Title: Problem 20-9A
QA_Ori:
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
Costs incurred this period
Unit cost information
Units to account for Units accounted for
Equivalent units of production
Direct
Materials
Direct
Labor
Factory
Overhead
Units to complete beginning goods in process
Units started and completed……………………………..
19,200 EUP 19,200 EUP 19,200 EUP
Units of ending goods in process
[Continued on next page]
Cost per EUP
Direct
Materials
Direct
Labor
Factory
Overhead
EUP
EUP
EUP
Cost assignment and reconciliation
Costs transferred out
Cost of beginning goods in process…………………………. $ 120,870
Cost to complete beginning goods in process
Costs of units started and completed this period
Direct materials (19,200 EUP x $11.50 per EUP)…….. 220,800
Costs of ending goods in process
Part 2
Transfer of goods to finished goods
inventory.
Part 3
If equivalent units of production for the production department’s ending inventory
should be the case. However, since October ending work in progress inventory
is understated, beginning work in progress inventory for November is also
QA_Edit:
Title: Problem 20-1B
QA_Ori:
Part 1: Cost of goods transferred and cost of goods sold
Beginning goods in process inventory…………………………………………. $156,000
Beginning finished goods inventory ……………………………………………. $160,000
Part 2: Summary journal entries
a.
b.
c.
June 30 Factory Overhead ……………………………………………………42,000
d.
e.
June 30 Goods in Process Inventory………………………………………350,000
f.
g.
June 30 Factory Overhead ……………………………………………………170,500
h.
June 30 Goods in Process Inventory………………………………………262,500
Factory Overhead………………………………………………. 262,500
Applied overhead at 75% of direct labor cost.
i.
j.
Part 2: Summary journal entries
Title: Problem 20-2B
QA_Ori:
Part 1
(a) and (b) Equivalent units with respect to direct materials and direct labor
Direct Direct
Equivalent units of production Materials Labor
Units completed & transferred out………………………. 80,000 80,000
Part 2
Cost per equivalent unit of production
Direct
Materials
Direct
Labor
Costs of beginning goods in process………………… $ 58,000 $ 86,400
Part 3: Assigning product costs to units
Costs transferred out
Cost of ending goods in process
*This equals the sum of the total direct materials cost and the
total direct labor costs ($770,000 + $2,066,400 = $2,836,400).
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
labor, the number of equivalent units in ending inventory with respect to labor is
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 goods in process inventory and retained
earnings are understated; therefore total assets and equity are also understated.