Financial & Managerial Accounting, 5th Edition
924
Problem 16-1B (Continued)
d.
June 30
Factory Payroll ………………………………………….………….
400,000
Cash ……………………………………………………….
400,000
Incurred payroll cost.
e.
June 30
Goods in Process Inventory ……………………….….
350,000
Factory Payroll …………………………………….………….
350,000
Used direct labor.
f.
June 30
Factory Overhead ……………………………………..………….
50,000
Factory Payroll …………………………………….………….
50,000
Used indirect labor.
g.
June 30
Factory Overhead ……………………………………..………….
170,500
Other Accounts ……………………………………………….
170,500
Incurred other overhead costs.
h.
June 30
Goods in Process Inventory ……………………….….
262,500
Factory Overhead …………………………..…….………….
262,500
Applied overhead at 75% of direct labor cost.
i.
June 30
Finished Goods Inventory …………………………..
638,500
Goods in Process Inventory ………………….……….
638,500
Transferred completed products from
production to finished goods inventory.
j.
June 30
Accounts Receivable …………………………………………….
1,000,000
Sales ……………………………………………………….
1,000,00
0
Sold finished goods.
June 30
Cost of Goods Sold …………………………………..………….
600,500
Finished Goods Inventory …………………………..
600,500
To record cost of goods sold for June.
Problem 16-2B (50 minutes)
Part 1
(a) and (b) Equivalent units with respect to direct materials and direct labor
Direct
Direct
Materials
Labor
80,000
80,000
8,000
______
2,000
88,000
82,000
Part 2
Cost per equivalent unit of production
Direct
Materials
Direct
Labor
Costs of beginning goods in process …………...
$ 58,000
$ 86,400
Costs incurred this period …………………………..
712,000
1,980,000
Total costs …………………………………………………...
$770,000
$2,066,400
÷ Equivalent units of production …………………...
88,000 EUP
82,000 EUP
Cost per equivalent unit of production …………..
$8.75 per EUP
$25.2 per EUP
Part 3: Assigning product costs to units
Costs transferred out
Direct materials (80,000 EUP x $8.75 per EUP) ………
$ 700,000
Direct labor (80,000 EUP x $25.20 per EUP) ……..……
2,016,000
Total costs transferred out …………………………..………
$2,716,000
Cost of ending goods in process
Direct materials (8,000 EUP x $8.75 per EUP) …..……
70,000
Direct labor (2,000 EUP x $25.20 per EUP) ……….……
50,400
Total costs of ending goods in process …………..……
120,400
Total costs accounted for* ………………………………..……
$2,836,400
*This equals the sum of the total direct materials cost and the
total direct labor costs ($770,000 + $2,066,400 = $2,836,400).
Financial & Managerial Accounting, 5th Edition
926
Problem 16-2B (Concluded)
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
Problem 16-3B (60 minutes)
Part 1
a.
May 31
Raw Materials Inventory ……………………………..………….
221,120
Accounts Payable …………………………………………….
221,120
Raw materials purchased.
b.
May 31
Goods in Process Inventory ……………………….….
197,120
Raw Materials Inventory ………………………..…
197,120
Direct materials used in production.
c.
May 31
Factory Overhead ………………………………………………….
40,560
Raw Materials Inventory ………………………..…
40,560
Indirect materials used.
d.
May 31
Factory Payroll …………………………………………..………….
160,000
Cash …………………………………………………….…
160,000
Factory payroll costs.
e.
May 31
Goods in Process Inventory ……………………….….
123,680
Factory Payroll ……………………………………..………….
123,680
Direct labor used in production.
f.
May 31
Factory Overhead ………………………………………………….
36,320
Factory Payroll ……………………………………..………….
36,320
Indirect labor used.
g.
May 31
Factory Overhead ………………………………………………….
34,432
Other Accounts …………………………………….………….
34,432
Other overhead costs.
h.
May 31
Goods in Process Inventory ……………………….….
111,312
Factory Overhead …………………………..…….………….
111,312
Application of overhead at 90% of
direct labor cost.
Problem 16-3B (Continued)
i.
May 31
Finished Goods Inventory …………………………..
