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Solutions Manual, Appendix 4A 51
Problem 4A-10 (45 minutes)
FIFO method
1. Equivalent units of production
Material
s
Conversio
n
Equivalent units needed to complete be
g
innin
g
work in process inventory:
ending inventory) ……………………………….. 150,000 150,000
Equivalent units in endin
g
work in process
inventory:
2. Cost per equivalent unit
Material
s
Conversio
n
3. and 4. See the next page.
5. Cost Reconciliation
Costs to be accounted for:
Cost of be
g
innin
g
work in process inventory
($8,500 + $4,900) ……………………………………… $ 13,400
Costs added to production durin
g
the period
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52 Managerial Accounting, 16th Edition
Problem 4A-10 (continued)
3. and 4.
Costs of Endin
g
Work in Process Inventory and Units
T
ransferred Out
Material
s
Conversio
n
T
ota
l
Endin
g
work in process inventory:
Equivalent units ………………………………………………………….. 20,000 8,000
Units transferred out:
Cost in be
g
innin
g
work in process inventory………………………. $8,500 $4,900 $13,400
Cost to complete the units in be
g
innin
g
work in process inventory:
Equivalent units required to complete the be
g
innin
g
inventory ……………………………………………..…………….. 0 7,000
Cost per equivalent unit ………………………………..………….. $0.82 $1.48
g
g
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Solutions Manual, Appendix 4A 53
Problem 4A-11 (45 minutes)
FIFO method
1. Equivalent units of production
Material
s
Conversio
n
Equivalent units needed to complete be
g
innin
g
work in process inventory:
Materials: 20,000 units x (100% − 100%).. 0
Conversion: 20,000 units x (100% − 75%). 5,000
2. Cost per equivalent unit
Material
s
Conversio
n
3. and 4. See the next page.
5. Cost Reconciliation
Costs to be accounted for:
Cost of be
g
innin
g
work in process inventory
($25,200 + $24,800) ………………………………….. $ 50,000
Costs added to production durin
g
the period
Problem 4A-11 (continued)
3. and 4.
Costs of Endin
g
Work in Process Inventory and Units Transferred Out
Material
s
Conversio
n
T
ota
l
Endin
g
work in process inventory:
Equivalent units ………………………………………………………….. 40,000 10,000
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Solutions Manual, Appendix 4A 55
Case 4A-12 (60 minutes)
1.
T
ransferred I
n
Material
s
Conversio
n
Equivalent units needed to complete be
g
innin
g
work in
process inventory:
T
ransferred in: 450 units × (100% − 100%)…………….. 0
Materials: 450 units × (100% − 100%)…………………… 0
Conversion: 450 units × (100% − 60%) …………………. 180
Units started and completed durin
g
the period (1,950 units
T
s
n
T
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56 Managerial Accounting, 16th Edition
Case 4A-12 (continued)
T
ransferred I
n
Material
s
Conversio
n
T
ota
l
Endin
g
work in process inventory:
Equivalent units ………………………………………. 600 0 210
Units transferred out:
Cost in be
g
innin
g
work in process inventory…… $4,068 $1,980 $2,160 $8,208
Cost to complete units in be
g
innin
g
work in
process inventory:
Equivalent units needed to complete the
g
g
Cost of units started and completed this period:
Units started and completed this period ……. 1,350 1,350 1,350
Cost per equivalent unit production………….. $9.20 $4.60 $8.00
Cost of units started and completed this
2. The unit cost in the report prepared by the new assistant controller is high because none of the cost
incurred during the month was assigned to the units in ending work in process inventory. Because all
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Solutions Manual, Appendix 4B 57
Appendix 4B
Service Department Allocations
Exercise 4B-1 (15 minutes)
Service Departments Operating Departments
Admini-
stration
Facility
Services
Undergraduate
Programs
Graduate
Programs Total
Departmental costs
before allocations ………. $2,400,000 $1,600,000 $26,800,000 $5,700,000 $36,500,000
Allocations:
Administration costs
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58 Managerial Accounting, 16th Edition
Exercise 4B-2 (15 minutes)
Service
Departments
Operating
Departments
Admini-
stration Janitorial Groceries Gifts Total
Departmental costs before allocations ….. $150,000 $40,000 $2,320,000 $950,000 $3,460,000
Allocations:
Administration costs
(160/4,000, 3,100/4,000,
*Based on employee hours in the other three departments: 160 + 3,100 + 740 = 4,000.
†Based on space occupied by the two operating departments: 4,000 + 1,000 = 5,000.
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Solutions Manual, Appendix 4B 59
Exercise 4B-3 (20 minutes)
Service
Departments
Operating
Departments
Admini-
stration Janitorial
Mainte-
nance Binding Printing Total
Departmental costs before allocations $140,000 $105,000 $ 48,000 $275,000 $430,000 $998,000
A
llocations:
A
dministration costs1:
(35/700, 140/700, 315/700,
T