535
APPENDIX B
PROCESS COST SYSTEMS
EXERCISES
E–1
a. Work in Process—Blending Department Increase
Materials—Cocoa Beans Decrease
Materials—Sugar Decrease
Materials—Dehydrated Milk Decrease
b. Work in Process—Molding Department Increase
Work in Process—Blending Department Decrease
536
E–2
Materials
Factory Overhead—
Smeltin
g
Dept.
Work in Process—
Smeltin
g
Dept.
XXX XX
X
XXX XXX
Factory Overhead—
X
X
X
X
X
X
Work in Process—
Finished Goods—
537
E–3
a. and b.
A
B C
1
a. Units
b. Equivalent Units
of Production
2 Units to be accounted for:
3 Be
g
innin
g
W
ork in Process 700
4 Units started durin
period 4,980
5 Total 5,680
538
E–4
a. Drawing Department
A
B C
1
Units
Equivalent Units
of Production
2 Units to be accounted for:
3 Be
g
innin
g
W
ork in Process 1,500
4 Units started durin
period 45,500
5 Total 47,000
b. Winding Department
A
B C
1
Units
Equivalent Units
of Production
2 Units to be accounted for:
3 Be
g
innin
g
W
ork in Process 1,000
4 Units started durin
g
the period 45,000
5 Total 46,000
539
E–5
a. Units in process, July 1 ……………………………………… 20,000
Units placed into production for July …………………. 144,000
Less units finished during July ………………………….. (142,500)
Units in process, July 31 ……………………………………. 21,500
b.
A
B C
1
Units
Equivalent Units
of Production
2 Units to be accounted for:
3 Be
g
innin
g
W
ork in Process 20,000
4 Units started durin
g
the period 144,000
540
E–6
a. and b.
A
B C
1 Units
Units
Equivalent Units
of Production
2 Units to be accounted for:
3 Be
g
innin
g
W
ork in Process 5,000
4 Units started durin
g
the period 41,150
(
c. Cost per Equivalent Unit = Units Equivalent Total
Costs Production Total
Cost per Equivalent Unit = $173,430*
42,300 units = $4.10
*$6,140 + $80,500 + $45,900 + $40,890
541
E–7
a.
A B C
1
Units
Equivalent Units
of Production
2 Units to be accounted for:
3 Be
g
innin
g
W
ork in Process 2,000
4 Units started durin
g
the period 46,200
5 Total 48,200
Cost per Equivalent Unit = Units Equivalent Total
Costs Production Total
Cost per Equivalent Unit = $546,365*
47,510 units = $11.50
*$9,120 + $324,800 + $137,045 + $75,400
542
E–8
A
B C
1 COLONEL DIRKS COFFEE COMPANY
2 Cost of Production Report—Roastin
g
Department
3 For the Month Ended Au
g
ust 31
4 UNITS
5 Equivalent Units
6 Units of Production
7 Units to account for durin
g
production:
8 Work in process inventor
y
, Au
g
ust 1 2,000
9 Received from materials storeroom 93,000
g
g
15
16 COSTS
17
18 Cost per equivalent unit:
19 Total production costs for Au
g
ust in Roastin
g
Department $587,450**
20 Total equivalent units ÷ 94,750
21 Cost per equivalent unit $ 6.20
22 Costs assi
g
ned to production:
23 Inventor
y
in process, Au
g
ust 1 $ 8,130
g
g
y
g
E–9
A
B C
1 ALADDIN CARPET COMPANY
2 Cost of Production Report—D
y
ein
g
Department
3 For the Month Ended Ma
y
31
4 UNITS
5 Equivalent Units
6 Units of Production
7 Units to account for durin
g
production:
8 Work in process inventor
y
, Ma
y
1 4,000
y
g
y
15
16 COSTS
17
18 Cost per equivalent unit:
19 Total production costs for Ma
y
in D
y
ein
g
Department $629,400
20 Total equivalent units ÷ 52,450
21 Cost per equivalent unit $ 12.00
22 Costs assi
g
ned to production:
y
y
y
g
y
)
y
(
)
y
544
E–10
Memo
To: Production Manager
The cost of production report was used to identify the cost per case for each of
the four flavors as shown next.
A
B C D E
1 Grape Cola Oran
g
e Root Bee
r
A
B C D E
1 Cost per Case b
y
Cost Element
2 Grape Cola Oran
g
e Root Bee
r
3 Concentrate $1.90 $2.25 $2.20 $1.80
4 Wate
r
0.60 0.60 0.60 0.60
The preceding table indicates the concentrate per case is less for Grape and Root
Beer than for Cola and Orange. This is because the concentrate supplier charges
a higher price for the more popular flavors. The costs per case for water, sugar,
and bottles are the same for each flavor. However, the costs per case for
changeover are much greater for Grape and Root Beer than for the other two
flavors. In addition, the conversion costs per unit for Grape and Root Beer are
$0.35 higher than for Cola and Orange. These last two cost elements are sufficient
to cause the cost per case of Grape and Root Beer to be greater than Cola and
Orange.
545
E–11
The objective of this exercise is to determine if cost-per-pound trends in paper
stock, conversion, and coating costs are remaining stable over time. The follow-
ing table can be developed from the data:
a.
A
B C D E F G
1 April Ma
y
June Jul
y
Au
g
ust Sept.
2 Paper stock
The cost-per-pound information is determined by dividing the costs by the
pounds transferred out. The yield is determined by dividing the pounds trans-
ferred out by the pounds input.
b. Operator 1 believes that energy consumption is becoming less efficient. The
energy cost is part of the conversion cost. The conversion cost per output
pound has remained constant for the six months. If the energy efficiency were
declining, it would take more energy per pound of output over time. Thus, we
would expect to see the conversion rate per pound increasing if Operator 1
were correct.
546
P–1
A
B C
1 ALTERNATIVE FLOUR COMPANY
2 Cost of Production Report—Siftin
g
Department
3 For the Month Ended March 31
4 UNITS
5 Equivalent Units
6 Units of Production
7 Units to account for durin
g
production:
8 Work in process inventor
y
, March 1 640
g
15
16 COSTS
17
18 Cost per equivalent unit:
19 Total production costs for March in Siftin
g
Department $ 14,670**
20 Total equivalent units ÷ 3,260
21 Cost per equivalent unit $ 4.50
22 Costs assi
g
ned to production:
g
g
547
P–2
A
B C
1 SERGEANT WILKES COFFEE COMPANY
2 Cost of Production Report—Roastin
g
Department
3 For the Month Ended Octobe
r
31
4 UNITS
5 Equivalent Units
r
g
g
r
13 Inventory in process, October 31
(
75% completed
)
8,000 6,000*
14 Total units to be assigned costs 72,000 70,000
15
16 COSTS
17
18 Cost per equivalent unit:
19 Total production costs for Octobe
r
in Roastin
g
Department $350,000**
20 Total equivalent units ÷ 70,000
21 Cost per equivalent unit $ 5.00
22 Costs assi
g
ned to production:
23 Inventor
y
in process, Octobe
r
1 $ 27,600
24 Direct materials, direct labor, and factory overhead incurred in
r
y
r