389,740
Goods in Process Inventory ………………….……….
389,740
Transfer goods to finished goods.
j.
May 31
Cash ………………………………………………………….………….
1,200,000
Sales …………………………………………………….…
1,200,000
Sales of finished goods. (10,000 x $120)
May 31
Cost of Goods Sold …………………………..……….………….
474,540
Finished Goods …………………………………….………….
474,540
Cost of goods sold.
Part 2
OSLO COMPANY
Process Cost Summary – Weighted Average Method
For Month Ended May 31
Costs Charged to Production
Costs of beginning goods in process
Direct materials ………………………………………………………..
$ 2,880
Direct labor ………………………………………………………………
2,820
Factory overhead ……………………………………………………..
2,538
$ 8,238
Costs incurred this period
Direct materials ………………………………………………………..
197,120
Direct labor ………………………………………………………………
123,680
Factory overhead ……………………………………………………..
111,312
432,112
Total costs to account for …………………………………………..
$440,350
Unit cost information
Units to account for
Units accounted for
Beginning goods in process ….…….
4,000
Completed & transferred out …………………………..
13,00
0
Units started this period ………..…….
12,000
Ending goods in process …….…………………….
3,000
Total units to account for …………….
16,000
Total units accounted for …….…………………….
16,00
0
[Continued on next page]
Problem 16-3B (Concluded)
Equivalent units of production
Direct
Materials
Direct
Labor
Factory
Overhead
Units completed & transferred out ………..
13,000 EUP
13,000 EUP
13,000 EUP
Units of ending goods in process
Direct materials (3,000 x 100%) ……….…..
3,000 EUP
Direct labor (3,000 x 25%) ……………….…..
750 EUP
Factory overhead (3,000 x 25%) …………..
__________
__________
750 EUP
Equivalent units of production ……………..
16,000 EUP
13,750 EUP
13,750 EUP
Cost per EUP
Direct
Materials
Direct
Labor
Factory
Overhead
Cost of beginning goods in process ……..
$ 2,880
$ 2,820
$ 2,538
Costs incurred this period ………………..…..
197,120
123,680
111,312
Total costs …………………………………………..
$200,000
$126,500
$113,850
÷ EUP …………………………………………………..
16,000 EUP
13,750 EUP
13,750 EUP
Cost per EUP …………………………………..…..
$12.50 per
EUP
$9.20 per
EUP
$8.28 per
EUP
Cost assignment and reconciliation
Costs transferred out
Direct materials (13,000 EUP x $12.50 per EUP) ….
$162,500
Direct labor (13,000 EUP x $9.20 per EUP) ………….
119,600
Factory overhead (13,000 x $8.28 per EUP) …………
107,640
$389,740
Costs of ending goods in process
Direct materials (3,000 EUP x $12.50 per EUP) ……
37,500
Direct labor (750 EUP x $9.20 per EUP) ………………
6,900
Factory overhead (750 EUP x $8.28 per EUP) ……..
6,210
50,610
Total costs accounted for …………………………………….
$440,350
Part 3
If equivalent units of production for the production department’s ending
Financial & Managerial Accounting, 5th Edition
930
Problem 16-4B (75 minutes)
Part 1
BRAUN COMPANY
Process Cost Summary – Weighted Average Method
For Month Ended November 30
Costs Charged to Production
Costs of beginning goods in process
Direct materials………………………………………………………..
$ 6,800
Direct labor ………………………………………………………………
5,800
Factory overhead……………………………………………………..
8,700
Costs incurred this period
$ 21,300
Direct materials………………………………………………………..
116,400
Direct labor ………………………………………………………………
426,800
Factory overhead……………………………………………………..
640,200
1,183,400
Total costs to account for ………………………………………….
$1,204,700
Unit cost information
Units to account for
Units accounted for
Beginning goods in process ……….
7,500
Completed & transferred out ..…………………………
100,000
Units started this period ……….…….
104,500
Ending goods in process …………………………..
12,000
Total units to account for ……..…….
112,000
Total units accounted for …………………………..
112,000
Equivalent units of production
Direct
Materials
Direct
Labor
Factory
Overhead
Units completed & transferred out ………..…..
