EXERCISE 3-12
To: David Skaros
From: Student
Re: Ending inventory
The reason for any confusion related to your department’s ending inventory
The ending inventory quantity can be measured in physical units or equivalent
units. Physical units are actual units present without regard to the stage of
Equivalent units measure the work done on the physical units, expressed
in terms of fully completed units. Therefore, if your ending inventory contains
EXERCISE 3-13
THORPE COMPANY
Welding Department
Production Cost Report
For the Month Ended February 28, 2014
Equivalent Units
Quantities
Physical
Units
Materials
(Step 1)
(Step 2)
Units to be accounted for
Work in process, February 1
Started into production
Total units
Units accounted for
Transferred out
15,000
45,000
60,000
49,000
49,000
49,000
Work in process, February 28
11,000
11,000
2,200
(11,000 X 20%)
Total units
60,000
60,000
51,200
Costs
Materials
Conversion
Costs
Total
Unit costs (Step 3)
Total cost
Equivalent units
Unit costs (a) ÷ (b)
Costs to be accounted for
Work in process, February 1
Started into production
Total costs
(a)
(b)
$198,000(1)
60,000
$3.30
$128,000(2)
51,200
$2.50
$326,000
$5.80
$ 32,175
293,825
$326,000
Cost Reconciliation Schedule (Step 4)
Costs accounted for
Transferred out (49,000 X $5.80)
Work in process, February 28
Materials (11,000 X $3.30)
Conversion costs (2,200 X $2.50)
Total costs
$36,300
5,500
$284,200
41,800
$326,000
(1)$18,000 + $180,000
*EXERCISE 3-16
Equivalent Units
(a)
Physical
Units
Materials
Conversion
Costs
Applications completed:
Work in process, September 1
100
0
60
Started and completed
700
700
700
Work in process, September 30
200
200
120
Total units
1,000
900
880
(b)
Materials: $4,500 ÷ 900 = $5.00
Conversion costs: $21,340* ÷ 880 = $24.25
*($12,000 + $9,340)
Costs accounted for:
Applications completed:
Work in process, September 1
$4,960
Conversion costs (60 x $24.25)
1,455
$ 6,415
Started and completed (700 x $29.25)
20,475
$26,890
Work in process, September 30:
Materials (200 x $5.00)
1,000
Conversion costs (120 x $24.25)
2,910
3,910
Total costs
$30,800*
*Total costs to be accounted for: $1,000 + $3,960 + $4,500 + $12,000 +
$9,340 = $30,800
*EXERCISE 3-17
(a) (1) Materials:
Production Data
Physical
Units
Materials Added
This Period
Equivalent
Units
Work in process, August 1
Started and completed
Work in process, August 31
Total
0
8,000
2,000
10,000
0
100%
100%
0
8,000
2,000
10,000
(2) Conversion Costs:
Production Data
Physical
Units
Work Added
This Period
Equivalent
Units
Work in process, August 1
Started and completed
Work in process, August 31
Total
0
8,000
2,000
10,000
0
100%
40%
0
8,000
800
8,800
(b) Unit costs are:
Materials $45,000 ÷ 10,000 = $4.50
Costs to Be
Assigned
Assignment of Costs
Equivalent
Units
Unit
Cost
Total Costs
Assigned
Total mfg. costs
Transferred out
$75,800 (1)
Work in process, August 1
Started and completed
0
8,000
$0
$8
$ 0
64,000
$64,000
Work in process, August 31
Materials
Conversion costs
2,000
800
$4.50
$3.50
$ 9,000
2,800
11,800
$75,800
(1) $45,000 + $14,700 + $16,100.
