Exercise 16–11 (continued)
2.
Cost assignment and reconciliation – FIFO
Cost of 60,000 units from beginning inventory
$ 167,066
Materials to complete (24,000 EUP x $2.58 per EUP)
61,920
Conversion to complete (36,000 EUP x $2.16 per EUP)
77,760
139,680
Total cost of 60,000 units from beginning inventory
$ 306,746
Costs of units started and completed
Direct materials (240,000 EUP x $2.58 per EUP)
$619,200
Conversion costs (240,000 EUP x $2.16 per EUP)
518,400
Total cost of 240,000 units started and completed
1,137,600
Total cost of 300,000 units transferred out
$1,444,346
Costs of units in ending inventory
Direct materials (65,600 EUP x $2.58 per EUP)
$169,248
Conversion costs (24,600 EUP x $2.16 per EUP)
53,136
Total cost of 82,000 units in ending inventory
222,384
$1,666,730
$167,066
Direct materials – current period
850,368
Conversion costs – current period
649,296
Total costs to be assigned
$1,666,730
Dept. 1 – WIP
Beg. Inv
167,066
DM
850,368
Conv
649,296
1,666,730
1,444,346
End. Inv.
222,384
Exercise 16-12 (30 minutes)
ASHAD COMPANY
Process Cost Summary – Weighted Average Method
For Month Ended July 31
Costs Charged to Production
Costs of beginning work in process ($18,550 + $2,280) ……………………...
$ 20,830
Costs incurred this period ($357,500 + $188,670) ……………………………....
546,170
Total costs to account for ………………………………………………………………...
$567,000
Unit Information
Units to Account For
Units Accounted For
Beginning work in process …….…………
2,000
Completed & transferred out …………………………..
32,000
Units started this period ……………………
32,500
Ending work in process …………….…………….
2,500
Total units to account for ……….…………
34,500
Total units accounted for ………….……………….
34,500
Equivalent Units of Production (EUP)
Direct
Materials
Conversion
Units completed and transferred out ……..
32,000 EUP
32,000 EUP
Units of ending work in process …………….
2,500 EUP
1,500 EUP
Equivalent units of production ……………...
34,500 EUP
33,500 EUP
Cost per EUP
Direct
Materials
Conversion
Costs of beginning work in process ……...
$ 18,550
$ 2,280
Costs incurred this period ……………………..
357,500
188,670
Total costs …………………………………………...
$376,050
$190,950
÷ Equivalent units of production …………...
34,500
33,500
Cost per equivalent unit of production …....
$10.90 per
EUP
$5.70 per
EUP
Cost Assignment and Reconciliation
Costs transferred out
Direct materials (32,000 x $10.90) …………………….…….
$348,800
Conversion (32,000 x $5.70) …………………………….………….
182,400
Total transferred out
$531,200
Cost of ending work in process
Direct materials (2,500 x $10.90) …………………………..
27,250
Conversion (1,500 x $5.70) ………………………………………….
8,550
Total ending work in process …………………………..
35,800
Total costs accounted for …………………………………….………….
$567,000
Exercise 16–13 (40 minutes)
ASHAD COMPANY
Process Cost Summary – FIFO Method
For Month Ended July 31
Costs Charged to Production
Costs of beginning work in process
Direct materials ………………………………………………..……..
$ 18,550
Conversion ……………………………………………………….
2,280
$ 20,830
Costs incurred this period
Direct materials ………………………………………………..……..
357,500
Conversion ……………………………………………………….
188,670
546,170
Total costs to account for …………………………………..………
$567,000
Unit cost information
Units to account for
Units accounted for
Beginning work in process ….……………………….
2,000
Completed & transferred out ………..
32,000
Units started this period…………………………..
32,500
Ending work in process ……………...
2,500
Total units to account for …….…………………….
34,500
Total units accounted for …………....
34,500
Equivalent units of production
Direct
Materials
Conversion
Units to complete beginning WIP
Direct materials (2,000 x 0%) ……………………….
0 EUP
Conversion (2,000 x 80%) …………………..………
1,600 EUP
Units started and completed ………………..……….
30,000 EUP
30,000 EUP
Units of ending work in process
Direct materials ………………………………….……….
2,500 EUP
Conversion ………………………………………..……….
_________
1,500 EUP
Equivalent units of production ……………..……….
32,500 EUP
33,100 EUP
[Continued on next page]
Exercise 16–13 (Concluded)
Cost per EUP
Direct
Materials
Conversion
Costs incurred this period ………………
$ 357,500
$ 188,670
EUP (from prior page) …………………….
