Student Name:
Class:
Part 1 (a) and (b)
Direct Direct
Materials Labor
700,000 700,000
180,000
54,000
880,000 754,000
Correct! Correct!
Direct Direct
Materials Labor
420,000$ 139,000$
2,220,000 3,254,000
2,640,000$ 3,393,000$
Correct! Correct!
880,000 754,000
3.00$ 4.50$
Correct! Correct!
Direct Direct
Materials Labor
2,100,000$
3,150,000
5,250,000$ «- Correct!
540,000
243,000
783,000 «- Correct!
6,033,000$ «- Correct!
Part 4
To:
From:
Date:
Subject: Percentage of Completion Error Analysis
Problem 16-02A
McGraw-Hill/Irwin
Instructor
Total costs of ending goods in process
Total costs accounted for
Direct materials
Direct labor
Total costs transferred out
Costs of ending goods in process
Direct materials
Direct labor
Divided by Equivalent units of production
Cost per equivalent unit of production
Costs transferred out
Part 3
Assigning product costs to units
Costs of beginning goods in process
Costs incurred this period
Total costs
Part 2
Cost per equivalent unit of production
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 respect to
labor is understated, and the total equivalent units produced for the period is
also understated. If the correct percentage of completion with respect to labor
is used, the direct labor cost per equivalent unit will be smaller. However, the
cost of direct labor in ending goods in process is larger because the
percentage of equivalent units remaining in ending inventory is greater.
Regarding financial statements, this error causes an overstatement of cost of
goods sold and an understatement of net income on the income statement for
November. On the November 30 balance sheet, the goods in process
inventory and retained earnings are understated; therefore total assets and
equity are also understated.
VICTORY COMPANY
Memorandum
Equivalent units of production (EUP)
Units of ending goods in process
Units completed and transferred out
Direct materials
Direct labor
Total equivalent units of production
700,000
180,000
$420,000
$139,000
$3,254,000
$2,220,000
$4.50
$783,000
Given Data P16-02A:
Beginning inventory:
end of period
Number of units 30% complete as to labor at
Number of units transferred to finished goods
For the month of November:
Direct labor
Direct materials
(3b)
(2) Direct labor cost per equivalent unit
Check figure:
Direct materials cost for period
Direct labor cost for period
Student Name:
Class:
59,450$
172,800
103,680 335,930$
102,050
408,200
244,920 755,170
1,091,100$
Correct!
30,000
140,000
170,000 «- Correct!
150,000
20,000
170,000 «- Correct!
Total costs
Divided by EUP
Cost per EUP
Equivalent units of production
Cost of beginning goods in process
Costs incurred this period
Cost per EUP
Equivalent units of production
Units completed and transferred out
Units of ending goods in process
Direct materials
Direct labor
Factory overhead
McGraw-Hill/Irwin
Instructor
For Month Ended October 31
Process Cost Summary – Weighted Average Method
FAST CO.
Problem 16-04A
Student Name:
Class:
McGraw-Hill/Irwin
Instructor
Problem 16-04A
142,500$
525,000
315,000 982,500$
19,000
56,000
33,600 108,600
1,091,100$
Correct!
Account Debit Credit
982,500
982,500 «- Correct!
Factory overhead
Total costs accounted for
Goods in Process Inventory
Oct. 31 Finished Goods Inventory
Direct materials
Direct labor
Factory overhead
Costs of ending goods in process
Direct materials
Direct labor
Costs transferred out
Cost assignment and reconciliation
General Journal
FAST CO.
Goods in Process Inventory Acct. No. 133
Date Explanation Debit Credit Balance
Oct 1 Balance 335,930
31 Direct materials 102,050 437,980
31 Direct labor 408,200 846,180
31
Applied overhead
244,920 1,091,100
59,450$
172,800$
103,680$
140,000
150,000
20,000
80.00%
982,500$
Given Data P16-04A:
(1) Costs transferred out to finished goods
Units started
Units transferred to finished goods
Units in goods in process inventory
Percent complete
FAST CO.
Check figure:
End of October:
During October:
Direct materials
Beginning goods in process inventory:
Direct labor
Factory overhead