Chapter 4
Process Costing
Solutions to Questions
4-1 A process costing system should be
used in situations where a homogeneous
1. Job-order costing and process costing have
the same basic purposes—to assign
3. Costs flow through the accounts in basically
4-3 Cost accumulation is simpler under
costing system often must keep track of the
4-4 In a process costing system, a Work in
4-5 The journal entry to record the transfer
of work in process from the Mixing Department
4-6 The costs that might be added in the
Firing Department include: (1) costs transferred
4-7 Under the weighted-average method,
finished goods) during the period plus the
4-8 The company will want to distinguish
processes. Thus, operation costing is ideally
The Foundational 15
1. The journal entries would be recorded as follows:
Work in Process—Mixing …………………………..
120,000
Raw Materials Inventory …………………………..
120,000
Work in Process—Mixing …………………………..
79,500
Wages Payable …………………………………………………
79,500
2. The journal entry would be recorded as follows:
Work in Process—Mixing …………………………..
97,000
Manufacturing Overhead …………………………..
97,000
3. The “units completed and transferred to finished goods” is computed
as follows:
Pounds
Work in process, June 1 ……………………………………
5,000
Started into production during the month ……………..
37,500
Total pounds in process …………………………………….
42,500
Deduct work in process, June 30 …………………………
8,000
Completed and transferred out during the month ……
34,500
4. and 5.
The equivalent units of production for materials and conversion are
computed as follows:
Equivalent Units
Materials
Conversion
Units transferred out …………………………..
34,500
34,500
Work in process, ending:
8,000 units × 100% …………………………..
8,000
8,000 units × 40% ……………………………….
3,200
Equivalent units of production ……………………
42,500
37,700
The Foundational 15 (continued)
6. and 7.
Materials
Conversion
Cost of beginning work in process …………….
$ 16,000
$ 12,000
Cost added during the period …………………..
120,000
176,500*
Total cost …………………………………………….
$136,000
$188,500
* $79,500 + $97,000 = $176,500
8. and 9.
The cost per equivalent unit for materials and conversion is computed
37,700
The Foundational 15 (continued)
14. The journal entry to record the transfer of costs from Work in
15. The total cost to be accounted for and the total cost accounted for is:
Costs to be accounted for:
Cost of beginning work in process inventory …….
$ 28,000
Costs added to production during the period ……
296,500
Total cost to be accounted for ………………………
$324,500
Costs accounted for:
Cost of ending work in process inventory ………..
$ 41,600
Cost of units completed and transferred out …….
282,900
Total cost accounted for ………………………………
$324,500
Exercise 4-1 (20 minutes)
a. To record issuing raw materials for use in production:
Work in Process—Molding Department ……… 23,000
Work in Process—Firing Department …………. 8,000
Raw Materials ………………………………… 31,000
Exercise 4-2 (10 minutes)
Weighted-Average Method
Equivalent Units
Materials
Conversion
Units transferred out ………………….
190,000
190,000
Work in process, ending:
15,000 units × 80% ………………..
12,000
15,000 units × 40% ………………..
6,000
Equivalent units of production ……..
202,000
196,000
Exercise 4-3 (10 minutes)
Weighted-Average Method
1.
Materials
Labor
Overhead
Cost of beginning work in process
inventory ……………………………..
$ 18,000
$ 5,500
$ 27,500
Cost added during the period ……..
238,900
80,300
401,500
Total cost (a) ………………………….
$256,900
$85,800
$429,000
Equivalent units of production (b) .
35,000
33,000
33,000
Cost per equivalent unit (a) ÷ (b) .
$7.34
$2.60
$13.00
2.
Cost per equivalent unit for materials …..
$ 7.34
Cost per equivalent unit for labor ………..
2.60
Cost per equivalent unit for overhead …..
13.00
Total cost per equivalent unit ……………..
$22.94
Exercise 4-4 (10 minutes)
Materials
Conversion
Total
Ending work in process inventory:
Equivalent units of production ……
2,000
800
Cost per equivalent unit ……………
$13.86
$4.43
Cost of ending work in process
inventory …………………………..
$27,720
$3,544
$31,264
Units completed and transferred out:
Units transferred to the next
department ………………………..
20,100
20,100
Cost per equivalent unit ……………
$13.86
$4.43
Cost of units transferred out ………
$278,586
$89,043
$367,629
Exercise 4-5 (10 minutes)
Baking Department
Cost Reconciliation
Costs to be accounted for:
Cost of beginning work in process inventory .
$ 3,570
Costs added to production during the period .
43,120
Total cost to be accounted for ………………….
$46,690
Costs accounted for as follows:
Cost of ending work in process inventory ……
$ 2,860
Cost of units completed and transferred out ..
43,830
*
Total cost accounted for ………………………….
$46,690
Cost of units
completed and = $3,570 + $43,120 – $2,860
transferred out
Cost of units
completed and = $43,830
transferred out
Exercise 4-6 (10 minutes)
Weighted-Average 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
Units transferred out …………………………..
