Atkinson, Solutions Manual t/a Management Accounting, 6E
– 122 –
4-46 (a)
Mixing and
Reaction
Pulverizing
Blending
Chambers
and Packing
Total conversion costs
$424,600
$1,551,000
$559,900
Total number of process hours
8,760
35,040
8,760
Conversion cost per process hour
$48.470
$44.264
$63.916
(b)
Costs
C206
C208
Materials:
Raw materials
$1,488.00
$1,488.00
Packing materials
$175.20
$280.80
$1,663.20
$1,768.80
Conversion costs:
Mixing and blending: 6 hrs $48.470
290.82
290.82
Reaction chamber: 24 hrs $44.264
1,062.34
1,062.34
Pulverizing and packing: 4 hrs $63.916,
255.66
8 hrs $63.916
511.33
Total conversion costs
$1,608.82
$1,864.49
Total cost
$3,272.02
$3,633.29
4-47 (a)
Materials
Conversion
Completed and
transferred out units
8000 100%
8,000
8,000
Ending WIP units
4000 40%; 4000 25%
1,600
1,000
EUs of production
9,600
9,000
(b)
Materials
Conversion
Total
Costs, beginning of October
$1,050
$3,240
$4,290
Added during October
8,200
22,620
30,820
To be accounted for
$9,250
$25,860
$35,110
EUs of production
9,600
9,000
Cost per equivalent unit
$0.96
$2.87
$3.83
Chapter 4: Accumulating and Assigning Costs to Products
– 123 –
(c)
Materials
Conversion
Costs, beginning of October
$1,050
$3,240
Corresponding equivalent units
1,400
1,200
Cost per equivalent unit
$0.75
$2.70
Costs added during October
$8,200
$22,620
Corresponding equivalent units*
8,200
7,800
Cost per equivalent unit
$1.00
$2.90
*Equivalent units:
Materials
Conversion
Completed during October from
beginning WIP
2000 30% = 600
2000 40% = 800
Equivalent units in ending WIP
4000 40% = 1600
4000 25% = 1000
Started and completed during
October:
(12,000 – 2,000 – 4,000) 100%
6000
6000
Total EU s in October
8200
7800
respectively.
Atkinson, Solutions Manual t/a Management Accounting, 6E
4-48
(a)
Service Departments
Production Departments
Personnel
Maintenance
Machining
Assembly
Directly identified
costs
$100,000
$200,000
$400,000
$300,000
Allocation of
Personnel Dept.
costs
(100,000)
—
11,111a
88,889b
Allocation of
Maintenance
Dept. costs
—
(200,000)
176,471c
23,529d
$0
$0
$587,582
$412,418
a
$100,000 5
45
c
$200,,
,
000 7500
8500
$100,000 40
45
Total unit cost
Markup (30%)
Bid price
Chapter 4: Accumulating and Assigning Costs to Products
– 125 –
(c)
Service Departments
Production Departments
Personnel
Maintenance
Machining
Assembly
Directly
identified costs
$100,000
$200,000
$400,000
$300,000
Allocation of
Maintenance
Dept. costs
30,000a
(200,000)
150,000b
20,000c
Allocation of
Personnel
Dept. costs
(130,000)
—
14,444d
115,556e
$0
$0
$564,444
$435,556
a
$200,,
,
000 1500
10 000
d
$130,000 5
45
,
10 000
(d) Cost driver rate: Machining
$ ,
,
$ .
564 444
10 000
56 4444
machine hours
per machine hour
Cost driver rate: Assembly
$ ,
,
$ .
435 556
10 000
43 5556
direct labor hours
per direct labor hour
Direct materials and labor costs:
$450.00
Overhead costs from Machining Department
($56.4444 3 machine hours)
169.33
Overhead costs from Assembly Department
($43.5556 5 direct labor hours)
217.78
Total unit cost
$837.11
Markup (30%)
251.13
Bid price
$1,088.24
$130,000 40
45
$200,,
Atkinson, Solutions Manual t/a Management Accounting, 6E
4-49
(a)
Service Departments
Production Departments
Maintenance
Grounds
Fabricating
Assembly
Directly
identified costs
$18,000
$14,000
$45,000
$25,000
Allocation of
Maintenance
Dept. costs
(18,000)
—
12,000a
6,000b
Allocation of
Grounds Dept.
costs
—
(14,000)
6,000c
8,000d
$0
$0
$63,000
$39,000
(b)
Service Departments
Production Departments
Allocation of
Allocation of
Dept. costs
(15,385)
Chapter 4: Accumulating and Assigning Costs to Products
(c)
Service Departments
Production Departments
Maintenance
Grounds
Fabricating
Assembly
Directly
identified
costs
$18,000.0000
$14,000.0000
$45,000.0000
$25,000.0000
Allocation of
Maintenance
Dept. costs
($19,221.9959)
($19,221.9959)
1,478.6151a
11,828.9206b
5,914.4603c
Allocation of
Grounds
Dept. costs
($15,478.6151)
1,221.9959d
(15,478.6151)
6,109.9796e
8,146.6395f
$0
$0
$62,938.9002
$39,061.0998
a
500,19
500,1
9959.221,19$
d
000,38
000,3
6151.478,15$
b
500,19
000,12
9959.221,19$
e
000,38
000,15
6151.478,15$
000,6
000,20
9959.221,19$
Atkinson, Solutions Manual t/a Management Accounting, 6E
4-50 (a) Service Dept. Cost Allocation: Direct Method
Service Departments
Production Departments
Maintenance
Power
Casting
Assembly
Directly
identified
costs
$750,000
$450,000
$150,000
$110,000
Allocation of
Maint. Dept.
Costsa
(750,000)
—
500,000a
0a0a
250,000
Allocation of
Power Dept.
Costsb
—
(450,000)
250,000
200,000
$0
$0
$900,000
$560,000
a
000,250
000,40000,80
000,40
000,750 ;000,500
000,40000,80
000,80
000,750
b
000,200
000,160000,200
000,160
000,504 ;000,250
000,160000,200
000,200
000,450
Cost driver rate: Casting machine hours
per machine hour
$900,
,
$11.
000
80 000
25
Cost driver rate: Assembly direct labor hours
per direct labor hour
$560,
,
$9.
000
60 000
33
Chapter 4: Accumulating and Assigning Costs to Products
– 129 –
Direct labor and material costs
$32.000
Overhead costs:
Casting (1 $11.25)
$11.250
Assembly (0.5 $9.33)
4.665
15.915
Unit cost
$47.915
Number of units per month
1,000.000
Total manufacturing costs per month
$47,915.000
Mark up (25%)
$11,978.750
Bid price (per month)
$59,893.750
(b) Service Dept. Cost Allocation: Sequential Method
Service Departments
Production Departments
Maintenance
Power
Casting
Assembly
Directly
identified
costs
$750,000
$450,000
$150,000
$110,000
Allocation of
Maint. Dept.
costs
(750,000)
$300,000
300,000
150,000
Allocation of
Power Dept.
costs
—
(750,000)
416,667
333,333
$0
$0
$866,667
$593,333
Cost driver rate: Casting
$ ,
,
$ .
866 667
80 000
10 833 per machine hour
Cost driver rate: Assembly
$ ,
,
$ .
593 333
60 000
9889 per labor hour