÷ 32,500
÷ 33,100
Cost per EUP …………………………………
$11.00 per
EUP
$5.70 per
EUP
Cost assignment and reconciliation
Costs transferred out
Cost of beginning work in process ………………………
$20,830
Cost to complete beginning work in process
Direct materials (0 EUP x $11.00 per EUP)…………..
$ 0
Conversion (1,600 EUP x $5.70 per EUP) …………….
9,120
9,120
Costs of units started and completed this period
Direct materials (30,000 EUP x $11.00 per EUP) ….
330,000
Conversion (30,000 EUP x $5.70 per EUP) …………..
171,000
501,000
Total cost of work finished this period ………………..
530,950
Costs of ending work in process
Direct materials (2,500 EUP x $11.00 per EUP) ……
27,500
Conversion (1,500 EUP x $5.70 per EUP) …………….
8,550
36,050
Total costs accounted for …………………………………….
$567,000
Exercise 16-14 (30 minutes)
Part 1: Cost of goods transferred and cost of goods sold
Weaving
Sewing
Finished
Department
Department
Goods
Beginning inventory …………………………….
$ 300,000
$ 570,000
$1,266,000
Direct materials …………………………………...
240,000
75,000
Direct labor ………………………………………….
1,200,000
360,000
Overhead applied (80% & 150% of labor) …...
960,000
540,000
Total costs—Weaving………………………...
2,700,000
Less ending inventory—Weaving ……….
(330,000)
TRANSFERRED TO SEWING (a) …………………..
$2,370,000
2,370,000
Total costs—Sewing ………………………………...
3,915,000
Less ending inventory—Sewing ………..
(700,000)
TRANSFERRED TO FINISHED GOODS (b) ……..
$3,215,000
3,215,000
Less ending inventory—Finished goods ….
(1,206,000)
COST OF GOODS SOLD (c) ……………………….
$3,275,000
Part 2: Summary journal entries.
June 30
Work in Process Inventory—Sewing ………….………….
2,370,000
Work in Process Inventory—Weaving ……………….
2,370,000
Transferred products from weaving to sewing.
June 30
Finished Goods Inventory…………………………..
3,215,000
Work in Process Inventory—Sewing ……..………….
3,215,000
Transferred completed products from
sewing to finished goods inventory.
June 30
Accounts Receivable …………………………………………….
4,000,000
Sales …………………………..……………………….….
4,000,000
Sold finished goods.
June 30
Cost of Goods Sold …………………………………..………….
3,275,000
Finished Goods Inventory …………………….…….
3,275,000
To record cost of goods sold for the month.
Exercise 16-15 (25 minutes)
Summary journal entries (all dated June 30)
a.
Raw Materials Inventory …………………………....………….
500,000
Accounts Payable ………………………………..………….
500,000
Purchased raw materials.
b.
Work in Process Inventory—Weaving …………………….
240,000
Work in Process Inventory—Sewing …………..………….
75,000
Raw Materials Inventory ………………………..…
315,000
Used direct materials.
c.
Factory Overhead ……………………………………..………….
120,000
Raw Materials Inventory ……………………….….
120,000
Used indirect materials.
d.
Work in Process Inventory—Weaving ………..………….
1,200,000
Work in Process Inventory—Sewing ………….………….
360,000
Factory Payroll Payable ……………………….….
1,560,000
Used direct labor.
e.
Factory Overhead ……………………………………..………….
1,500,000
Factory Payroll Payable ………………………..…
1,500,000
Used indirect labor.
f.
Factory Overhead ……………………………………..………….
156,000
Other Accounts ……………………………………………….
156,000
Incurred other overhead costs.
g.
Work in Process Inventory—Weaving ………..………….
960,000
Work in Process Inventory—Sewing ………….………….
540,000
Factory Overhead …………………………………………….
1,500,000
Applied overhead using predetermined rates.
h.
Factory Payroll Payable …………………………….………….
3,060,000
Cash …………………………..………………………..…
3,060,000
Paid total payroll.
Exercise 16–16 (25 minutes)
ELLIOTT COMPANY
Process Cost Summary – Weighted Average Method
For Month Ended March 31
Costs Charged to Production
Costs of beginning work in process
Direct materials ………………………………………………………..
$ 2,500
Conversion ……………………………………………………………….
6,360
$ 8,860
Costs incurred this period
Direct materials ………………………………………………………..
168,000
Conversion ……………………………………………………………….
