Accounting Chapter 16 Homework Cost to complete beginning work in process Direct materials

Problem 16-5B (Concluded)

Cost per EUP

Direct

Materials

Conversion

Costs incurred this period………

$ 112,500

$ 616,000

÷ EUP………………………………..

÷ 232,500

÷ 226,000

Cost per EUP (rounded)………………

$0.484 per

EUP

$2.726 per

EUP

Cost assignment and reconciliation

Costs transferred out

Cost of beginning work in process………………

$ 57,340

Cost to complete beginning work in process

Direct materials (2,500 EUP x $0.484 per EUP)…

$ 1,210

Conversion (4,000 EUP x $2.726 per EUP)………

10,904

12,114

Conversion (210,000 EUP x $2.726 per EUP)…….

Direct materials (20,000 EUP x $0.484 per EUP)…

Conversion (12,000 EUP x $2.726 per EUP)………

Part 2

Jan. 31

Work in Process Inventory—Assembly …………………..

743,554

Work in Process Inventory—Cutting …………………

743,554

Transfer of goods to Assembly.

Problem 16-6B (45 minutes)

1.

Units in beginning inventory …………………………………..

62,500

Units started and completed …………………………………..

175,000

Total units transferred out ………………………………………

237,500

2. Equivalent units of production—FIFO

Direct

Equivalent units of production

Materials

Conversion

3. Cost per equivalent unit of direct materials and conversion—FIFO

Direct

Materials

Conversion

Costs incurred this period………………………

$683,750

$446,050

÷ Equivalent units of production (from part 2).

273,500

202,750

Cost per equivalent unit of production………..

$2.50 per

EUP

$2.20 per EUP

Problem 16-6B (Concluded)

4. Assignment of costs to output of Forming department—FIFO

Costs of goods transferred out

Cost of beginning work in process inventory …..

Direct materials …………………………………………….

$ 99,075

Conversion ……………………………………………………

53,493

$ 152,568

Costs to complete beginning work in process

Direct materials (37,500 EUP x $2.50 per EUP) .

93,750

Conversion (12,500 EUP x $2.20 per EUP) ………

27,500

Total costs to complete …………………………………

121,250

Cost of units started and completed this period

Direct materials (175,000 EUP x $2.50 per EUP).

385,000

Cost of ending work in process inventory

Direct materials (61,000 EUP x $2.50 per EUP)..

Problem 16-7B (80 minutes)

Part 1

BELDA CO.—Cutting Department

Process Cost Summary – FIFO Method

For Month Ended March 31

Costs Charged to Production

Costs of beginning work in process

Direct materials…………………………………………

$ 16,800

Conversion………………………………………………

97,720

$ 114,520

Costs incurred this period

Direct materials…………………………………………

Conversion………………………………………………

Unit cost information

Beginning work in process..

220,000

250,000

260,000

Total units accounted for ……..

260,000

Equivalent units of production

Direct

Materials

Conversion

Units to complete beginning WIP

Direct materials (10,000 x 25%)…..

2,500 EUP

Conversion (10,000 x 40%)………..

4,000 EUP

Units started and completed

210,000 EUP

Units of ending work in process

Direct materials (40,000 x 50%)…..

20,000 EUP

232,500 EUP

226,000 EUP

Problem 16-7B (Continued)

Cost per EUP

Direct

Materials

Conversion

Costs incurred this period…………

$ 223,200

$1,233,960

÷ EUP

÷ 232,500

÷ 226,000

Cost per EUP

$ 0.96 per

EUP

$ 5.46 per

EUP

Cost assignment and reconciliation

Costs transferred out

Cost of beginning work in process………………

$ 114,520

Cost to complete beginning work in process

Direct materials (2,500 EUP x $0.96 per EUP)…

$ 2,400

Conversion (4,000 EUP x $5.46 per EUP)………

21,840

24,240

Conversion (210,000 EUP x $5.46 per EUP)……..

Direct materials (20,000 EUP x $0.96 per EUP)…..

Conversion (12,000 EUP x $5.46 per EUP)………..

Part 2

Mar. 31

Work in Process Inventory—Blending ……………………

1,486,960

Work in Process Inventory—Cutting …………………

1,486,960

Transfer of goods to Blending.

Problem 16-7B (Concluded)

If equivalent units of production for a production department’s ending

inventory for March are overstated, then total equivalent units of

production is also overstated. This means the cost per equivalent unit for

March is understated and the production manager would be paid a larger

bonus in March than should be the case. However, since March ending

work in progress inventory is overstated, beginning work in progress

inventory for April is also overstated. Then, the cost per equivalent unit for

SERIAL PROBLEM — SP 16

1. Features of job order and process costing follow.

Job order costing

Process costing

• Custom orders

• Repetitive operations

• Heterogeneous products

• Homogeneous products

• Low production volume

• High production volume

• High product flexibility

• Low product flexibility

• Low to medium standardization

• High standardization

2. Given the size of her company, and the types of products she sells,

Santana should probably stay with job order costing. The furniture

she makes would be made in small batches, probably to customer

COMPREHENSIVE PROBLEM

Comprehensive Problem, Major League Bat Company (110 minutes)

[Instructor note: General Ledger accounts are shown in Part 4.]

Part 1 (Using either weighted-average or FIFO)

July Journal Entries

a.

