Chapter 5 Process Costing
(continued) E5-31A
Req. 2
Cambria Winery
Fermenting Department
Flow of Physical Units and Computation of Equivalent Units
Flow of
Physical Units
Equivalent Units
Direct
Materials
Conversion
Costs
Units to account for:
Beginning work in process, March 1
2,900
Started in production during March
4,770
Total physical units to account for
7,670
Units accounted for:
Completed and transferred out
during March
6,420
6,420
6,420
Ending work in process, March 31
1,250
1,250a
1,000b
Total physical units accounted for
7,670
Total equivalent units
7,670
7,420
__________
Managerial Accounting 4e Solutions Manual
(continued) E5-31A
Req. 4
Cambria Winery
Fermenting Department
Assign Costs
Direct
Materials
Conversion Costs
Total
a) Completed and transferred out:
Equivalent units completed and transferred out
6,420
6,420
Multiply by: Cost per equivalent unit
x $ 1.60
x $ 0.50
Cost assigned to units completed and transferred out
$ 10,272
$ 3,210
$13,482
b) Ending work in process inventory:
Equivalent units in ending WIP
1,250
1,000
Multiply by: Cost per equivalent unit
x $ 1.60
x $ 0.50
Cost assigned to units in ending WIP
$2,000
$ 500
$2,500
Total costs to account for
$15,982
Req. 5
The average cost per gallon transferred out of Fermenting is:
$13,482
=
$2.10 per gallon
6,420 gallons
Managers will want to know this cost to compare it to their budgeted target costs. They may also use the cost
information when setting selling prices.
(15 min.) E5-32A
Reqs. 1 – 3
Option #1
# of tons
Cost per ton
Monthly cost
Annual
(x 12 mos.)
Material cost of machine drool
160
$78
$12,480
$149,760
Disposal cost
160
$60
$9,600
$115,200
$22,080
$264,960
Option #2
# of tons
Cost per ton
Monthly cost
Annual
(x 12 mos.)
Receive from local recycler
160
$15
$2,400
$28,800
Waste disposal charges saved
160
$60
$9,600
$115,200
$12,000
$144,000
Chapter 5 Process Costing
(continued) E5-32A
Option #3
# of tons
Cost per ton
Monthly cost
Annual
(x 12 mos.)
Reduction in plastics cost (160 x 40% = 64)
64
$78
$ 4,992
$ 59,904
Reduction in waste disposal fees
160
$60
$ 9,600
$ 115,200
Receive from local recycler (160 – 64 = 96)
96
$15
$ 1,440
$ 17,280
Less annual cost to re-engineer
0
($65,000)
$16.032
$127,384
Req. 4
Student answers will vary.
(15-20 min.) E5-33A
Antonio Roping
Forming Department
Physical Flow of Units and Equivalent Units
Equivalent Units
Flow of Production
Flow of Physical
Units
Direct Materials
Conversion Costs
Units to account for:
Beginning work in process, October 1
10,400
Started in production during October
77,300
Total physical units to account for
87,700
Units accounted for:
Completed and transferred out during October
a79,000
79,000
79,000
Ending work in process, October 31
8,700
b5,220
c1,740
Total physical units accounted for
87,700
Total Equivalent Units
84,220
80,740
__________
a 87,700 physical units to account for minus the 8,700 still in ending work in process inventory = 79,000 that must have
Forming Department
$185,284
Managerial Accounting 4e Solutions Manual
(continued) E5-33A
Antonio Roping
Forming Department
Assign Costs
Direct
Materials
Conversion Costs
Total
a) Completed and transferred out:
Equivalent units completed and transferred out
79,000
79,000
Multiply by: Cost per equivalent unit
x $ 2.20
x $ 2.70
Cost assigned to units completed and transferred out
$ 173,800
$ 213,300
$387,100
b) Ending work in process inventory:
Equivalent units in ending WIP
5,220
1,740
Multiply by: Cost per equivalent unit
x $ 2.20
x $ 2.70
Cost assigned to units in ending WIP
$11,484
$ 4,698
$16,182
Total costs to account for
$403,282
Journal
DATE
ACCOUNTS AND EXPLANATIONS
POST.
