18-11
SOLUTION EXHIBIT 18-24
PANEL B: Steps 3, 4, and 5— Summarize Total Costs to Account For, Compute Cost per
Equivalent Unit, and Assign Total Costs to Units Completed, to Spoiled Units, and to Units
18-25 (25 min.) FIFO method, spoilage.
2. Solution Exhibit 18-25, Panel B, summarizes Chipcity’s production costs for September
2011, calculates the costs per equivalent unit for each cost category, and assigns total costs to
units completed and transferred out (including normal spoilage), to abnormal spoilage, and to
units in ending work in process under the FIFO method.
SOLUTION EXHIBIT 18-25
||Degree of completion in this department: direct materials, 100%; conversion costs, 30%.
#2,100 physical units completed and transferred out minus 600 physical units completed and transferred out from
beginning work in process inventory.
*Normal spoilage is 15% of good units transferred out: 15% 2,100 = 315 units. Degree of completion of normal
SOLUTION EXHIBIT 18-25
PANEL B: Steps 3, 4 and 5— Summarize Total Costs to Account For, Compute Cost per
Equivalent Unit, and Assign Total Costs to Units Completed, to Spoiled Units, and to Units
in Ending Work in Process
Total
Production
Costs
Direct
Materials
Conversion
Costs
(Step 3) Work in process, beginning (given)
Costs added in current period (given)
Total costs to account for
(Step 4) Costs added in current period
Divided by equivalent units of work done in current
period
Cost per equivalent unit
(Step 5) Assignment of costs:
Good units completed and transferred out (2,100 units)
$111,300
797,400
$908,700
$ 96,000
567,000
$663,000
$567,000
2,550
$222.353
$ 15,300
230,400
$245,700
$230,400
2,700
$ 85.333
Work in process, beginning (600 units)
Costs added to beg. work in process in current period
Total from beginning inventory before normal
spoilage
Started and completed before normal spoilage
(1,500 units)
Normal spoilage (315 units)
(A) Total costs of good units completed and
transferred out
(B) Abnormal spoilage (285 units)
(C) Work in process, ending (450 units)
$111,300
35,840
147,140
461,529
96,921
705,590
87,691
115,419
$96,000 + $15,300
(0§ $222.353) + (420§ $85.333)
(1,500§ $222.353)+(1,500§$85.333)
(315§ $222.353) + (315§ $85.333)
(285§ $222.353) + (285§ $85.333)
(450§ $222.353) + (180§ $85.333)
(A)+(B)+(C) Total costs accounted for
$908,700
$663,000
+ $245,700
§Equivalent units of direct materials and conversion costs calculated in Step 2 in Panel A.
18-14
1. Solution Exhibit 18-25, Panel A, shows the computation of the equivalent units of work
2. The direct materials cost per equivalent unit of beginning work in process and of work
done in September 2011 is the standard cost of $200 given in the problem.
The conversion cost per equivalent unit of beginning work in process and of work done
in September 2011 is the standard cost of $75 given in the problem.
Solution Exhibit 18-26 summarizes the total costs to account for, and assigns these costs
18-15
1. Cash 420
Loss from Abnormal Spoilage 3,360
2. a. Cash 840
Work-in-Process Control 840
The cost of the remaining good cases = [($9.00 2,100) – $840] = $18,060
The unit cost of a good case now becomes $18,060 1,680 = $10.75
3. a. Work-in–Process Control 420
Materials Control, Wages Payable Control,
Manufacturing Overhead Allocated 420
The cost of the good cases = [($9.00 2,100) + $420] = $19,320
18-16
1. The two alternative approaches to account for the materials costs of reworked units are:
a. To charge the costs of rework to the current period as a separate expense item as
2. The $50 tumbler cost is the cost of the actual tumblers included in the washing machines.
3. The total costs of rework due to the defective tumbler units include the following:
a. the labor and other conversion costs spent on substituting the new tumbler units;
18-17
1. Journal entry to record scrap generated by a specific job and accounted for at the time
scrap is sold is:
2. Scrap common to various jobs and accounted for at the time of its sale can be accounted
for in two ways:
a. Regard scrap sales as a separate line item of revenues (the method generally used when
3. Journal entry to record scrap common to various jobs at the time scrap is returned to
storeroom:
Materials Control 4,400
18-30 (30 min.) Weighted-average method, spoilage.
Solution Exhibit 18-30 summarizes total costs to account for, calculates the equivalent units of
work done to date for each cost category, and assigns total costs to units completed (including
normal spoilage), to abnormal spoilage, and to units in ending work in process using the
weighted-average method.
SOLUTION EXHIBIT 18-30
PANEL B: Steps 3, 4, and 5— Summarize Total Costs to Account For, Compute Cost per
Equivalent Unit, and Assign Total Costs to Units Completed, to Spoiled Units, and to Units
18-31 (25 min.) FIFO method, spoilage.
For the Cleaning Department, Solution Exhibit 18-31 summarizes the total costs for May,
calculates the equivalent units of work done in the current period for direct materials and
conversion costs, and assigns total costs to units completed and transferred out (including normal
spoilage), to abnormal spoilage, and to units in ending work in process under the FIFO method.