Raw Materials Inventory …………………………..……………

125,000

Cash ………………………………………………………………..

125,000

Purchased raw materials for cash.

b.

Work in Process Inventory ……………………………………..

52,440

Factory Overhead ………………………………………………….

10,000

Raw Materials Inventory …………………………..……….

62,440

Record use of raw materials.

c.

Work in Process Inventory ……………………………………..

202,250

Factory Overhead ………………………………………………….

25,000

Factory Wages Payable ……………………………………

227,250

Record direct and indirect labor.

d.

Factory Wages Payable …………………………………………

227,250

Cash ……………………………………………………………….

227,250

Paid factory payroll with cash.

e.

Factory Overhead ………………………………………………….

80,000

Cash ……………………………………………………………….

80,000

Paid other overhead with cash.

Work in Process Inventory ……………………………………..

101,125

Factory Overhead …………………………………………….

101,125

Allocated overhead at 50% of direct labor.

Comprehensive Problem (Continued)

Part 2 (Using weighted-average)

MAJOR LEAGUE BAT CO.

Process Cost Summary (Weighted Average)

For Month Ended July 31

Costs Charged to Production

Costs of beginning work in process

Direct materials…………………………………………

$ 2,660

Conversion………………………………………………

5,475

$ 8,135

Costs incurred this period

Direct materials…………………………………………

52,440

Conversion………………………………………………

303,375

355,815

Total costs to account for

$363,950

Unit cost information

Beginning work in process…

Complete & transferred out …………

Units started this period…….

Total units accounted for …………….

Equivalent units of production

Conversion

Units completed & transferred out..

11,000 EUP

Units of ending work in process

Direct materials (8,000 x 100%)…..

Conversion (8,000 x 40%)…………

19,000 EUP

14,200 EUP

Cost per EUP

Direct

Materials

Conversion

Cost of beginning work in process…

$ 2,660

$ 5,475

Costs incurred this period……………

52,440

303,375

Total costs………………………………

$55,100

$308,850

÷ EUP

19,000 EUP

14,200 EUP

Cost per EUP……………………………

$2.90 per

EUP

$21.75 per

EUP

[Continued on next page]

Comprehensive Problem (Continued)

(Using weighted-average)

Cost assignment and reconciliation

Costs transferred out

Direct materials (11,000 EUP x $2.90 per EUP)

$ 31,900

Conversion (11,000 EUP x $21.75 per EUP)

239,250

$271,150

Direct materials (8,000 EUP x $2.90 per EUP)

Conversion (3,200 EUP x $21.75 per EUP)

Part 3 — Journal entries (Using weighted-average)

g.

Finished Goods Inventory …………………………..

271,150

Work in Process Inventory …………………………..

271,150

Transferred goods to Finished Goods.

h.

Cash ……………………………………………………………………..

625,000

Sales ……………………………………………………….

625,000

Sold finished goods for cash.

265,700

Finished Goods Inventory …………………………..

265,700

Wild and Shaw, Financial & Managerial Accounting, 8e Solutions Manual: Chapter 16

Comprehensive Problem (Continued)

Part 4 (Using weighted-average)

General ledger accounts

Raw Materials Inventory

Acct. No. 132

Date

Explanation

Debit

Credit

Balance

June

30

Balance

25,000

(a)

Purchases

125,000

150,000

(b)

Usage

62,440

87,560

Work in Process Inventory

Acct. No. 133

Date

Explanation

Debit

Credit

Balance

(b)

Direct materials

60,575

Overhead allocation

101,125

363,950

(g)

Transfer to Fin. Goods

92,800

Finished Goods Inventory

Acct. No. 135

Date

Explanation

Debit

Credit

Balance

110,000

(g)

271,150

381,150

July sales

Comprehensive Problem (Concluded)

Part 4 (Using weighted-average)

Factory Wages Payable

Acct. No. 212

Date

Explanation

Debit

Credit

Balance

(c)

Direct labor

202,500

(c)

(d)

Indirect labor

Payment

25,000

227,250

0

Sales

Acct. No. 413

Date

Explanation

Debit

Credit

Balance

(h)

July sales

625,000

Cost of Goods Sold

Acct. No. 502

Date

Explanation

Debit

Credit

Balance

(h)

July sales

265,700

Factory Overhead

Acct. No. 540

Date

Explanation

Debit

Credit

Balance

(b)

(e)

115,000

Overhead application

101,125

Part 5 (Using weighted-average)

Computation of gross profit for July

Comprehensive Problem (Continued)

Part 2 (Using FIFO)

MAJOR LEAGUE BAT CO.

Process Cost Summary (FIFO)

For Month Ended July 31

Costs Charged to Production

Costs of beginning work in process

Direct materials………………………………………

$ 2,660

Conversion……………………………………………

5,475

$ 8,135

Costs incurred this period

Direct materials………………………………………

52,440

Conversion……………………………………………

303,375

355,815

Total costs to account for……………………………

$363,950

Unit cost information

Complete & transferred out …………

Total units to account for……

Total units accounted for …………….

Equivalent units of production

Direct

Materials

Conversion

Units to complete beginning WIP

Direct materials (5,000 x 25%)…

0 EUP

Conversion (5,000 x 25%)………

1,250 EUP

Units started and completed……

6,000 EUP

8,000 EUP