Copyright © 2015 Pearson Education, Inc.
5-41
(30-45 min.) P5-48A
Req. 1
Direct
materials
added
Conversion costs added evenly throughout the process
Start 45% 100%
Managerial Accounting 4e Solutions Manual
(continued) P5-48A
Cost per Equivalent Unit:
Direct Materials
Conversion Costs
Beginning work in process June 1
$ 0
$ 0
Costs added during June
5,225
3,608d
Costs to account for
$ 5,225
$ 3,608
Divide by total equivalent units
÷ 20,900
÷ 18,040
Cost per equivalent unit
$ 0.25
$ 0.20
d$3,360 + $248 = $3,608
Req. 3
Lopez Cosmetics
Lip Balm Department
Assign Costs
Direct
Materials
Conversion Costs
Total
a) Completed and transferred out:
Equivalent units completed and transferred out
15,700
15,700
Multiply by: Cost per equivalent unit
x $ 0.25
x $ 0.20
Cost assigned to units completed and transferred out
$ 3,925
$ 3,140
$7,065
b) Ending work in process inventory:
Equivalent units in ending WIP
5,200
2,340
Multiply by: Cost per equivalent unit
x $ 0.25
x $ 0.20
Cost assigned to units in ending WIP
$1,300
$ 468
$1,768
Total costs to account for
$8,833
Req. 4
Work in Process Inventory
Bal. June 1
0
Transferred out
7,065
Direct materials
5,225
Direct labor
3,360
Manufacturing overhead
248
Bal. June 30
1,768
Chapter 5 Process Costing
(30-45 min.) P5–49A
Req. 1
Direct
materials
added
Conversion costs added evenly throughout the process
Start 80% 100%
Managerial Accounting 4e Solutions Manual
(continued) P5–49A
Northern Furniture Company
Sawing Department
Cost per Equivalent Unit
Month Ended September 30
Cost per Equivalent Unit:
Direct Materials
Conversion Costs
Total
Beginning work in process September 1
$ 0
$ 0
$ 0
Costs added during September
1,863,000
294,400
$2,157,400
Total costs to account for
$1,8463,000
$294,400
$2,157,400
Divide by total equivalent units
÷ 13,500
÷ 12,800
Cost per equivalent unit
$ 138
$ 23
__________ $137,000 + $157,400 = $294,400
Req. 3
Northern Furniture Company
Sawing Department
Assign Costs
Direct
Materials
Conversion Costs
Total
a) Completed and transferred out:
Equivalent units completed and transferred out
10,000
10,000
Multiply by: Cost per equivalent unit
x $ 138
x $ 23
Cost assigned to units completed and transferred out
$ 1,380,000
$ 230,000
$1,610,000
b) Ending work in process inventory:
Equivalent units in ending WIP
3,500
2,800
Multiply by: Cost per equivalent unit
x $ 138
x $ 23
Cost assigned to units in ending WIP
$483,000
$ 64,400
$547,400
Total costs to account for
$2,157,400
Total cost accumulated in the Sawing Department during September are the same as the Total Costs to account for
shown in Req. 2:
Direct materials……………………………
$1,863,000
Direct labor………………………………...
137,000
Manufacturing overhead…………………
157,400
Total costs…………………………………
$2,157,400
Chapter 5 Process Costing
(continued) P5–49A
Req. 4
Journal Entry
DATE
ACCOUNT TITLE AND EXPLANATION
POST.
REF.
DEBIT
CREDIT
Work in Process Inventory—Sawing
2,157,400
Raw Materials Inventory
1,863,000
Wages Payable
137,000
Manufacturing Overhead
157,400
Work in Process Inventory—Assembly
1,610,000
Work in Process Inventory—Sawing
1,610,000
Note: Students may prepare three separate journal entry or the one summary journal entry (as shown above) to
record the three manufacturing costs.
(30-40 min.) P5-50A
Req. 1
Chicken and Green
cream peppers and
Managerial Accounting 4e Solutions Manual
(continued) P5-50A
Req. 2
Royce Chicken
Mixing Department
Flow of Physical Units and Computation of Equivalent Units
Flow of
Physical Units
Equivalent Units
Flow of Production
Chicken,
Cream
Green Peppers,
Mushrooms
Conversion
Costs
Units to account for:
Beginning work in process,
November 1
0
Started in production
14,200
Total physical units to account for
14,200
Units accounted for:
Completed and transferred out
13,200
13,200
13,200
13,200
Ending work in process,
November 30
1,000
1,000a
0a
600b
Total physical units accounted for
14,200
Total equivalent units
14,200
13,200
13,800
Beginning work in process
Costs added during Nov.
