Exercise 4A-8 (15 minutes)
FIFO Method
1.
Tons of Pulp
Work in process, June 1 ……………………………………
20,000
Started into production during the month ……………..
190,000
Total tons in process ………………………………………..
210,000
Deduct work in process, June 30 …………………………
30,000
Completed and transferred out during the month ……
180,000
2.
Equivalent Units
Materials
Labor and
Overhead
To complete beginning work in process:
Materials: 20,000 tons × (100% − 90%)
2,000
Labor and overhead: 20,000 tons ×
(100% − 80%) ……………………………..
4,000
Units started and completed during the
month* ………………………………………….
160,000
160,000
Ending work in process:
Materials: 30,000 tons × 60% complete .
18,000
Labor and overhead:
30,000 tons × 40% complete …………..
12,000
Equivalent units of production ……………….
180,000
176,000
*
Exercise 4A-9 (45 minutes)
FIFO Method
1. Computation of the total cost per equivalent unit of production:
Cost per equivalent unit of production for material ………….
$25.40
Cost per equivalent unit of production for conversion ………
18.20
Total cost per equivalent unit of production …………………..
$43.60
2. Computation of equivalent units in ending inventory:
Materials
Conversion
Units in ending inventory (a) ……………….
300
300
Percentage completed (b) …………………..
70
%
60
%
Equivalent units of production (a) × (b) …
210
180
3. Computation of equivalent units required to complete the beginning
inventory:
Materials
Conversion
Units in beginning inventory (a) …………..
400
400
Percentage needed to complete
production of beginning inventory (b) …
20
%
60
%
Equivalent units of production (a) × (b) …
80
240
4.
Units transferred to the next department …………
3,100
Units from the beginning inventory …………………
400
Units started and completed during the period ….
2,700
Exercise 4A-9 (continued)
5.
Materials
Conversion
Total
Ending work in process inventory:
Equivalent units of production …………………………..
210
180
Cost per equivalent unit …………………………..
$25.40
$18.20
Cost of ending work in process
inventory ……………………………………………………….
$5,334
$3,276
$8,610
Units transferred out:
Cost from the beginning work in
process inventory …………………………..
$8,120
$2,920
$11,040
Cost to complete the units in beginning
work in process inventory:
Equivalent units of production
required to complete the units in
beginning inventory ………………….……….
80
240
Cost per equivalent unit ……………….………….
$25.40
$18.20
Cost to complete the units in
beginning inventory ………………….……….
$2,032
$4,368
$6,400
Cost of units started and completed
this period:
Units started and completed this
period ……………………………………………………….
2,700
2,700
Cost per equivalent unit ……………….………….
$25.40
$18.20
Cost of units started and completed
this period ……………………………………………………….
$68,580
$49,140
$117,720
Total cost of units transferred out …………………………..
$135,160
Problem 4A-10 (45 minutes)
FIFO method
1.
Equivalent Units of Production
Materials
Conversion
To complete beginning work in process:
Materials: 10,000 units x (100% − 100%) …..
0
Conversion: 10,000 units x (100% − 30%) ….
7,000
Units started and completed during the period
(170,000 units started − 20,000 units in
ending inventory) ……………………………………
150,000
150,000
Ending work in process:
Materials: 20,000 units x 100% complete ……
20,000
Conversion: 20,000 units x 40% complete …..
8,000
Equivalent units of production ………………………
170,000
165,000
2.
Cost per Equivalent Unit
Materials
Conversion
Cost added during the period (a) …………..
$139,400
$244,200
Equivalent units of production (b) ………….
170,000
165,000
Cost per equivalent unit (a) ÷ (b) ………….
$0.82
$1.48
3. See the next page.
4.
Cost Reconciliation
Costs to be accounted for:
Cost of beginning work in process inventory
($8,500 + $4,900) ………………………………………
$ 13,400
Costs added to production during the period
($139,400 + $244,200) ………………………………..
383,600
Total cost to be accounted for …………………………..
$397,000
Costs accounted for as follows:
Cost of ending work in process inventory …………….
$ 28,240
Costs of units transferred out …………………………...
368,760
Total cost accounted for …………………………..……..
$397,000
Problem 4A-10 (continued)
3.
Costs of Ending Work in Process Inventory and Units Transferred Out
Materials
Conversion
Total
Ending work in process inventory:
Equivalent units of production ………………………………………….
20,000
8,000
Cost per equivalent unit ………………………………………………….
$0.82
$1.48
Cost of ending work in process inventory …………………………...
$16,400
$11,840
$28,240
Units transferred out:
Cost in beginning work in process inventory ……………………….
$8,500
$4,900
$13,400
Cost to complete the units in beginning work in process inventory:
Equivalent units of production required to complete the
beginning inventory ………………………………………………..
0
7,000
Cost per equivalent unit ……………………………………………..
$0.82
$1.48
Cost to complete the units in beginning inventory …………….
$0
$10,360
$10,360
Cost of units started and completed this period:
Units started and completed this period …………………………
150,000
150,000
Cost per equivalent unit ……………………………………………..
$0.82
$1.48
Cost of units started and completed this period ……………….
$123,000
$222,000
$345,000
Cost of units transferred out ……………………………………………
$368,760
Problem 4A-11 (45 minutes)
FIFO method
1.
