Problem 16-3A (concluded)
Equivalent units of production
Direct
Materials
Conversion
Units completed & transferred out..
Units of ending work in process
20,000 EUP
Equivalent units of production……
Cost per EUP
Direct
Materials
Conversion
Cost of beginning work in process..
$17,100
$67,200
Costs incurred this period…………
144,400
862,400
Total costs…………………………….
$161,500
$929,600
÷ EUP…………………………………..
170,000 EUP
166,000 EUP
Cost per EUP…………………………
$0.95 per EUP
$5.60 per EUP
Cost assignment and reconciliation
Costs transferred out
Costs of ending work in process
Part 2
Oct. 31
Work in Process Inventory—Assembly …………………..
982,500
Work in Process Inventory—Cutting …………………
982,500
Transfer of goods to next department.
Problem 16-4A (80 minutes)
Part 1
TAMAR CO.—Forming Department
Process Cost Summary – Weighted Average Method
For Month Ended May 31
Costs Charged to Production
Costs of beginning work in process
Direct materials………………………………………
$ 19,800
Conversion……………………………………………
221,940
$ 241,740
Costs incurred this period
Direct materials………………………………………
Conversion……………………………………………
Total costs to account for……………………………
$2,904,480
Unit cost information
Beginning work in process..
Completed & transferred out ………..
Total units to account for…..
Total units accounted for …………….
Equivalent units of production
Direct
Materials
Conversion
Units completed & transferred out…
22,200 EUP
22,200 EUP
Units of ending work in process…..
Direct materials (2,400 x 100%)….
2,400 EUP
Conversion (2,400 x 80%)…………
__________
1,920 EUP
Equivalent units of production……
24,600 EUP
24,120 EUP
24,600 EUP
24,120 EUP
Problem 16-4A (Concluded)
Cost assignment and reconciliation
Costs transferred out
Direct materials (22,200 EUP x $21.00 per EUP)…
$ 466,200
Conversion (22,200 x $99.00 per EUP)…………….
2,197,800
$2,664,000
Direct materials (2,400 EUP x $21.00 per EUP)…..
Conversion (1,920 EUP x $99.00 per EUP)………..
Part 2
May 31
Work in Process Inventory—Assembly …………………..
2,664,000
Work in Process Inventory—Forming ……………….
2,664,000
Transfer of goods to next department.
Part 3
3a. Two major estimates are the: i) overhead allocation rate, and ii)
percentage of completion for materials and conversion.
3b. Management might try to underestimate the percentage complete
because this reduces the equivalent units for conversion. This results
in lowering the dollar value assigned to these components of ending
inventory.
Problem 16-5A (80 minutes)
Part 1
TAMAR CO.—Forming Department
Process Cost Summary – FIFO Method
For Month Ended May 31
Costs Charged to Production
Costs of beginning work in process
Direct materials……………………………………..
$ 19,800
Conversion…………………………………………..
221,940
$ 241,740
Costs incurred this period
Direct materials……………………………………..
496,800
Conversion…………………………………………..
2,165,940
2,662,740
Total costs to account for…………………………..
$2,904,480
Unit cost information
Units to account for
Units accounted for
Beginning work in process..
3,000
Completed & transferred out ………..
22,200
Units started this period……
21,600
Ending work in process ……………..
2,400
Total units to account for….
24,600
Total units accounted for ……………
24,600
Equivalent units of production
Conversion
Units to complete beginning WIP
Direct materials (3,000 x 0%)…………
Conversion (3,000 x 60%)……………..
Units of ending work in process
Direct materials (2,400 x 100%)………
Equivalent units of production…………
Problem 16-5A (Concluded)
Cost per EUP
Direct
Materials
Conversion
Costs incurred this period ………………
$ 496,800
$2,165,940
÷ EUP …………………………………………….
÷ 21,600
÷ 22,920
Cost per EUP …………………………………
$23.00 per
EUP
$94.50 per
EUP
Cost assignment and reconciliation
Costs transferred out
Cost of beginning work in process…………………
$ 241,740
Cost to complete beginning work in process
Direct materials (0 EUP x $23.00 per EUP)………
$ 0
Conversion (1,800 EUP x $94.50 per EUP)………
170,100
170,100
Costs of units started and completed this period
Conversion (1,920 EUP x $94.50 per EUP)………
181,440
May 31
Problem 16-6A (45 minutes)
1.
