completed & transferred out …..
150,000 EUP
150,000 EUP
150,000 EUP
Units of ending goods in process
Direct materials (20,000 x 100%) …...
20,000 EUP
Direct labor (20,000 x 80%) …………...
16,000 EUP
Factory overhead (20,000 x 80%) …..
__________
__________
16,000 EUP
Equivalent units of production
170,000 EUP
166,000 EUP
166,000 EUP
Cost per EUP
Direct
Materials
Direct
Labor
Factory
Overhead
Cost of beginning goods in process ...
$ 59,450
$172,800
$103,680
Costs incurred this period ……………...
102,050
408,200
244,920
Total costs ……………………………………..
$161,500
$581,000
$348,600
÷ EUP ……………………………………………..
170,000 EUP
166,000 EUP
166,000 EUP
Cost per EUP …………………………..……..
$0.95 per EUP
$3.50 per EUP
$2.10 per EUP
[Continued on next page]
Problem 20-4A (Concluded)
Cost assignment and reconciliation
Costs transferred out
Direct materials (150,000 EUP x $0.95 per EUP) ….
$142,500
Direct labor (150,000 EUP x $3.50 per EUP) ………..
525,000
Factory overhead (150,000 x $2.10 per EUP) ……….
315,000
$ 982,500
Costs of ending goods in process
Direct materials (20,000 EUP x $0.95 per EUP) ……
19,000
Direct labor (16,000 EUP x $3.50 per EUP) ………….
56,000
Factory overhead (16,000 EUP x $2.10 per EUP) …
33,600
108,600
Total costs accounted for …………………………………….
$1,091,100
Part 2
Oct. 31
Finished Goods Inventory ……………………………………..
982,500
Goods in Process Inventory …………………………..
982,500
Transfer of goods to finished goods inventory.
Fundamental Accounting Principles, 21st Edition
1166
Problem 20-5A (80 minutes)
Part 1
TAMAR CO.
Process Cost Summary – Weighted Average Method
For Month Ended May 31
Costs Charged to Production
Costs of beginning goods in process
Direct materials ………………………………………………..……..
$ 19,800
Direct labor ……………………………………………………….
123,300
Factory overhead ……………………………………………..………
98,640
$ 241,740
Costs incurred this period
Direct materials ………………………………………………..……..
496,800
Direct labor ……………………………………………………….
1,203,300
Factory overhead ……………………………………………..………
962,640
2,662,740
Total costs to account for …………………………………..………
$2,904,480
Unit cost information
Units to account for
Units accounted for
Beginning goods in process …………………………..
3,000
Completed & transferred out ….…….
22,200
Units started this period ……….………………….
21,600
Ending goods in process …………….
2,400
Total units to account for ……..……………………
24,600
Total units accounted for …………….
24,600
Equivalent units of production
Direct
Materials
Direct
Labor
Factory
Overhead
Units completed & transferred out …….
22,200 EUP
22,200 EUP
22,200 EUP
Units of ending goods in process ……..
Direct materials (2,400 x 100%) ……..
2,400 EUP
Direct labor (2,400 x 80%) ……………..
1,920 EUP
Factory overhead (2,400 x 80%) …….
__________
__________
1,920 EUP
Equivalent units of production ………..
24,600 EUP
24,120 EUP
24,120 EUP
Cost per EUP
Direct
Materials
Direct
Labor
Factory
Overhead
Cost of beginning goods in process ….
$ 19,800
$ 123,300
$ 98,640
Costs incurred this period ………………
496,800
1,203,300
962,640
Total costs ……………………………………..
$516,600
$1,326,600
$1,061,280
÷ EUP ……………………………………………..
24,600 EUP
24,120 EUP
24,120 EUP
Cost per EUP …………………………..……..
$21 per EUP
$55 per EUP
$44 per EUP
[Continued on next page]
Problem 20-5A (Concluded)
Cost assignment and reconciliation
Costs transferred out
Direct materials (22,200 EUP x $21.00 per EUP) ……………..
$
466,200
Direct labor (22,200 EUP x $55.00 per EUP) ………….………..
1,221,000
Factory overhead (22,200 x $44.00 per EUP) …………………..
976,800
$2,664,000
Costs of ending goods in process
Direct materials (2,400 EUP x $21.00 per EUP) ……..………..
50,400
Direct labor (1,920 EUP x $55.00 per EUP) ……………………..