100,000 EUP
100,000 EUP
100,000 EUP
Units of ending goods in process
Direct materials (12,000 x 100%) ………….…..
12,000 EUP
Direct labor (12,000 x 25%) ………………….…..
3,000 EUP
Factory overhead (12,000 x 25%) ……………..
___________
___________
3,000 EUP
Equivalent units of production…………………..
112,000 EUP
103,000 EUP
103,000 EUP
Cost per EUP
Direct
Materials
Direct
Labor
Factory
Overhead
Cost of beginning goods in process ……..…..
$ 6,800
$ 5,800
$ 8,700
Costs incurred this period …………………….…..
116,400
426,800
640,200
Total costs …………………………………………..…..
$123,200
$432,600
$648,900
÷ EUP …………………………………………………..…..
112,000 EUP
103,000 EUP
103,000 EUP
Cost per EUP …………………………..…………..…..
$1.10 per
EUP
$4.20 per
EUP
$6.30 per
EUP
[Continued on next page]
Problem 16-4B (Concluded)
Cost assignment and reconciliation
Costs transferred out
Direct materials (100,000 EUP x $1.10 per EUP) ….
$110,000
Direct labor (100,000 EUP x $4.20 per EUP) ………..
420,000
Factory overhead (100,000 x $6.30 per EUP) ……….
630,000
$1,160,000
Costs of ending goods in process
Direct materials (12,000 EUP x $1.10 per EUP) ……
13,200
Direct labor (3,000 EUP x $4.20 per EUP) ……………
12,600
Factory overhead (3,000 EUP x $6.30 per EUP) …..
18,900
44,700
Total costs accounted for …………………………………….
$1,204,700
Part 2
Nov. 30
Finished Goods Inventory …………………………..
1,160,000
Goods in Process Inventory …………………………..
1,160,000
Transfer of goods to finished goods
inventory.
Financial & Managerial Accounting, 5th Edition
932
Problem 16-5B (80 minutes)
Part 1
SWITCH CO.
Process Cost Summary – Weighted Average Method
For Month Ended January 31
Costs Charged to Production
Costs of beginning goods in process
Direct materials…………………………………………………….…
$ 7,500
Direct labor …………………………………………………………..….
14,240
Factory overhead………………………………………………….….
35,600
Costs incurred this period
$ 57,340
Direct materials…………………………………………………….…
112,500
Direct labor …………………………………………………………..….
176,000
Factory overhead………………………………………………….….
440,000
728,500
Total costs to account for ………………………………………….
$785,840
Unit cost information
Units to account for
Units accounted for
Beginning goods in process ….……
10,000
Completed & transferred out .…
220,000
Units started this period ………..……
250,000
Ending goods in process ……
40,000
Total units to account for ……………
260,000
Total units accounted for ……
260,000
Equivalent units of production
Direct
Materials
Direct
Labor
Factory
Overhead
Units completed & transferred out …………..………..
220,000 EUP
220,000 EUP
220,000 EUP
Units of ending goods in process
Direct materials (40,000 x 50%) ………………………..
20,000 EUP
Direct labor (40,000 x 30%) …………………….…….
12,000 EUP
Factory overhead (40,000 x 30%) ……………………..
___________
___________
12,000 EUP
Equivalent units of production
240,000 EUP
232,000 EUP
232,000 EUP
Cost per EUP
Direct
Materials
Direct
Labor
Factory
Overhead
Cost of beginning goods in process ………..………..
$ 7,500
$ 14,240
$ 35,600
Costs incurred this period ……………………….….
112,500
176,000
440,000
Total costs ……………………………………………..………..
$120,000
$190,240
$475,600
÷ EUP ……………………………………………………....
240,000 EUP
232,000 EUP
232,000 EUP
Cost per EUP …………………………..……………..………..
$0.50 per
EUP
$0.82 per
EUP
$2.05 per
EUP
[Continued on next page]
Problem 16-5B (Concluded)
Cost assignment and reconciliation
Costs transferred out
Direct materials (220,000 EUP x $0.50 per EUP) ……….…….