Units in beginning inventory …………………………………..
37,500
Units started and completed …………………………………..
150,000
Total units transferred to Assembly ………………………..
187,500
2. Equivalent units of production—FIFO
Direct
Equivalent units of production—FIFO
Materials
Conversion
Units to complete beginning work in process
Direct materials (37,500 x 40%)…………………
15,000
Conversion (37,500 x 60%)………………………
22,500
Units started and completed………………………
150,000
150,000
Units in ending work in process
Direct materials (51,250 x 60%)………………….
30,750
Direct
Conversion
Problem 16-6A (Concluded)
4. Assignment of costs to output of Cutting department—FIFO
Costs of goods transferred out
Cost of beginning work in process inventory
Direct materials……………………………………
$74,075.00
Conversion…………………………………………
28,493.00
$ 102,568.00
Costs to complete beginning work in process
Direct materials (15,000 EUP x $2.58 per EUP)..
38,700.00
Conversion (22,500 EUP x $2.17 per EUP)……..
48,825.00
Total costs to complete……………………………
87,525.00
Cost of units started and completed this period
Direct materials (150,000 EUP x $2.58 per EUP)…
Conversion (150,000 EUP x $2.17 per EUP)……
325,500.00
Total cost of units started and completed……..
Cost of ending work in process inventory
Direct materials (30,750 EUP x $2.58 per EUP)..
79,335.00
Conversion (10,250 EUP x $2.17 per EUP)……..
Problem 16-7A (80 minutes)
Part 1
DENGO CO.—Roasting Department
Process Cost Summary – FIFO Method
For Month Ended October 31
Costs Charged to Production
Costs of beginning work in process
Direct materials ……………………………………………………….
$ 9,900
Conversion ………………………………………………………………
110,970
$ 120,870
Costs incurred this period
Direct materials ……………………………………………………….
248,400
Conversion ………………………………………………………………
1,082,970
1,331,370
Total costs to account for …………………………………………..
$1,452,240
Unit cost information
Units to account for
Units accounted for
Beginning work in process..
3,000
Completed & transferred out ………..
22,200
Units started this period…...
21,600
Ending work in process ………………
2,400
Total units to account for…
24,600
Total units accounted for …………….
24,600
Equivalent units of production
Conversion
Units to complete beginning WIP
Units of ending work in process
Problem 16-7A (Continued)
Cost per EUP
Direct
Materials
Conversion
Costs incurred this period…………
$ 248,400
$1,082,970
÷ EUP…………………………………..
÷ 21,600
÷ 22,920
Cost per EUP…………………………
$11.50 per
EUP
$47.25 per
EUP
Cost assignment and reconciliation
Costs transferred out
Cost of beginning Work in Process………………..
$ 120,870
Cost to complete beginning work in process
Direct materials (0 EUP x $11.50 per EUP)………
$ 0
Conversion (1,800 EUP x $47.25 per EUP)………
85,050
85,050
Conversion (19,200 EUP x $47.25 per EUP)………
Direct materials (2,400 EUP x $11.50 per EUP)….
Conversion (1,920 EUP x $47.25 per EUP)……….
Part 2
Oct. 31
Work in Process Inventory—Blending ………………………….
1,333,920
Work in Process Inventory—Roasting …………………….
1,333,920
Transfer of goods across processing
departments.
Problem 16-7A (Concluded)
Part 3
If equivalent units of production for a production department’s ending
inventory for October are understated, then total equivalent units of
production for that department is also understated. This means the cost
per equivalent unit for that department for October is overstated and that
department’s manager would be paid a smaller bonus in October than
should be the case.
PROBLEM SET B
Problem 16–1B (45 minutes)
Part 1: Cost of goods transferred and cost of goods sold
(a) Beginning work in process inventory—Mixing ……………
$ 156,000
Direct materials used in production …………………………..
174,000
Direct labor used in production ………………………………………
52,500
Overhead applied (75% of direct materials cost)………………
130,500
Total production costs ………………………………………………….
513,000
Less ending work in process inventory—Mixing ……………
(250,000)
Transferred to work in process—Blending (a) ………………….
$ 263,000
$ 160,000
Direct materials used in production …………………………..
44,000
Overhead applied (60% of direct labor cost) …………………….
Total production costs ………………………………………………….
586,488
Less ending work in process inventory—Blending ………..
(198,000)
Transferred to finished goods (b) ……………………………………
$388,488
(c) Beginning finished goods inventory …………………………..
$ 80,200
Transferred-in from Blending ………………………………………….
Cost of goods available for sale …………………………………….
388,488
468,688
Less ending finished goods inventory …………………………..
(60,250)
Cost of goods sold (c) …………………………………………………….
$408,438
Problem 16–1B (continued)
Part 2: Summary journal entries
a.
Mar 31
Raw Materials Inventory ………………………………………..
212,000
Accounts Payable ……………………………………………
212,000
Purchased raw materials.
b.
Mar 31
Work in Process Inventory—Mixing ……………………….
174,000
Work in Process Inventory—Blending ……………………
Raw Materials Inventory …………………………..
44,000
218,000
Used direct materials.
c.
Mar 31
Factory Overhead …………………………………………………
41,200
Raw Materials Inventory …………………………..
41,200
Used indirect materials.
d.
Mar 31
Work in Process Inventory—Mixing ………………………
52,500
Work in Process Inventory—Blending ……………………
Factory Wages Payable …………………………..
74,680
127,180
Incurred direct labor costs.
e.
Mar 31
Factory Overhead …………………………………………………
69,500
Factory Wages Payable …………………………..
69,500
Incurred indirect labor costs.
Mar 31
Factory Wages Payable ………………………………………….
196,680
Cash ……………………………………………………….
Paid factory payroll.
Mar 31
Factory Overhead …………………………………………………
64,660
Other Accounts ……………………………………………….
64,660
Incurred other overhead costs.
Mar 31
Work in Process Inventory—Mixing ……………………….
130,500
Factory Overhead ……………………………………………
Problem 16–1B (continued)
i.
Mar 31
j.
Mar 31
Work in Process Inventory—Blending ……………………
Work in Process Inventory—Mixing ………………….
Transferred costs of partially completed goods.
Finished Goods Inventory …………………………..
263,000
388,488
263,000
Work in Process Inventory—Blending ………………
388,488
Transferred completed products from
Blending to finished goods inventory.
k.
Mar 31
408,438
Mar 31
Accounts Receivable …………………………………………….
Problem 16-2B (50 minutes)
For the first process:
Part 1
(a) and (b) Equivalent units with respect to direct materials and conversion
Direct
Equivalent units of production
Materials
Conversion
Units completed & transferred out …………………..
80,000
80,000
Units of ending work in process ……………………..
Direct materials (8,000 x 100%) ………………….
8,000
Conversion (8,000 x 25%) ………………………….
______
2,000
Equivalent units of production ………………………..
88,000
82,000
Part 2
Cost per equivalent unit of production
Direct
Materials
Conversion
Costs of beginning work in process ………………
$ 58,000
$ 86,400
Costs incurred this period …………………………..
712,000
1,980,000
Total costs ……………………………………………………
$770,000
$2,066,400
÷ Equivalent units of production ……………………
88,000 EUP
82,000 EUP
Cost per equivalent unit of production …………..
$8.75 per EUP
$25.20 per EUP
Part 3: Assigning product costs to units
Costs transferred out
Cost of ending work in process
Problem 16-2B (Concluded)
Part 4
MEMORANDUM
TO:
FROM:
DATE:
RE: Percentage of Completion Error Analysis
For the first process:
If the units in ending inventory are 75% complete instead of 25% with respect
to conversion, the number of equivalent units in ending inventory with respect
to conversion is understated, and the total equivalent units produced for the
period is also understated. If the correct percentage of completion with
respect to conversion is used, the conversion cost per equivalent unit will be
smaller. However, the cost of conversion in ending work in process is larger
Problem 16-3B (75 minutes)
Part 1
BRUN COMPANY—Mixing Department
Process Cost Summary – Weighted Average Method
For Month Ended November 30
Costs Charged to Production
Costs of beginning work in process
Direct materials ……………………………………………………
$ 6,800
Conversion ………………………………………………………….