Costs to account for
Divide by total equivalent units
Chapter 5 Process Costing
(continued) P5-50A
Req. 4
Royce Chicken
Mixing Department
Assignment of Costs
Assign costs
Chicken and
Cream
Green
Peppers &
Mushrooms
Conversion
Costs
Total
Completed and transferred out:
Equivalent units completed and transferred out
13,200
13,200
13,200
Multiply by: Cost per equivalent unit
x $1.40
x $0.60
x $1.04
Cost assigned to units completed and transferred out
18,480
$7,920
$13,728
$ 40,128
Ending work in process inventory:
Equivalent units in ending WIP
1,000
0
600
Multiply by: Cost per equivalent unit
x $1.40
x $0.60
x $1.04
Cost assigned to units in ending WIP
$ 1,400
$0
$624
$2,024
Total costs accounted for
$42,152
(45-60 min.) P5-51A
Req. 1
Transferred Direct
Managerial Accounting 4e Solutions Manual
(continued) P5-51A
Req. 2
Chrome Accessories
Plating Department
Equivalent Unit Computations (Weighted-Average)
Flow of
Equivalent Units
Flow of Production
Physical Units
Transferred
In
Direct Materials
Conversion
Costs
Units accounted for:
Completed and transferred out during March
2,000
2,000
2,000
2,000
Ending work in process, March 31
1,600
1,600a
0b
800c
Total physical units
accounted for
3,600
Total equivalent units
3,600
2,000
2,800
__________
a The time line shows that transferred-in costs are incurred at
the beginning of the plating process. Ending inventory was started this period, so it did pass the point where
transferred-in costs are added. The ending inventory is therefore complete with respect to transferred-in costs.
Beginning work in process, March 1
$14,000
Costs added during March
Total costs to account for
Divide by equivalent units
Cost per equivalent unit
Chapter 5 Process Costing
(continued) P5-51A
Chrome Accessories
Plating Department
Production Cost Report
Assign costs
Transferred-
in Costs
Direct
Materials
Conversion
Costs
Total
Completed and transferred out:
Equivalent units completed and transferred out
2,000
2,000
2,000
Multiply by: Cost per equivalent unit
x $17
x $15
x $23
Cost assigned to units completed and transferred out
$34,000
$30,000
$46,000
$ 110,000
Ending work in process inventory:
Equivalent units in ending WIP
1,600
0
800
Multiply by: Cost per equivalent unit
x $17
x $15
x $23
Cost assigned to units in ending WIP
$ 27,200
$0
$ 18,400
$45,600
Total costs accounted for
$155,600
Req. 3
Journal Entry
DATE
ACCOUNT TITLE AND EXPLANATION
POST.
REF.
DEBIT
CREDIT
Work in Process Inventory—Plating
40,800
Work in Process Inventory—Shaping
40,800
To transfer in costs from Shaping
Department.
Work in Process Inventory—Plating
80,400
Raw Materials Inventory
30,000
Wages Payable
21,500
Manufacturing Overhead
28,900
To record direct materials, direct labor,
and manuf. costs to the Plating
Department.
Finished Goods Inventory
110,000
Work in Process Inventory—Plating
110,000
To record cost of units completed and
transferred out.
Note: Students may have prepared three separate journal entries, rather than the one summary entry shown above, to
Chapter 5 Process Costing
(continued) P5-52A
Req. 5
In this requirement, we are proving that the current price of $12.60 per box does indeed provide the required 2.5%
return. The monthly operating income that would provide a 2.5% rate of return is:
Monthly return on investment
=
Monthly operating income
Investment
2.5%
=
Monthly operating income
$450,000
Monthly operating income
=
$450,000
×
2.5%
=
$11,250
To achieve a 2.5% rate of return, Charlie’s Cricket Farm must charge a price that provides enough gross profit to cover
operating expenses of $12,750 and then provide $11,250 in operating income. This requires a gross profit of $24,000.
Gross profit
=
(Selling price per box – Cost per box)
×
Boxes sold
$24,000
=
(Selling price per box – $11.40)
×
20,000
$24,000
=
Selling price per box – $11.40
20,000
$1.20
=
Selling price per box – $11.40
$1.20 + $11.40
=
Selling price per box
$12.60
=
Selling price per box
Managerial Accounting 4e Solutions Manual
Problems (Group B)
(30-45 min.) P5-53B
Req. 1
Direct
materials
added
Conversion costs added evenly throughout the process
Start 40% 100%
Chapter 5 Process Costing
(continued) P5-53B
Req. 3
Grand Lips
Lip Balm Department
Assign Costs
Direct
Materials
Conversion Costs
Total
a) Completed and transferred out:
Equivalent units completed and transferred out
15,600
15,600
Multiply by: Cost per equivalent unit
x $ 0.24
x $ 0.30
Cost assigned to units completed and transferred out
$ 3,744
$ 4,680
$8,424
b) Ending work in process inventory:
Equivalent units in ending WIP
5,200
2,080
Multiply by: Cost per equivalent unit
x $ 0.24
x $ 0.30
Cost assigned to units in ending WIP
$1,248
$ 624
$1,872
Total costs to account for
$10,296
Req. 4
Work in Process Inventory
Bal. June 1
0
Transferred out
8,424
Direct materials
4,992
Direct labor
3,350
Manufacturing overhead
1,954
Bal. June 30
1,872