180,000
180,000
Work in process, ending:
Materials: 30,000 tons × 60% complete .
18,000
Labor and overhead:
30,000 tons × 40% complete …………..
12,000
Equivalent units of production ……………….
198,000
192,000
Exercise 4-7 (10 minutes)
Work in Process—Cooking …………
42,000
Raw Materials Inventory ………
42,000
Work in Process—Cooking …………
50,000
Work in Process—Molding …………
36,000
Wages Payable …………………..
86,000
Work in Process—Cooking …………
75,000
Work in Process—Molding …………
45,000
Manufacturing Overhead ………
120,000
Work in Process—Molding …………
160,000
Work in Process—Cooking …….
160,000
Finished Goods ……………………….
240,000
Work in Process—Molding …….
240,000
Exercise 4-8 (30 minutes)
Weighted-Average Method
1.
Materials
Conversion
Units transferred to the next production
department ………………………………………….
175,000
175,000
Ending work in process:
Materials: 10,000 units × 100% complete …..
10,000
Conversion: 10,000 units × 30% complete ….
3,000
Equivalent units of production …………………….
185,000
178,000
2.
Materials
Conversion
Cost of beginning work in process ………………
$ 1,500
$ 4,000
Cost added during the period …………………….
54,000
352,000
Total cost (a) …………………………………………
$55,500
$356,000
Equivalent units of production (b) ……………….
185,000
178,000
Cost per equivalent unit (a) ÷ (b) ……………….
$0.30
$2.00
3.
Materials
Conversion
Total
Ending work in process inventory:
Equivalent units of production
(see above) ……………………
10,000
3,000
Cost per equivalent unit (see
above) ………………………….
$0.30
$2.00
Cost of ending work in process
inventory ……………………….
$3,000
$6,000
$9,000
Units completed and transferred out:
Units transferred to the next
department ……………………
175,000
175,000
Cost per equivalent unit
(see above) ……………………
$0.30
$2.00
Cost of units completed and
transferred out ……………….
$52,500
$350,000
$402,500
Exercise 4-9 (15 minutes)
Weighted-Average Method
1.
Materials
Labor
Overhead
Units transferred to the next
department ………………………………..
42,000
42,000
42,000
Work in process, ending:
Materials:
8,000 units × 75% complete ……….
6,000
Labor and overhead:
8,000 units × 50% complete ……….
4,000
4,000
Equivalent units of production ………….
48,000
46,000
46,000
2.
Materials
Labor
Overhead
Cost of beginning work in process ….
$ 4,320
$ 1,040
$ 1,790
Cost added during the period ………..
52,800
21,500
32,250
Total cost (a) …………………………....
$57,120
$22,540
$34,040
Equivalent units of production (b) ….
48,000
46,000
46,000
Cost per equivalent unit (a) ÷ (b) …..
$1.19
$0.49
$0.74
Exercise 4-10 (10 minutes)
Weighted-Average Method
Materials
Labor &
Overhead
Pounds transferred to the Packing Department
during July* ………………………………………………
375,000
375,000
Work in process, July 31:
Materials: 25,000 pounds × 100% complete …….
25,000
Labor and overhead:
25,000 pounds × 60% complete ………………….
15,000
Equivalent units of production …………………………
400,000
390,000
*20,000 + 380,000 – 25,000 = 375,000
Exercise 4-11 (30 minutes)
Weighted-Average Method
1.
Equivalent units of production
Pulping
Conversion
Transferred to next department ……………………
157,000
157,000
Ending work in process:
Pulping: 8,000 units x 100% complete ………..
8,000
Conversion: 8,000 units x 25% complete ……..
2,000
Equivalent units of production ……………………..
165,000
159,000
2.
Cost per equivalent unit
Pulping
Conversion
Cost of beginning work in process …………….
$ 4,800
$ 500
Cost added during the period …………………..
102,450
31,300
Total cost (a) …………………………..…………..
$107,250
$31,800
Equivalent units of production (b) …………….
165,000
159,000
Cost per equivalent unit, (a) ÷ (b) ……………
$0.65
$0.20
3.
Cost of ending work in process inventory and units transferred out
Pulping
Conversion
Total
Ending work in process inventory:
Equivalent units of production…
8,000
2,000
Cost per equivalent unit ………..
$0.65
$0.20
Cost of ending work in process
inventory ………………………….
$5,200
$400
$5,600
Units completed and transferred out:
Units transferred to the next
department ………………………
157,000
157,000
Cost per equivalent unit ………..
$0.65
$0.20
Cost of units completed and
transferred out …………………..
$102,050
$31,400
$133,450
Exercise 4-11 (continued)
4.
Cost reconciliation
Costs to be accounted for:
Cost of beginning work in process inventory
($4,800 + $500) ………………………………….