479,640
647,640
Total costs to account for …………………………………………..
$656,500
Unit information
Units to account for
Units accounted for
Beginning work in process ……..……………………
2,000
Completed & transferred out ………….
17,000
Units started this period ………….……………….
20,000
Ending work in process ……..……….
5,000
Total units to account for ………..…………………
22,000
Total units accounted for …………….
22,000
Equivalent units of production
Direct
Materials
Conversion
Units completed & transferred out ….
17,000 EUP
17,000 EUP
Units of ending work in process
Direct materials (5,000 x 100%) ……..
5,000 EUP
Conversion (5,000 x 35%) ……………..
__________
1,750 EUP
Equivalent units of production ……….
22,000 EUP
18,750 EUP
Cost per EUP
Direct
Materials
Conversion
Cost of beginning work in process …
$ 2,500
$ 6,360
Costs incurred this period ………………
168,000
479,640
Total costs …………………………………….
$170,500
$486,000
÷ EUP …………………………………………….
22,000 EUP
18,750 EUP
Cost per EUP …………………………………
$7.75 per
EUP
$25.92 per
EUP
[Continued on next page]
Exercise 16-16 (continued)
Cost assignment and reconciliation
Costs transferred out
Direct materials (17,000 EUP x $7.75 per EUP) ……
$131,750
Conversion (17,000 x $25.92 per EUP) ………………..
440,640
$572,390
Costs of ending work in process
Direct materials (5,000 EUP x $7.75 per EUP) ……..
38,750
Conversion (1,750 EUP x $25.92 per EUP) …………..
45,360
84,110
Total costs accounted for …………………………………….
$656,500
Exercise 16-17 (40 minutes)
OSLO COMPANY
Process Cost Summary – Weighted Average Method
For Month Ended May 31
Costs Charged to Production
Costs of beginning work in process
Direct materials ………………………………………………………..
$ 2,880
Conversion ……………………………………………………………….
5,358
$ 8,238
Costs incurred this period
Direct materials ………………………………………………………..
197,120
Conversion ……………………………………………………………….
234,992
432,112
Total costs to account for …………………………………………..
$440,350
Unit information
Units to account for
Units accounted for
Beginning work in process ………….
4,000
Completed & transferred out …………………………..
13,000
Units started this period ………..…….
12,000
Ending work in process ……….………………….
3,000
Total units to account for …………….
16,000
Total units accounted for …….…………………….
16,000
[Continued on next page]
Exercise 16–17 (Concluded)
Equivalent units of production
Direct
Materials
Conversion
Units completed & transferred out ………..
13,000 EUP
13,000 EUP
Units of ending work in process
Direct materials (3,000 x 100%) ……….…..
3,000 EUP
Conversion (3,000 x 25%) ……………….…..
__________
750 EUP
Equivalent units of production ……………..
16,000 EUP
13,750 EUP
Cost per EUP
Direct
Materials
Conversion
Cost of beginning work in process …..…..
$ 2,880
$ 5,358
Costs incurred this period ………………..…..
197,120
234,992
Total costs …………………………………………..
$200,000
$240,350
÷ EUP …………………………………………………..
16,000 EUP
13,750 EUP
Cost per EUP …………………………………..…..
$12.50 per
EUP
$17.48 per
EUP
Cost assignment and reconciliation
Costs transferred out
Direct materials (13,000 EUP x $12.50 per EUP) ….
$162,500
Conversion (13,000 x $17.48 per EUP) ………………..
227,240
$389,740
Costs of ending work in process
Direct materials (3,000 EUP x $12.50 per EUP) ……
37,500
Conversion (750 EUP x $17.48 per EUP) ……………..
13,110
50,610
Total costs accounted for …………………………………….
$440,350
Exercise 16-18 (10 minutes)
Equivalent units of production—FIFO
Units of
Percent
Equivalent
EUP (for materials and conversion)
Product
Added
Units
Beginning work in process ………....
30,000
70%
21,000 EUP
Goods started and completed ……..
120,000
100
120,000 EUP
Ending work in process ……………...
20,000
80
16,000 EUP
Total units …………………………..……...
170,000
157,000 EUP
Exercise 16–19 (20 minutes)
[Note: Solution key is on the following page.]
Punching
Bending
Warehouse
punching department
(1) $94,500
Process
$6,000
Costs transferred
(2) $88,500
Beginning Work in
Process
Direct
Materials
Direct
Labor
Factory
Overhead
to Finished Goods
(4) $236,400
Beginning
Cost of Goods Available
Ending