REF.
DEBIT
CREDIT
Work in Process Inventory—Finishing
387,100
Work in Process Inventory—Forming
387,100
(15-20 mins.) E5-34A
Waterfall Fudge
Mixing Department
Flow of Physical Units and Computation of Equivalent Units
Flow of
Equivalent Units
Flow of Production
Physical Units
Transferred In
Direct Materials
Conversion Costs
Units to account for:
Beginning work in process, May 1
28,000
Transferred in during May
72,000
Total physical units to account for
100,000
Units accounted for:
Completed and transferred out
during May
85,000
85,000
85,000
85,000
Ending work in process, May 31
15,000
15,000
12,000a
3,000b
Total physical units accounted for
100,000
Total equivalent units
100,000
97,000
88,000
__________
a Direct materials: 15,000 units × 0.80 = 12,000
Chapter 5 Process Costing
(continued) E5-34A
Waterfall Fudge
Heating Department
Flow of Physical Units and Computation of Equivalent Units
Flow of
Equivalent Units
Flow of Production
Physical Units
Transferred In
Direct Materials
Conversion Costs
Units to account for:
Beginning work in process, May 1
6,000
Transferred in during May
85,000
Total physical units to account for
91,000
Units accounted for:
Completed and
transferred out
during May:
79,000
79,000
79,000
79,000
Ending work in process, May 31
12,000
12,000
7,800a
6,600b
Total physical units accounted for
91,000
Total equivalent units
91,000
86,800
85,600
__________
a Direct materials: 12,000 units × 0.65 = 7,800
Flow of Physical Units and Computation of Equivalent Units
Units to account for:
9,000
Transferred in during December
23,000
Total physical units to account for
32,000
Units accounted for:
Completed and transferred out
during December
Ending work in process, December 31
32,000
Managerial Accounting 4e Solutions Manual
(continued) E5–35A
Req. 2
Goldstein Semiconductors
Photolithography Department
Cost per Equivalent Unit
Transferred
In
Direct
Materials
Conversion
Costs
Total
Beginning work in process,
December 1
$ 1,600
$20,450
$ 37,890
$ 59,940
Costs added during December
97,600
53,150
90,850
241,600
Total costs to account for
$99,200
$73,600
$128,740
$301,540
Divide by total equivalent units (from Req.1)
÷ 32,000
÷ 32,000
÷ 31,400
Cost per equivalent unit
$ 3.10
$ 2.30
$ 4.10
Req. 3
Crystal Springs Goldstein Semiconductors
Photolithography Department
Assignment of Costs
Assign costs
Transferred-
in Costs
Direct
Materials
Conversion
Costs
Total
Completed and transferred out:
Equivalent units completed and transferred out
30,000
30,000
30,000
Multiply by: Cost per equivalent unit
x $3.10
x $2.30
x $4.10
Cost assigned to units completed and transferred out
$93,000
$69,000
$123,000
$285,000
Ending work in process inventory:
Equivalent units in ending WIP
2,000
2,000
1,400
Multiply by: Cost per equivalent unit
x $3.10
x $2.30
x $4.10
Cost assigned to units in ending WIP
$ 6,200
$ 4,600
$ 5,740
$16,540
Total costs accounted for
$301,540
Chapter 5 Process Costing
Exercises (Group B)
(15-20 min.) E5–36B
Reqs. 1 and 2
Raw Materials Inventory
Beginning Balance
23,300
Direct materials purchased
175,000
Direct materials used in Mixing
155,000
Direct materials used in Packaging
33,000
Ending Balance
10,300
Beginning Balance
12,600
Direct materials used