105,600
Factory overhead (1,920 EUP x $44.00 per EUP) …..………..
84,480
240,480
Total costs accounted for ………………………………………………..
$2,904,480
Part 2
May 31
Finished Goods Inventory …………………………..
2,664,000
Goods in Process Inventory ………………….……….
2,664,00
0
Transfer of goods to finished inventory.
Part 3
3a. Two major estimates are the: i) overhead allocation rate, and ii)
3b. Management might want an overhead allocation rate that assigns the
least amount of overhead applied to their respective production
Fundamental Accounting Principles, 21st Edition
1168
Problem 20-6A (80 minutes)
Part 1
TAMAR CO.
Process Cost Summary – FIFO Method
For Month Ended May 31
Costs charged to Production
Costs of beginning goods in process
Direct materials ………………………………………………….……
$ 19,800
Direct labor ………………………………………………………..…….
123,300
Factory overhead ……………………………………………….…….
98,640
$ 241,740
Costs incurred this period
Direct materials ………………………………………………….……
496,800
Direct labor ………………………………………………………..…….
1,203,300
Factory overhead ……………………………………………….…….
962,640
2,662,740
Total costs to account for …………………………………….…….
$2,904,480
Unit cost information
Units to account for
Units accounted for
Beginning goods in process ….……………………….
3,000
Completed & transferred out ………..
22,200
Units started this period ………..…………………
21,600
Ending goods in process …….……..
2,400
Total units to account for …………………………..
24,600
Total units accounted for …….……..
24,600
Equivalent units of production
Direct
Materials
Direct
Labor
Factory
Overhead
Units to complete beginning goods in process
Direct materials (3,000 x 0%) ………………..……..
0 EUP
Direct labor (3,000 x 60%) …………………….…….
1,800 EUP
Factory overhead (3,000 x 60%) …………………..
1,800 EUP
Units started and completed …………………..……..
19,200 EUP
19,200 EUP
19,200 EUP
Units of ending goods in process
Direct materials (2,400 x 100%) …………….……..
2,400 EUP
Direct labor (2,400 x 80%) …………………….…….
1,920 EUP
Factory overhead (2,400 x 80%) …………………..
_________
_________
1,920 EUP
Equivalent units of production ……………….……..
21,600 EUP
22,920 EUP
22,920 EUP
[Continued on next page]
Problem 20-6A (Concluded)
Cost per EUP
Direct
Materials
Direct
Labor
Factory
Overhead
Costs incurred this period ………………
$ 496,800
$1,203,300
$ 962,640
÷ EUP …………………………………………….
÷ 21,600
÷ 22,920
÷ 22,920
Cost per EUP …………………………………
$23.00 per
EUP
$52.50 per
EUP
$42.00 per
EUP
Cost assignment and reconciliation
Costs transferred out
Cost of beginning goods in process …………………….
$ 241,740
Cost to complete beginning goods in process
Direct materials (0 EUP x $23.00 per EUP) ………….
$ 0
Direct labor (1,800 EUP x $52.50 per EUP) ………….
94,500
Factory overhead (1,800 EUP x $42.00 per EUP) …
75,600
170,100
Costs of units started and completed this period
Direct materials (19,200 EUP x $23.00 per EUP) ….
441,600
Direct labor (19,200 EUP x $52.50 per EUP) ………..
1,008,000
Factory overhead (19,200 EUP x $42.00 per EUP) .
806,400
2,256,000
Total cost of goods finished this period ……………….
2,667,840
Costs of ending goods in process
Direct materials (2,400 EUP x $23.00 per EUP) ……
55,200
Direct labor (1,920 EUP x $52.50 per EUP) ………….
100,800
Factory overhead (1,920 EUP x $42.00 per EUP) …
80,640
236,640
Total costs accounted for …………………………………….
$2,904,480
Part 2
May 31
Finished Goods Inventory …………………………..
2,667,840
Goods in Process Inventory …………………………..
2,667,840
Transfer of goods to finished inventory.
Fundamental Accounting Principles, 21st Edition
1170
Problem 20-7A (45 minutes)
1.
Units in beginning inventory …………………………………..
37,500
Units started and completed …………………………………..
150,000
Total units transferred to finished goods ………………..
187,500
2. Equivalent units of production—FIFO
Direct
Direct
Equivalent units of production
Materials
Labor
Units to complete beginning goods in process
Direct materials (37,500 x 40%) …………………………...