$ 5,300
Costs added to production during the period
($102,450 + $31,300) …………………………..
133,750
Total cost to be accounted for …………………..
$139,050
Costs accounted for as follows:
Cost of ending work in process inventory ……
$ 5,600
Cost of units completed and transferred out ..
133,450
Total cost accounted for ………………………….
$139,050
Exercise 4-12 (20 minutes)
Weighted-Average Method
1. Computation of equivalent units in ending inventory:
Materials
Labor
Overhead
Units in ending inventory ……….
3,000
3,000
3,000
Percent completed ……………….
80%
60%
60%
Equivalent units of production …
2,400
1,800
1,800
2. Cost of ending work in process inventory and units transferred out:
Materials
Labor
Overhead
Total
Ending work in process inventory:
Equivalent units of
production ……………..
2,400
1,800
1,800
Cost per equivalent unit
$12.50
$3.20
$6.40
Cost of ending work in
process inventory …….
$30,000
$5,760
$11,520
$47,280
Units completed and transferred out:
Units transferred to the
next department ………
25,000
25,000
25,000
Cost per equivalent unit
$12.50
$3.20
$6.40
Cost of units completed
and transferred out …..
$312,500
$80,000
$160,000
$552,500
3. Cost reconciliation:
Total cost to be accounted for ………………………
$599,780
Costs accounted for as follows:
Cost of ending work in process inventory ……
$ 47,280
Cost of units completed and transferred out ..
552,500
Total cost accounted for ………………………….
$599,780
Problem 4-13A (60 minutes)
Weighted-Average Method
1. Computation of equivalent units in ending inventory:
Mixing
Materials
Conversion
Units transferred to the next department ……..
50.0
50.0
50.0
Ending work in process:
Mixing: 1 unit × 100% complete …………….
1.0
Materials: 1 unit × 80% complete …………..
0.8
Conversion: 1 unit × 70% complete ………..
0.7
Equivalent units of production ……………………
51.0
50.8
50.7
2. Costs per equivalent unit:
Mixing
Materials
Conversion
Cost of beginning work in process inventory ….
$ 1,670
$ 90
$ 605
Cost added during the period …………………….
81,460
6,006
42,490
Total cost (a) ………………………………………….
$83,130
$6,096
$43,095
Equivalent units of production (b) ……………….
51.0
50.8
50.7
Cost per equivalent unit (a) ÷ (b) ……………….
$1,630
$120
$850
Problem 4-13A (continued)
3. Costs of ending work in process inventory and units transferred out:
Mixing
Materials
Conversion
Total
Ending work in process inventory:
Equivalent units of production ………………..
1.0
0.8
0.7
Cost per equivalent unit ………………………..
$1,630
$120
$850
Cost of ending work in process inventory ….
$1,630
$96
$595
$2,321
Units completed and transferred out:
Units transferred to the next department ….
50.0
50.0
50.0
Cost per equivalent unit ………………………..
$1,630
$120
$850
Cost of units transferred out ………………….
$81,500
$6,000
$42,500
$130,000
4. Cost reconciliation:
Cost to be accounted for:
Cost of beginning work in process inventory
($1,670 + $90 + $605) …………………………
$ 2,365
Cost added to production during the period
($81,460 + $6,006 + $42,490) ……………….
129,956
Total cost to be accounted for ………………….
$132,321
Costs accounted for as follows:
Cost of ending work in process inventory ……
$ 2,321
Cost of units transferred out …………………….
130,000
Total cost accounted for ………………………….
$132,321
Problem 4-14A (45 minutes)
Weighted-Average Method
1.
Equivalent units of production
Materials
Conversion
Transferred to next department* ………………….
170,000
170,000
Ending work in process:
Materials: 15,000 units x 100% complete …….
15,000
Conversion: 15,000 units x 60% complete ……
9,000
Equivalent units of production ……………………..
185,000
179,000
*Units transferred to the next department = Units in beginning work in
process + Units started into production − Units in ending work in
process = 18,000 + 167,000 − 15,000 = 170,000
2.
Cost per equivalent unit
Materials
Conversion
Cost of beginning work in process …………….
$ 14,600
$ 7,200
Cost added during the period …………………..
133,400
225,500
Total cost (a) …………………………..…………..
$148,000
$232,700
Equivalent units of production (b) …………….
185,000
179,000
Cost per equivalent unit, (a) ÷ (b) ……………
$0.80
$1.30
3.
Cost of ending work in process inventory and units transferred out
Materials
Conversion
Total
Ending work in process inventory:
Equivalent units of production…
15,000
9,000
Cost per equivalent unit ………..
$0.80
$1.30
Cost of ending work in process
inventory ………………………….
$12,000
$11,700
$23,700
Units completed and transferred out:
Units transferred to the next
department ………………………
170,000
170,000
Cost per equivalent unit ………..
$0.80
$1.30
Cost of units completed and
transferred out …………………..
$136,000
$221,000
$357,000