155,000
Direct labor
11,600
Manufacturing overhead allocated
63,000
Transferred to Baking
226,000
Ending Balance
16,200
Beginning Balance
15,200
Direct labor
Manufacturing overhead
74,000
Transferred in from Mixing
226,000
Transferred to Packaging
Ending Balance
18,000
Beginning Balance
Direct materials used
33,000
Direct labor
Manufacturing overhead
48,000
Transferred in from Baking
302,000
Ending Balance
14,900
Beginning Balance
Transferred in from Packaging
Ending Balance
The cost per loaf of bread is calculated as follows:
Chapter 5 Process Costing
(20 min.) E5–39B
Req. 1
Conversion costs added evenly throughout the process
Direct materials
Managerial Accounting 4e Solutions Manual
(continued) E5–39B
Req. 3
Shannon Paint Company
Blending Department
Cost per Equivalent Unit
Cost per Equivalent Unit:
Direct Materials
Conversion Costs
Total
Beginning work in process, May 1
$ 0
$ 0
$ 0
Costs added during May
5,166
2,429
$7,595
Total costs to account for
$5,166
$2,429
$7,595
Divide by total equivalent units (from Req. 2)
÷ 8,200
÷ 6,940
Cost per equivalent unit
$ 0.63
$ 0.35
__________
$600 + $1,829 = $2,429
Req. 4
Shannon Paint Company
Blending Department
Assign Costs
Direct
Materials
Conversion Costs
Total
Completed and transferred out:
Equivalent units completed and transferred out
6,100
6,100
Multiply by: Cost per equivalent unit
x $ 0.63
x $ 0.35
Cost assigned to units completed and transferred out
$ 3,843
$ 2,135
$5,978
Ending work in process inventory:
Equivalent units in ending WIP
2,100
840
Multiply by: Cost per equivalent unit
x $ 0.63
x $ 0.35
Cost assigned to units in ending WIP
$1,323
$ 294
$1,617
Total Costs to account for
$7,595
Req. 5
The average cost per gallon transferred out of blending is:
$5,978
=
$.98 per gallon
6,100 gallons
Managers will want to know this cost to compare it to their budgeted target costs. They may also use the cost
information when setting selling prices.
Chapter 5 Process Costing
(15 min.) E5-40B
Req. 1
Note: Students may prepare 3 separate journal entries or one summary entry (as shown below) to record the three
manufacturing costs.
Journal
DATE
ACCOUNTS AND EXPLANATIONS
POST.
REF.
DEBIT
CREDIT
Work in Process Inventory—Blending
7,595
Raw Materials Inventory
5,166
Wages Payable
600
Manufacturing Overhead
1,829
Work in Process Inventory—Packaging
5,978
Work in Process Inventory—Blending
5,978
(from Req. 4 of E5-40B)
Req. 2
Work in Process Inventory—Blending
Bal. May 1
0
Transferred to Packaging
5,978
Direct materials
5,166
Direct labor
600
Manufacturing overhead
1,829
Bal. May 31
1,617
Managerial Accounting 4e Solutions Manual
(15-20 min.) E5-41B
Journal
DATE
ACCOUNTS AND EXPLANATIONS
POST.
REF.
DEBIT
CREDIT
a.
Raw Materials Inventory
9,900
Accounts Payable
9,900
b.
Work in Process Inventory—Assembly
4,400
Raw Materials Inventory
4,400
Work in Process Inventory—Finishing
2,800
Raw Materials Inventory
2,800
c.
Work in Process Inventory – Assembly
10,300
Cash
10,300
d.
Manufacturing Overhead
10,700
Property Taxes Payable—Plant
1,500
Utilities Payable
4,500
Prepaid Insurance—Plant
1,400
Accumulated Depreciation—Plant
3,300
e.
Work in Process Inventory—Assembly
7,700
Wages Payable
5,000
Manufacturing Overhead
2,700
f.