15,000
Direct labor (37,500 x 60%) ………………………………….
22,500
Units started and completed …………………………………
150,000
150,000
Units in ending work in process
Direct materials (51,250 x 60%) …………………………...
30,750
Direct labor (51,250 x 20%) ………………………………….
_______
10,250
Equivalent units of production ……………………………..
195,750
182,750
3. Cost per equivalent unit of direct materials and direct labor—FIFO
Direct
Direct
Materials
Labor
Costs incurred this period …………………………………….
$ 505,035
$ 396,568
÷ Equivalent units of production (from part 2) ……….
195,750
182,750
Cost per equivalent unit of production ………………….
$2.58 per
EUP
$2.17 per
EUP
Problem 20-7A (Concluded)
4. Assignment of costs to output of department—FIFO
Costs of goods transferred out
Cost of beginning goods in process inventory …..….
Direct materials ………………………………………………….
$74,075.00
Direct labor …………………………………………………….…
28,493.00
$ 102,568.00
Costs to complete beginning goods in process
Direct materials (15,000 EUP x $2.58 per EUP) …….
38,700.00
Direct labor (22,500 EUP x $2.17 per EUP) ……….….
48,825.00
Total costs to complete …………………………………..….
87,525.00
Cost of units started and completed this period
Direct materials (150,000 EUP x $2.58 per EUP) .….
387,000.00
Direct labor (150,000 EUP x $2.17 per EUP) ……..….
325,500.00
Total cost of units started and completed ………..….
712,500.00
Total costs of goods transferred out………………….….
902,593.00
Cost of ending goods in process inventory
Direct materials (30,750 EUP x $2.58 per EUP) …….
79,335.00
Direct labor (10,250 EUP x $2.17 per EUP) ……….….
22,242.50
Total costs of ending goods in process …………..….
101,577.50
Total costs accounted for ………………………………….….
$1,004,170.50
Fundamental Accounting Principles, 21st Edition
1172
Problem 20-8A (50 minutes)
Part 1 Equivalent units with respect to direct materials and direct labor
Direct
Direct
Equivalent units of production (EUP)
Materials
Labor
Units to complete beginning goods in process
Direct materials (60,000 x 0%) ……………………….
0
Direct labor (60,000 x 20%) …………………………...
Units started and completed …………………………..
640,000
12,000
640,000
Units in ending work in process
Direct materials (180,000 x 100%) ………………….
180,000
Direct labor (180,000 x 30%) ………………………….
_______
54,000
Total equivalent units of production ………………..
820,000
706,000
Part 2
Cost per equivalent unit of production
Direct
Materials
Direct
Labor
Costs incurred this period ……………………………..………
$ 2,220,000
$ 3,254,000
÷ Equivalent units of production …………………….…….
820,000 EUP
706,000 EUP
Cost per equivalent unit of production* ………….………
$2.71 per EUP
$4.61 per EUP
Part 3 Assigning product costs to units
Cost assignment and reconciliation
Costs transferred out
Cost of beginning goods in process …………………….
$ 559,000
Cost to complete beginning goods in process
Direct materials (0 EUP x $2.71 per EUP) ……………
$ 0
Direct labor (12,000 EUP x $4.61 per EUP) ………….
55,320
55,320
Costs of units started and completed this period
Direct materials (640,000 EUP x $2.71 per EUP) ….
1,734,400
Direct labor (640,000 EUP x $4.61 per EUP) ………..
2,950,400
Total cost of goods finished this period ……………….
4,684,800
Costs of ending goods in process
Direct materials (180,000 EUP x $2.71 per EUP) ….
487,800
Direct labor (54,000 EUP x $4.61 per EUP) ………….
248,940
736,740
Total costs accounted for** ………………………………….
$6,035,860
*Rounded to two decimal places. **This differs from the sum of the total direct materials cost
and the total direct labor costs ($2,640,000 + $3,393,000 = $6,033,000) due to rounding.
Problem 20-8A (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 labor, the number of equivalent units in ending inventory with
inventory is greater.
Regarding financial statements, this error causes an overstatement of cost
Fundamental Accounting Principles, 21st Edition
1174
Problem 20-9A (80 minutes)
Part 1
DENGO CO.
Process Cost Summary – FIFO Method
For Month Ended October 31
Costs Charged to Production
Costs of beginning goods in process
Direct materials ………………………………………………….……
$ 9,900
Direct labor ………………………………………………………..…….