*EXERCISE 3-18
(a)
(1)
Materials
Physical
Units
Materials Added
This Period
Equivalent
Units
Work in process,
September 1
Started and completed
Work in process,
September 30
Total
2,000
9,000
1,000
12,000
Q
0%
100%
100%
0
9,000
1,000
10,000
(2)
Conversion Costs
Physical
Units
Work Added
This Period
Equivalent
Units
Work in process,
September 1
Started and completed
Work in process,
September 30
Total
2,000
9,000
1,000
12,000
80%
100%
40%
1,600
9,000
400
11,000
(b) Materials $ 60,000 ÷ 10,000 = $ 6
(c)
Costs to Be
Assigned
Assignment of Costs
Equivalent
Units
Unit
Cost
Total Costs
Assigned
Total mfg. costs
Transferred out
*$207,200*
Work in process, 9/1
Conversion costs
Started and completed
0
1,600
9,000
$ 0
$12
$18
$15,200
19,200
$ 34,400
162,000
Total costs transferred out
196,400
Work in process, 9/30
Materials
Conversion costs
Total costs
1,000
400
$ 6
$12
$6,000
4,800
10,800
$207,200
costs $132,000.
*EXERCISE 3-19
(a) Work in process, March 1 800
Started into production 1,200
(b) Materials:
Production Data
Physical
Units
Materials Added
This Period
Equivalent
Units
Work in process, March 1
Started and completed
Work in process, March 31
Total
800
700
500
2,000
%100
100%
100%
0
700
500
1,200
Unit cost = $6,600 ÷ 1,200 = $5.50.
(c) Conversion costs:
Production Data
Physical
Units
Work Added
This Period
Equivalent
Units
Work in process, March 1
Started and completed
Work in process, March 31
Total
800
700
500
2,000
70%
100%
40%
560
700
200
1,460
Unit cost = $2,500 + $1,150 = $3,650 ÷ 1,460 = $2.50.
(d) In process, March 1 ………………………………………………… $3,680
(e) 700 X ($5.50 + $2.50) = $5,600.
(f) Materials (500 X $5.50) ……………………………………………. $2,750
*EXERCISE 3-20
MAJESTIC COMPANY
Welding Department
Production Cost Report
For the Month Ended February 28, 2014
Equivalent Units
Quantities
Physical
Units
Materials
Conversion
Costs
(Step 1)
(Step 2)
Units to be accounted for
Work in process, February 1
Started into production
Total units
Units accounted for
Completed and transferred out
15,000
64,000
79,000
Work in process, February 1
Started and completed
Total
Work in process, February 28
15,000
39,000*
54,000
25,000
0
39,000
39,000
25,000
13,500
39,000
52,500
5,000
(15,000 X 90%)
(25,000 X 20%)
Total units
79,000
64,000
57,500
*(64,000 – 25,000)
Costs
Materials
Conversion
Costs
Total
Unit costs (Step 3)
Costs in February
Equivalent units
Unit costs (a) ÷ (b)
Costs to be accounted for
Work in process, February 1
Started into production
Total costs
(a)
(b)
$192,000
64,000
$3.00
(1)
$103,500
57,500
$1.80
(2)
$295,500
$4.80
$ 32,175
295,500
$327,675
*EXERCISE 3-20 (Continued)
Cost Reconciliation Schedule
Costs accounted for (Step 4)
Transferred out
Work in process, February 1
Costs to complete beginning
work in process
Conversion costs
(13,500 X $1.80)
Total costs
Units started and completed (39,000 X $4.80)
Total costs transferred out
Work in process, February 28
Materials (25,000 X $3.00)
Conversion costs (5,000 X $1.80)
Total costs
$32,175
24,300
$ 56,475
187,200
75,000
9,000
$243,675
84,000
$327,675
(2) Labor $35,100 plus overhead $68,400.
SOLUTIONS TO PROBLEMS
PROBLEM 3-1A
1. Raw Materials Inventory ……………………………. 300,000
2. Work in Process—Mixing ………………………….. 210,000
3. Factory Labor …………………………………………… 258,900
4. Work in Process—Mixing ………………………….. 182,500
5. Manufacturing Overhead …………………………... 810,000
6. Work in Process—Mixing (28,000 X $24) …….. 672,000
7. Work in Process—Packaging ……………………. 979,000
8. Finished Goods Inventory …………………………. 1,315,000
9. Accounts Receivable ………………………………… 2,500,000