Work in Process Inventory—Finishing
10,300
Wages Payable
4,300
Manufacturing Overhead
6,000
g.
Work in Process Inventory—Finishing
10,200
Work in Process Inventory—Assembly
10,200
h.
Finished Goods Inventory
15,300
Work in Process Inventory—Finishing
15,300
Managerial Accounting 4e Solutions Manual
(continued) E5-42B
Req. 4
Journal
DATE
ACCOUNTS AND EXPLANATIONS
POST.
REF.
DEBIT
CREDIT
Work in Process Inventory—Testing
53,130
Work in Process Inventory—Assembly
53,130
Chapter 5 Process Costing
(continued) E5-43B
Req. 2
Cove Point Winery
Fermenting Department
Flow of Physical Units and Computation of Equivalent Units
Flow of
Physical Units
Equivalent Units
Flow of Production
Direct
Materials
Conversion
Costs
Units to account for:
Beginning work in process, March 1
2,000
Started in production during March
6,000
Total physical units to account for
8,000
Units accounted for:
Completed and transferred out
during March
6,550
6,550
6,550
Ending work in process, March 31
1,450
1,450a
1,160b
Total physical units accounted for
8,000
Total equivalent units
8,000
7,710
__________
Managerial Accounting 4e Solutions Manual
(continued) E5-43B
Req. 4
Cove Point Winery
Fermenting Department
Assign Costs
Direct
Materials
Conversion Costs
Total
Completed and transferred out:
Equivalent units completed and transferred out
6,550
6,550
Multiply by: Cost per equivalent unit
x $ 1.45
x $ 0.90
Cost assigned to units completed and transferred out
$ 9,497.50
$ 5,895
$15,392.50
Ending work in process inventory:
Equivalent units in ending WIP
1,450
1,160
Multiply by: Cost per equivalent unit
x $ 1.45
x $ 0.90
Cost assigned to units in ending WIP
$2,102.50
$ 1,044.00
$ 3,146.50
Total costs to account for
$18,539
Req. 5
The average cost per gallon transferred out of Fermenting is:
$15,392.50
=
$2.35 per gallon
6,550 gallons
Managers will want to know this cost to compare it to their budgeted target costs. They may also use the cost
information when setting selling prices.
(15 min.) E5-44B
Reqs. 1- 3
Option #1
# of tons
Cost per ton
Monthly cost
Annual
(x 12 mos.)
Material cost of machine drool
180
$71
$12,780
$153,360
Disposal cost
180
$58
$10,440
$125,280
$23,220
$278,640
Option #2
# of tons
Cost per ton
Monthly cost
Annual
(x 12 mos.)
Receive from local recycler
180
$14
$2,520
$30,240
Waste disposal charges saved
180
$58
$10,440
$125,280
$12,960
$155,520
Chapter 5 Process Costing
(continued) E5-44B
Option #3
# of tons
Cost per ton
Monthly cost
Annual
(x 12 mos.)
Reduction in plastics cost (180 x 40%)
72
$71
$5,112
$61,344
Reduction in waste disposal fees
180
$58
$10,440
$125,280
Receive from local recycler (180 – 72)
108
$14
$ 1,512
$ 18,144
Less annual cost to re-engineer
0
(60,000)
$17,064
$144,768
(15-20 min.) E5-45B
Johnson Roping
Forming Department
Physical Flow of Units and Equivalent Units
Equivalent Units
Flow of Production
Flow of Physical
Units
Direct Materials
Conversion Costs
Units to account for:
Beginning work in process, October 1
10,300
Started in production during October
75,200
Total physical units to account for
85,500
Units accounted for:
Completed and transferred out during October
a77,000
77,000
77,000
Ending work in process, October 31
8,500
b5,100
c1,700
Total physical units accounted for
85,500
Total Equivalent Units
82,100
78,700
__________
a 85,500 physical units to account for minus the 8,500 still in ending work in process inventory = 77,000 that must have
$205,250
Managerial Accounting 4e Solutions Manual
(continued) E5-45B
Johnson Roping
Forming Department
Assign Costs
Direct
Materials
Conversion Costs
Total
Completed and transferred out:
Equivalent units completed and transferred out
77,000
77,000
Multiply by: Cost per equivalent unit
x $ 2.50
x $ 2.20
Cost assigned to units completed and transferred out
$192,500
$ 169,400
$361,900
Ending work in process inventory:
Equivalent units in ending WIP
5,100
1,700
Multiply by: Cost per equivalent unit
x $ 2.50
x $ 2.20
Cost assigned to units in ending WIP
$12,750
$ 3,740
$ 16,490
Total costs to account for
$378,390
Journal
DATE
ACCOUNTS AND EXPLANATIONS
POST.