Equivalent Units of Production
Materials
Conversion
To complete beginning work in process:
Materials: 20,000 units x (100% − 100%) …..
0
Conversion: 20,000 units x (100% − 75%) ….
5,000
Units started and completed during the period
(180,000 units started − 40,000 units in
ending inventory) ……………………………………
140,000
140,000
Ending work in process:
Materials: 40,000 units x 100% complete ……
40,000
Conversion: 40,000 units x 25% complete …..
10,000
Equivalent units of production ………………………
180,000
155,000
2.
Cost per Equivalent Unit
Materials
Conversion
Cost added during the period (a) …………..
$334,800
$238,700
Equivalent units of production (b) ………….
180,000
155,000
Cost per equivalent unit (a) ÷ (b) ………….
$1.86
$1.54
3. See the next page.
4.
Cost Reconciliation
Costs to be accounted for:
Cost of beginning work in process inventory
($25,200 + $24,800) ……………………………………
$ 50,000
Costs added to production during the period
($334,800 + $238,700) ………………………………..
573,500
Total cost to be accounted for …………………………..
$623,500
Costs accounted for as follows:
Cost of ending work in process inventory …………….
$ 89,800
Costs of units transferred out …………………………...
533,700
Total cost accounted for …………………………..……..
$623,500
Problem 4A-11 (continued)
3.
Costs of Ending Work in Process Inventory and Units Transferred Out
Materials
Conversion
Total
Ending work in process inventory:
Equivalent units of production ………………………………………….
40,000
10,000
Cost per equivalent unit ………………………………………………….
$1.86
$1.54
Cost of ending work in process inventory …………………………...
$74,400
$15,400
$89,800
Units transferred out:
Cost in beginning work in process inventory ……………………….
$25,200
$24,800
$50,000
Cost to complete the units in beginning work in process inventory:
Equivalent units of production required to complete the
beginning inventory ………………………………………………..
0
5,000
Cost per equivalent unit ……………………………………………..
$1.86
$1.54
Cost to complete the units in beginning inventory …………….
$0
$7,700
$7,700
Cost of units started and completed this period:
Units started and completed this period …………………………
140,000
140,000
Cost per equivalent unit ……………………………………………..
$1.86
$1.54
Cost of units started and completed this period ……………….
$260,400
$215,600
$476,000
Cost of units transferred out ……………………………………………
$533,700
Case 4A-12 (60 minutes)
1.
Transferred In
Materials
Conversion
To complete beginning work in process:
Transferred in: 450 units × (100% − 100%) ………………
0
Materials: 450 units × (100% − 100%) …………………….
0
Conversion: 450 units × (100% − 60%)……………………
180
Units started and completed during the period (1,950 units
started − 600 units in ending inventory) …………………….
1,350
1,350
1,350
Ending work in process:
Transferred in: 600 units x 100% complete
600
Materials: 600 units x 0% complete …………………………
0
Conversion: 600 units x 35% complete ……………………..
210
Equivalent units of production …………………………………….
1,950
1,350
1,740
Transferred In
Materials
Conversion
Cost added during the period (a) …………………………………
$17,940
$6,210
$13,920
Equivalent units of production (b) ………………………………..
1,950
1,350
1,740
Cost per equivalent unit (a) ÷ (b) ………………………………..
$9.20
$4.60
$8.00
Case 4A-12 (continued)
Transferred In
Materials
Conversion
Total
Ending work in process inventory:
Equivalent units of production ……………………..
600
0
210
Cost per equivalent unit ……………………………..
$9.20
$4.60
$8.00
Cost of ending work in process inventory ……….
$5,520
$0
$1,680
$7,200
Units transferred out:
Cost in beginning work in process inventory …..
$4,068
$1,980
$2,160
$8,208
Cost to complete units in beginning work in
process inventory:
Equivalent units of production required to
complete the beginning inventory (see
above) …………………………..………………..
0
0
180
Cost per equivalent unit …………………………
$9.20
$4.60
$8.00
Cost to complete units in beginning
inventory ………………………………………….
$0
$0
$1,440
$1,440
Cost of units started and completed this period:
Units started and completed this period …….
1,350
1,350
1,350
Cost per equivalent unit …………………………
$9.20
$4.60
$8.00
Cost of units started and completed this
period ……………………………………………..
$12,420
$6,210
$10,800
$29,430
Cost of units transferred out ……………………….
$39,078
2. The unit cost in the report prepared by the new assistant controller is high because none of the cost
incurred during the month was assigned to the units in ending work in process inventory. Because all
Appendix 4B
Service Department Allocations
Exercise 4B-1 (15 minutes)
Service Departments
Operating Departments
Admini-
stration
Facility
Services
Undergraduate
Programs
Graduate
Programs
Total
Departmental costs
before allocations ………
$2,400,000
$1,600,000
$26,800,000
$5,700,000
$36,500,000
Allocations:
Administration costs
(20/25, 5/25) ………..
(2,400,000)
1,920,000
480,000
Facility Services costs
(70/100, 30/100)* ….
(1,600,000)
1,120,000
480,000
Total costs after
allocation …………………
$ 0
$ 0
$29,840,000
$6,660,000
$36,500,000
*Based on the space occupied by the two operating departments, which is 100,000 square feet.