14,500
Costs incurred this period
$ 21,300
Direct materials ……………………………………………………
116,400
Conversion ………………………………………………………….
1,067,000
1,183,400
Total costs to account for ………………………………………
$1,204,700
Unit cost information
Beginning work in process ………….
100,000
Units started this period ………………
104,500
12,000
Total units to account for …………….
112,000
Total units accounted for …………………………..
112,000
Equivalent units of production
Direct
Materials
Conversion
Units completed & transferred out…
100,000 EUP
100,000 EUP
Units of ending work in process
Direct materials (12,000 x 100%)…..
12,000 EUP
Conversion (12,000 x 25%)………….
__________
3,000 EUP
Equivalent units of production………
112,000 EUP
103,000 EUP
Cost per EUP
Direct
Materials
Conversion
Cost of beginning work in process…
Costs incurred this period……………
Total costs………………………………
÷ EUP…………………………………….
Cost per EUP……………………………
Problem 16-3B (Concluded)
Cost assignment and reconciliation
Costs transferred out
Direct materials (100,000 EUP x $1.10 per EUP) ……
$110,000
Conversion (100,000 x $10.50 per EUP) ………………..
1,050,000
$1,160,000
Costs of ending work in process
Direct materials (12,000 EUP x $1.10 per EUP) ……..
13,200
Conversion (3,000 EUP x $10.50 per EUP) …………….
31,500
44,700
Total costs accounted for ………………………………………
$1,204,700
Part 2
Problem 16-4B (80 minutes)
Part 1
SWITCH COMPANY—Cutting Department
Process Cost Summary – Weighted Average Method
For Month Ended January 31
Costs Charged to Production
Costs of beginning work in process
Direct materials………………………………………
$ 7,500
Conversion……………………………………………
49,840
Costs incurred this period
$ 57,340
Direct materials………………………………………
112,500
Conversion……………………………………………
616,000
728,500
Total costs to account for……………………………
$785,840
Unit cost information
Beginning work in process ………….
Units started this period ……………..
Total units to account for …………….
Total units accounted for ……
Equivalent units of production
Direct
Materials
Conversion
Units completed & transferred out………
220,000 EUP
220,000 EUP
Units of ending work in process
Direct materials (40,000 x 50%)…………
20,000 EUP
Conversion (40,000 x 30%)………………
___________
12,000 EUP
Equivalent units of production……………
240,000 EUP
232,000 EUP
Cost per EUP
Costs incurred this period…………………
Total costs……………………………………
÷ EUP………………………………………….
240,000 EUP
232,000 EUP
Cost per EUP…………………………………
Problem 16-4B (Concluded)
Cost assignment and reconciliation
Costs transferred out
Direct materials (220,000 EUP x $0.50 per EUP) ……
$110,000
Conversion (220,000 x $2.87 per EUP) ………………….
631,400
$741,400
Costs of ending work in process
Direct materials (20,000 EUP x $0.50 per EUP) ……..
Conversion (12,000 EUP x $2.87 per EUP) …………….
Part 2
Jan. 31
Work in Process Inventory—Assembly …………………..
741,400
Work in Process Inventory—Cutting …………………
741,400
Transfer of goods to finished inventory.
Part 3
3a. Two major estimates are the: i) overhead allocation rate, and ii)
percentage of completion for materials and conversion.
Problem 16-5B (80 minutes)
Part 1
SWITCH COMPANY—Cutting Department
Process Cost Summary – FIFO Method
For Month Ended January 31
Costs Charged to Production
Total costs to account for ………………………………………
250,000
260,000
Total units accounted for ………
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
210,000 EUP
Units of ending work in process
Direct materials (40,000 x 50%) ………………………
20,000 EUP
Conversion (40,000 x 30%) …………………………….
__________
12,000 EUP
Equivalent units of production …………………………
232,500 EUP
226,000 EUP
[Continued on next page]