50 Minutes, Strong PROBLEM 18.7B
DELRAY INDUSTRIES
a.
(1) 3,000
Requirements for the Molding Department in June
Flow of physical units: Molding Department
Units in beginning inventory, June 1
PROBLEM 18.7B
DELRAY INDUSTRIES (continued)
b.
(1) 5,000
Units in beginning inventory, June 1
Requirements for the Finishing Dept.
Flow of physical units: Finishing Dept.
in June
PROBLEM 18.7B
DELRAY INDUSTRIES (concluded)
(4) 2,310,000
Work in Process: Finishing Department 2,310,000
(5)
60,000$
Finished Goods Inventory
To record the transfer of 55,000 units
Work in Process: Finishing Department,
Molding materials
to the Finished Goods Inventory in June:
June 30
(2,000 equivalent units × $30)
50 Minutes, Strong PROBLEM 18.8B
THOMPSON TOOLS
a.
(1) 5,000
Flow of physical units: Assembly Department
Requirements for the Assembly Department in March
Units in beginning inventory, March 1
PROBLEM 18.8B
THOMPSON TOOLS (continued)
b. Requirements for the Packaging
(1) Flow of physical units: Packaging Dept.
Units in beginning inventory, March 1 4,000
(2) Assembly Direct
Input resources Materials Materials Conversion
To finish units in process on March 1:
Assembly material 0
Department in March
PROBLEM 18.8B
THOMPSON TOOLS (concluded)
(4) 1,980,000
Work in Process: Packaging Department 1,980,000
(5)
Finished Goods Inventory
To record the transfer of 60,000 units
Inventory in March:
Work in Process: Packaging Dept., March 31
to the Finished Goods
SOLUTIONS TO CRITICAL THINKING CASE
S
CASE 18.1
SHOULDN’T WE DO THINGS DIFFERENTLY?
I will first address our use of process costing. It is true that our beer is brewed in batches,
which could be identified as jobs. But once the beer is bottled, the concept of the batch becomes
insignificant. As we produce only one line of beer, we would not charge a different price, nor
record a different cost of goods sold based upon the batch from which particular bottles came.
Thus, information about the costs of different batches would serve little purpose. What we
really need is information about the per-unit cost of various brewing processes. This enables us
to quickly identify the causes of changes in our total unit cost.
Next, we assign all manufacturing costs to units completed during the period because it is more
convenient than computing equivalent units, and produces essentially the same results. If you
compute our equivalent units, you will find this measurement to be nearly identical to the
number of bottles produced.
30 Minutes, Strong
Mr. Brown:
Thank you for your recent memo. I am glad to see that you have become familiar with our cost
accounting methods and have constructive suggestions. You are correct that we could use job
order costing and, also, that we could base our unit cost computations upon equivalent units,
rather than upon units completed. But let me explain briefly why we are currently doing what
we
do.
CASE 18.2
METAL PRODUCTS, INC.
a.
20 Minutes, Medium
The cost per equivalent unit of cut materials transferred into the Assembly Department in
February and reported as beginning inventory on March 1 was $25 per unit ($25,000 ÷ 1,000
units). The cost per equivalent unit of cut materials transferred into the Assembly
Department in March was $20 per unit. Thus, the cost of cut materials decreased by $5 per
unit.
CASE 18.3
PROCESS COSTING AT PEPSICO
ETHICS, FRAUD & CORPORATE GOVERNANCE
a.
25 Minutes, Easy
There are approximately ten processes involved in the production of Pepsi: (1) Ingredients
and packaging materials are received and inspected; (2) Ingredients and packaging materials
are moved into production; (3) Production codes are printed on containers; (4) Containers
CASE 18.4
WRIGLEY COMPAN
Y
INTERNET
a.
Melting
Mixing
b.
One configuration of processing departments could include a “Production Department” and a
“Finishing Department.” The Production Department would handle the activities of grinding,
30 Minutes, Medium
A sample flowchart of the activities involved in manufacturing chewing gum could be
constructed as follows: