SOLUTION EXHIBIT 17-29B
Summarize the Total Costs to Account For, Compute the Cost per Equivalent Unit, and Assign
Costs to the Units Completed and Units in Ending Work-in-Process Inventory;
Weighted-Average Method of Process Costing for ZanyBrainy Corporation for October 2017.
Total
Production
Costs
Direct
Materials
Conversion
Costs
(Step 3) Work in process, beginning (given) $ 21,000 $ 5,760 $ 14,825
Costs added in current period (given) 83,650 25,440 58,625
*Equivalent units completed and transferred out (given).
†Equivalent units in ending work in process (given).
17-30 FIFO method, assigning costs.
Required:
1. Do Exercise 17-29 using the FIFO method.
2. ZanyBrainy’s management seeks to have a more consistent cost per equivalent unit. Which
method of process costing should the company choose and why?
SOLUTION
(30 min.) FIFO method, assigning costs.
1. Solution Exhibit 17-30A calculates the equivalent units of work done in the current period.
Solution Exhibit 17-30B summarizes total costs to account for, calculates the cost per equivalent
unit of work done in the current period for direct materials and conversion costs, and assigns
these costs to units completed and transferred out and to units in ending work-in-process
inventory.
SOLUTION EXHIBIT 17-30A
Summarize the Flow of Physical Units and Compute Output in Equivalent Units;
FIFO Method of Process Costing, ZanyBrainy Corporation for October 2017.
(Step 1)
(Step 2)
Equivalent Units
Flow of Production
Physical
Units
Direct
Materials
Conversion
Costs
17-B
SOLUTION EXHIBIT 17-30B
Summarize the Total Costs to Account For, Compute the Cost per Equivalent Unit, and
Assign Costs to the Units Completed and Units in Ending Work-in-Process Inventory;
FIFO Method of Process Costing, ZanyBrainy Corporation for October 2017.
Total
Production
Costs
Direct
Materials
(Step 3) Work in process, October 1 (given) $ 20,585 $ 5,760
Costs added in October (given) 84 ,065 25,440
Total costs to account for $ 104 ,650 $31,200
*Equivalent units used to complete beginning work in process from Solution Exhibit 17-30A, Step 2.
†Equivalent units started and completed from Solution Exhibit 17-30A, Step 2.
#Equivalent units in ending work in process from Solution Exhibit 17-30A, Step 2.
2 . Using the weighted average method will result in a greater degree of cost smoothing since
the cost of beginning inventory is mixed together with costs added each period. This will
produce a more consistent cost per equivalent unit than the FIFO method.
17-B
In the case of ZanyBrainy Corporation, note that the direct material cost per equivalent unit
went from $0.48 in the prior period ($5,760 ÷ 12,000 units) to $0.53 in October, while the
17-31 Transferred-in costs, weighted-average method. Trendy Clothing, Inc. is a
manufacturer of winter clothes. It has a knitting department and a finishing department. This
exercise focuses on the finishing department. Direct materials are added at the end of the
process. Conversion costs are added evenly during the process. Trendy uses the
weighted-average method of process costing. The following information for June 2017 is
available.
Required:
1. Calculate equivalent units of transferred-in costs, direct materials, and conversion costs.
2. Summarize the total costs to account for, and calculate the cost per equivalent unit for
transferred-in costs, direct materials, and conversion costs.
3. Assign costs to units completed (and transferred out) and to units in ending work in process.
SOLUTION
(35–40 min.) Transferred-in costs, weighted-average method.
1, 2. & 3. Solution Exhibit 17-31A calculates the equivalent units of work done to date.
Solution Exhibit 17-31B summarizes total costs to account for, calculates the cost per equivalent
unit of work done to date for transferred-in costs, direct materials, and conversion costs, and
assigns these costs to units completed and transferred out and to units in ending work-in-process
inventory.
SOLUTION EXHIBIT 17-31A
Summarize the Flow of Physical Units and Compute Output in Equivalent Units;
Weighted-Average Method of Process Costing,
Finishing Department of Trendy Clothing for June 2017.