$110,000
Direct labor (220,000 EUP x $0.82 per EUP) ……………..…….
180,400
Factory overhead (220,000 x $2.05 per EUP) …………….…….
451,000
$741,400
Costs of ending goods in process
Direct materials (20,000 EUP x $0.50 per EUP) ……………….
10,000
Direct labor (12,000 EUP x $0.82 per EUP) ……………….…….
9,840
Factory overhead (12,000 EUP x $2.05 per EUP) …………….
24,600
44,440
Total costs accounted for ………………………………………….…….
$785,840
Part 2
Jan. 31
Finished Goods Inventory …………………………..
741,400
Goods in Process Inventory ………………….……….
741,400
Transfer of goods to finished inventory.
Part 3
percentage of completion for materials, labor, and overhead.
3b. Management might want an overhead allocation rate that assigns the
least amount of overhead to their respective production process, and
Financial & Managerial Accounting, 5th Edition
934
Problem 16-6B (80 minutes)
Part 1
SWITCH COMPANY
Process Cost Summary – FIFO Method
For Month Ended January 31
Costs Charged to Production
Costs of beginning goods in process
Direct materials………………………………………………..……..
$ 7,500
Direct labor ……………………………………………………….
14,240
Factory overhead……………………………………………..………
35,600
$ 57,340
Costs incurred this period
Direct materials………………………………………………..……..
112,500
Direct labor ……………………………………………………….
176,000
Factory overhead……………………………………………..………
440,000
728,500
Total costs to account for ………………………………….………
$785,840
Unit cost information
Units to account for
Units accounted for
Beginning goods in process ………….
10,000
Completed & transferred out ….…
220,000
Units started this period ……..………
250,000
Ending goods in process ……..
40,000
Total units to account for ……………
260,000
Total units accounted for ……..
260,000
Equivalent units of production
Direct
Materials
Direct
Labor
Factory
Overhead
Units to complete beginning goods in process
Direct materials (10,000 x 25%) ………….
2,500 EUP
Direct labor (10,000 x 40%) ………………..
4,000 EUP
Factory overhead (10,000 x 40%) ……….
4,000 EUP
Units started and completed ……………….
210,000 EUP
210,000 EUP
210,000 EUP
Units of ending goods in process
Direct materials (40,000 x 50%) ………….
20,000 EUP
Direct labor (40,000 x 30%) ………………..
12,000 EUP
Factory overhead (40,000 x 30%) ……….
__________
___________
12,000 EUP
Equivalent units of production…………….
232,500 EUP
226,000 EUP
226,000 EUP
[Continued on next page]
Problem 16-6B (Concluded)
Cost per EUP
Direct
Materials
Direct Labor
Factory
Overhead
Costs incurred this period ……………...
$ 112,500
$ 176,000
$ 440,000
÷ EUP …………………………………………….
÷ 232,500
÷ 226,000
÷ 226,000
Cost per EUP (rounded) …………………...
$0.484 per
EUP
$0.779 per
EUP
$1.947 per
EUP
Cost assignment and reconciliation
Costs transferred out
Cost of beginning goods in process ……………………….….
$ 57,340
Cost to complete beginning goods in process
Direct materials (2,500 EUP x $0.484 per EUP) ……………….
$ 1,210
Direct labor (4,000 EUP x $0.779 per EUP) …………….……….
3,116
Factory overhead (4,000 EUP x $1.947 per EUP) …………….
7,788
12,114
Costs of units started and completed this period
Direct materials (210,000 EUP x $0.484 per EUP) …..……….
101,640
Direct labor (210,000 EUP x $0.779 per EUP) ………………….
163,590
Factory overhead (210,000 EUP x $1.947 per EUP) ..……….
408,870
674,100
Total cost of goods finished this period ………………….……….
743,554
Costs of ending goods in process
Direct materials (20,000 EUP x $0.484 per EUP) …….……….
9,680
Direct labor (12,000 EUP x $0.779 per EUP) …………..……….
9,348
Factory overhead (12,000 EUP x $1.947 per EUP) ….……….
23,364
42,392
Total costs accounted for* ……………………………………..……….