61,650
Factory overhead ……………………………………………….…….
49,320
$ 120,870
Costs incurred this period
Direct materials ………………………………………………….……
248,400
Direct labor ………………………………………………………..…….
601,650
Factory overhead ……………………………………………….…….
481,320
1,331,370
Total costs to account for …………………………………….…….
$1,452,240
Unit cost information
Units to account for
Units accounted for
Beginning goods in process …………………………..
3,000
Completed & transferred out ….…….
22,200
Units started this period ……….………………….
21,600
Ending goods in process …………….
2,400
Total units to account for ……..……………………
24,600
Total units accounted for …………….
24,600
Equivalent units of production
Direct
Materials
Direct
Labor
Factory
Overhead
Units to complete beginning goods in process
Direct materials (3,000 x 0%) ………………..……..
0 EUP
Direct labor (3,000 x 60%) …………………….…….
1,800 EUP
Factory overhead (3,000 x 60%) …………………..
1,800 EUP
Units started and completed …………………..……..
19,200 EUP
19,200 EUP
19,200 EUP
Units of ending goods in process
Direct materials (2,400 x 100%) …………….……..
2,400 EUP
Direct labor (2,400 x 80%) …………………….…….
1,920 EUP
Factory overhead (2,400 x 80%) …………………..
_________
_________
1,920 EUP
Equivalent units of production ……………….……..
21,600 EUP
22,920 EUP
22,920 EUP
[Continued on next page]
Problem 20-9A (Continued)
Cost per EUP
Direct
Materials
Direct
Labor
Factory
Overhead
Costs incurred this period ………………
$ 248,400
$ 601,650
$ 481,320
÷ EUP …………………………………………….
÷ 21,600
÷ 22,920
÷ 22,920
Cost per EUP …………………………………
$11.50 per
EUP
$26.25 per
EUP
$21.00 per
EUP
Cost assignment and reconciliation
Costs transferred out
Cost of beginning goods in process …………………….
$ 120,870
Cost to complete beginning goods in process
Direct materials (0 EUP x $11.50 per EUP) ………….
$ 0
Direct labor (1,800 EUP x $26.25 per EUP) ………….
47,250
Factory overhead (1,800 EUP x $21.00 per EUP) …
37,800
85,050
Costs of units started and completed this period
Direct materials (19,200 EUP x $11.50 per EUP) ….
220,800
Direct labor (19,200 EUP x $26.25 per EUP) ………..
504,000
Factory overhead (19,200 EUP x $21.00 per EUP) .
403,200
1,128,000
Total cost of goods finished this period ……………….
1,333,920
Costs of ending goods in process
Direct materials (2,400 EUP x $11.50 per EUP) ……
27,600
Direct labor (1,920 EUP x $26.25 per EUP) ………….
50,400
Factory overhead (1,920 EUP x $21.00 per EUP) …
40,320
118,320
Total costs accounted for …………………………………….
$1,452,240
Part 2
Oct. 31
Finished Goods Inventory ………………….……….
1,333,920
Goods in Process Inventory ………….……………….
1,333,920
Transfer of goods to finished goods
inventory.
Fundamental Accounting Principles, 21st Edition
1176
Problem 20-9A (Concluded)
Part 3
If equivalent units of production for the 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 goods in process inventory …………………………………....
$156,000
Direct materials used in production ………………………………………...
120,000
Direct labor used in production ……………………………………………....
350,000
Overhead applied (75% of direct labor cost) ……………………………..
262,500
Total production costs …………………………………………………………....
888,500
Less ending goods in process inventory ………………………………....
(250,000)
Transferred to finished goods inventory (a) ……………………………..
$638,500
Beginning finished goods inventory …………………………..…………..
$160,000
Plus goods transferred from production ………………………………....
638,500
Goods available for sale ……………………………………………………….
798,500
Less ending finished goods inventory ……………………………………..
(198,000)
Cost of goods sold (b) …………………………………………………………....
$600,500
Part 2: Summary journal entries
a.
June 30
Raw Materials Inventory …………………………….………….
200,000
Accounts Payable ………………………………..………….
200,000
Purchased raw materials.
b.
June 30
Goods in Process Inventory ……………………….….
120,000
Raw Materials Inventory ………………………..…
120,000
Used direct materials.
c.
June 30
Factory Overhead ……………………………………..………….
42,000
Raw Materials Inventory ……………………….….
42,000
Used indirect materials.