T2-8
Exercise T2-7
a. Work backwards from the cost per equivalent unit to determine units
completed and transferred out:
Materials
Conversion
Beginning inventory
$5,900
$15,000
Added to production
47,300
65,000
Total materials cost
$53,200
$80,000
Materials cost per EU
$.40
$.64
Equivalent units
133,000
125,000
Less: Ending WIP EU
Materials (40,000 60%)
(24,000)
Conversion (40,000 40%)
(16,000)
Units completed & transferred
109,000
109,000
answer both ways.
Topic Focus 2 – Focus on Process Costing
T2-9
SOLUTIONS TO PROBLEMS
Problem T2-8
a.
Raw materials
$115,000
60,000 (1)
8,000 (4)
$47,000
WIP – Grinding
WIP – Mixing
WIP – Finishing
$25,000
$7,000
$10,000
(1) 60,000
150,000 (3)
(3) 150,000
178,000 (6)
(6) 178,000
206,000 (8)
(2) 82,000
(4) 8,000
(7) 41,000
$17,000
(5) 33,000
$23,000
$20,000
Finished Goods
$41,000
230,000 (9)
(8) 206,000
$17,000
b. 1. Finishing
2. Grinding requires the greatest amount of material and conversion
to the other departments.
3.
$206,000 $230,000
=$20 per unit cost; =11,500 units sold
10,300 $20
T2–10
Problem T2-9
a.
Units
Beginning Inventory, Sep. 1
1,000
Added to production
+ x
= 10,150
Completed and transferred out
– 9,150
Ending inventory, April 30
= 2,000
b. Materials:
Completed and transferred out 9,150
Conversion:
Completed and transferred out 9,150
c.
Materials
Conversion
Beginning inventory, Sep. 1
$1,300
$ 1,250
Added to production
13,195
32,875
Total materials cost
$14,495
$34,125
Equivalent units
11,150
9,750
Materials cost per EU
$1.30
$3.50
Topic Focus 2 – Focus on Process Costing
T2–11
Problem T2-9, continued
e.
Units
Costs
WIP, Sep. 1
1,000
$2,550
Started into production
10,150
46,070
Total units to be accounted for
11,150
$48,620
Transferred to Silk-screening
9,150
$43,920
WIP, Sep. 30
2,000
4,700
Total accounted for
11,150
$48,620
Problem T2–10
a. Equivalent units: Materials Conversion
Completed and transferred 8,000 8,000
Cost per EU: Materials Conversion
Cost to be allocated $33,000 $17,000
b. WIP, ending
Materials (2,000 EU $3.30) $6,600
T2–12
Case T2–11
a.
Assembly
Finishing
Beginning balance
560
0
Started/Transferred in
7,600
7,260
Transferred out
(7,260)
(6,960)
Ending balance
900
300
Assembly:
Materials
Conversion
Transferred out
7,260
7,260
Ending balance, materials (900 100%)
900
Ending balance, conversion (900 40%)
360
Total EU
8,160
7,620
Finishing:
Materials
Conversion
Transferred out
6,960
6,960
Ending balance, materials (300 100%)
300
Ending balance, conversion (300 50%)
150
Total EU
7,260
7,110
b.
Assembly:
Materials
Conversion
Beginning balance
$12,500
$4,500
Added in
252,700
231,720
Total cost
$265,200
236,220
EU
8,160
7,620
Cost per EU
$32.50
$31
Finishing:
Materials
Conversion
Beginning balance
$0
$0
Added in
76,230
106,650
Total cost
76,230
106,650
EU
7,260
7,110
Cost per EU
$10.50
$15
Topic Focus 2 – Focus on Process Costing
T2–13
Case T2-11, continued
c. Assembly—materials $32.50
Assembly—conversion 31.00
d. markup =
$125.25-89 40.7%
$89
e.
To: Al Lovelace
From: Melanie Roberts
Re: Williamsburg plant
Before we increase our prices, I recommend we conduct market surveys to
investigate ways to reduce the production cost of our jackets.