$785,946
* $106 difference from total costs to account for due to rounding
Part 2
Jan. 31
Finished Goods Inventory …………………………..
743,554
Goods in Process Inventory ………………….……….
743,554
Transfer of goods to finished inventory.
Financial & Managerial Accounting, 5th Edition
936
Problem 16-7B (45 minutes)
1.
Units in beginning inventory …………………………………..
62,500
Units started and completed …………………………………..
175,000
Total units transferred to finished goods ………………..
237,500
2. Equivalent units of production—FIFO
Direct
Direct
Equivalent units of production
Materials
Labor
Units to complete beginning goods in process
Direct materials (62,500 x 60%) …………………….…….
37,500
Direct labor (62,500 x 20%) …………………………..
12,500
Units started and completed …………………………..
175,000
175,000
Units in ending work in process
Direct materials (76,250 x 80%) …………………….…….
61,000
Direct labor (76,250 x 20%) …………………………..
_______
15,250
Equivalent units of production …………………………..
273,500
202,750
3. Cost per equivalent unit of direct materials and direct labor—FIFO
Direct
Direct
Materials
Labor
Costs incurred this period ……………………………..……..
683,750
446,050
÷ Equivalent units of production (from part 2) ..……..
273,500
202,750
Cost per equivalent unit of production …………..……..
$2.50 per
EUP
$2.20 per
EUP
Problem 16–7B (Concluded)
4. Assignment of costs to output of department—FIFO
Costs of goods transferred out
Cost of beginning goods in process inventory …..….
Direct materials ………………………………………………….
$ 99,075
Direct labor …………………………………………………….…
53,493
$ 152,568
Costs to complete beginning goods in process
Direct materials (37,500 EUP x $2.50 per EUP) …….
93,750
Direct labor (12,500 EUP x $2.20 per EUP) ……….….
27,500
Total costs to complete …………………………………..….
121,250
Cost of units started and completed this period
Direct materials (175,000 EUP x $2.50 per EUP) .….
437,500
Direct labor (175,000 EUP x $2.20 per EUP) ……..….
385,000
Total cost of units started and completed ………..….
822,500
Total costs of goods transferred out………………….….
1,096,318
Cost of ending goods in process inventory
Direct materials (61,000 EUP x $2.50 per EUP) …….
152,500
Direct labor (15,250 EUP x $2.20 per EUP) ……….….
33,550
Total costs of ending goods in process …………..….
186,050
Total costs accounted for ………………………………….….
$1,282,368
Financial & Managerial Accounting, 5th Edition
938
Problem 16–8B (50 minutes)
Part 1 Equivalent units with respect to direct materials and direct labor
Direct
Direct
Materials
Labor
0
78,000
1,300
78,000
8,000
_____
2,000
86,000
80,300
Part 2
Cost per equivalent unit of production
Direct
Materials
Direct
Labor
Costs incurred this period ……………………………..………
$ 712,000
$ 1,980,000
÷ Equivalent units of production …………………….…….
86,000 EUP
80,300 EUP
Cost per equivalent unit of production* ………….………
$8.28 per EUP
$24.66 per EUP
Part 3 Assigning product costs to units
Cost assignment and reconciliation
Costs transferred out
Cost of beginning goods in process …………………….
$ 144,400
Cost to complete beginning goods in process
Direct materials (0 EUP x $8.28 per EUP) ………..….
$ 0
Direct labor (300 EUP x $24.66 per EUP) …………….
7,398
7,398
Costs of units started & completed this period
Direct materials (78,000 EUP x $8.28 per EUP) ..….
645,840
Direct labor (78,000 EUP x $24.66 per EUP) …….….
1,923,480
Total cost of goods finished this period ……………….
2,569,320
Costs of ending goods in process
Direct materials (8,000 EUP x $8.28 per EUP) ….….
66,240
Direct labor (2,000 EUP x $24.66 per EUP) ………….
49,320
115,560
Total costs accounted for** ………………………………….
$2,836,678
*Rounded to two decimal places. **This differs from the sum of the total direct materials cost
and the total direct labor costs ($770,000 + $2,066,400 = $2,836,400) due to rounding.