(Step 1) (Step 2)
17-B
Equivalent Units
Flow of Production
Physical
Units
Transferred-
in Costs
Direct
Materials
Conversion
Costs
Work in process, beginning (given) 60
Transferred in during current period (given) 100
EXHIBIT 17-31B
Summarize the Total Costs to Account For, Compute the Cost per Equivalent Unit, and
Assign Costs to the Units Completed and Units in Ending Work-in-Process Inventory;
Weighted-Average Method of Process Costing,
Finishing Department of Trendy Clothing for June 2017.
Total
Production
Costs
Transferred-in
Costs
Direct
Materials
(Step 3) Work in process, beginning (given) $84,000 $ 60,000 $ 0
Costs added in current period (given) 206 ,400 117,0 00 27,0 00
Total costs to account for $ 290 ,400 $ 177,0 00 $ 27,0 00
a Equivalent units completed and transferred out from Sol. Exhibit 17-31A, step 2.
b Equivalent units in ending work in process from Sol. Exhibit 17-31A, step 2.
17-32 Transferred-in costs, FIFO method. Refer to the information in Exercise 17-31.
Suppose that Trendy uses the FIFO method instead of the weighted-average method in all of its
departments. The only changes to Exercise 17-31 under the FIFO method are that total
transferred-in costs of beginning work in process on June 1 are $45,000 (instead of $60,000) and
total transferred-in costs added during June are $114,000 (instead of $117,000)
Required:
Do Exercise 17-31 using the FIFO method. Note that you first need to calculate equivalent units
of work done in the current period (for transferred-in costs, direct materials, and conversion
17-B
costs) to complete beginning work in process, to start and complete new units, and to produce
ending work in process.
SOLUTION
(35–40 min.) Transferred-in costs, FIFO method.
Solution Exhibit 17-32A calculates the equivalent units of work done in the current period (for
transferred-in costs, direct-materials, and conversion costs) to complete beginning
SOLUTION EXHIBIT 17-32A
Summarize the Flow of Physical Units and Compute Output in Equivalent Units;
FIFO Method of Process Costing,
Finishing Department of Trendy Clothing for June 2017.
(Step 1) (Step 2)
Equivalent Units
Flow of Production
Physical
Units
Transferred-in
Costs
Direct
Materials
Conversion
Costs
Work in process, beginning (given) 60 (work done before current period)
Transferred-in during current period (given) 100
To account for 16 0
aDegree of completion in this department: Transferred-in costs, 100%; direct materials, 0%; conversion costs, 50%.
b120 physical units completed and transferred out minus 60 physical units completed and transferred out from beginning
EXHIBIT 17-32B
Summarize the Total Costs to Account For, Compute the Cost per Equivalent Unit, and
Assign Costs to the Units Completed and Units in Ending Work-in-Process Inventory;
FIFO Method of Process Costing,
Finishing Department of Trendy Clothing for June 2017.
Total
Production
Transferred-in
Costs
Direct Materials
17-B
Costs
(Step 3) Work in process, beginning (given) $ 69,000 $ 45,000 $ 0
Costs added in current period (given) 203,4 00 114,0 00 27,0
Total costs to account for $ 272,4 00 $159,000 $27,000
a Equivalent units used to complete beginning work in process from Solution Exhibit 17-32A, step 2.
b Equivalent units started and completed from Solution Exhibit 17-32A, step 2.
c Equivalent units in ending work in process from Solution Exhibit 17-32A, step 2.
-33 Operation costing. Egyptian Spa produces two different spa products: Relax and
Refresh. The company uses three operations to manufacture the products: mixing, blending, and
packaging. Because of the materials used, Relax is produced in powder form in the mixing
department, then transferred to the blending department, and finally on to packaging. Refresh
undergoes no mixing; it is produced in liquid form in the blending department and then
transferred to packaging.
Egyptian Spa applies conversion costs based on labor-hours in the mixing department. It
takes 3 minutes to mix the ingredients for a container of Relax. Conversion costs are applied
based on the number of containers in the blending departments and on the basis of
machine-hours in the packaging department. It takes 0.5 minutes of machine time to fill a
container, regardless of the product.
The budgeted number of containers and expected direct materials cost for each product are as
follows:
Relax Refresh
The budgeted conversion costs for each department for May are as follows:
17-B
Department
Allocation of
Conversion Costs
Budgeted Conversion
Cost
Required:
1. Calculate the conversion cost rates for each department.
2. Calculate the budgeted cost of goods manufactured for Relax and Refresh for the month of
May.
3. Calculate the cost per container for each product for the month of May.
17-B