REF.
DEBIT
CREDIT
Work in Process Inventory—Finishing
361,900
Work in Process Inventory—Forming
361,900
(15-20 mins.) E5-46B
Abby’s Fudge
Mixing Department
Flow of Physical Units and Computation of Equivalent Units
Flow of
Equivalent Units
Flow of Production
Physical Units
Transferred In
Direct Materials
Conversion Costs
Units to account for:
Beginning work in process, May 1
27,000
Transferred in during May
75,000
Total physical units to account for
102,000
Units accounted for:
Completed and transferred out during
May
87,000
87,000
87,000
85,000
Ending work in process, May 31
15,000
15,000
12,000a
1,500b
Total physical units accounted for
102,000
Total equivalent units
102,000
99,000
86,500
__________
a Direct materials: 15,000 units × 0.80 = 13,600
Chapter 5 Process Costing
(continued) E5-46B
Abby’s Fudge
Heating Department
Flow of Physical Units and Computation of Equivalent Units
Flow of
Equivalent Units
Flow of Production
Physical Units
Transferred In
Direct Materials
Conversion Costs
Units to account for:
Beginning work in process, May 1
5,000
Transferred in during May
87,000
Total physical units to account for
92,000
Units accounted for:
Completed and
transferred out
during May:
82,000
82,000
82,000
82,000
Ending work in process, May 31
10,000
10,000
5,500a
4,500b
Total physical units accounted for
92,000
Total equivalent units
92,000
87,500
86,500
__________
a Direct materials: 10,000 units × 0.55 = 5,500
Equivalent Units
Units to account for:
2,000
Transferred in during December
Total physical units to account for
Units accounted for:
December
22,000
Managerial Accounting 4e Solutions Manual
(continued) E5–47B
Req. 2
Wilkman Semiconductors
Photolithography Department
Cost per Equivalent Unit
Transferred
In
Direct Materials
Conversion
Costs
Total
Beginning work in process,
December 1
$ 1,000
$20,550
$ 5,770
$ 27,320
Costs added during December
97,800
34,050
90,950
222,800
Total costs to account for
$98,800
$54,600
$ 96,720
$250,120
Divide by total equivalent units (from Req.1)
÷ 26,000
÷ 26,000
÷ 24,800
Cost per equivalent unit
$ 3.80
$ 2.10
$ 3.90
Req. 3
Wilkman Semiconductors
Photolithography Department
Assignment of Costs
Assign costs
Transferred-
in Costs
Direct
Materials
Conversion
Costs
Total
Completed and transferred out:
Equivalent units completed and transferred out
22,000
22,000
22,000
Multiply by: Cost per equivalent unit
x $3.80
x $2.10
x $3.90
Cost assigned to units completed and transferred out
83,600
$46,200
$85,800
$ 215,600
Ending work in process inventory:
Equivalent units in ending WIP
4,000
4,000
2,800
Multiply by: Cost per equivalent unit
x $3.80
x $2.10
x $3.90
Cost assigned to units in ending WIP
$ 15,200
$8,400
$ 10,920
$34,520
Total costs accounted for
$250,120