Wild and Shaw, Financial & Managerial Accounting, 8e Solutions Manual: Chapter 16
987
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 to complete beginning work in process
Part 2
Work in Process Inventory—Assembly …………………..
743,554
Wild and Shaw, Financial & Managerial Accounting, 8e Solutions Manual: Chapter 16
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Problem 16-6B (45 minutes)
1.
Units in beginning inventory …………………………………..
62,500
Units started and completed …………………………………..
Total units transferred out ………………………………………
2. Equivalent units of production—FIFO
Direct
Equivalent units of production
Materials
Conversion
Units to complete beginning work in process
Direct materials (62,500 x 60%)………………
37,500
Conversion (62,500 x 20%)……………………
Direct materials (76,250 x 80%)………………
61,000
Conversion (76,250 x 20%)……………………
3. Cost per equivalent unit of direct materials and conversion—FIFO
Direct
Materials
Conversion
Costs incurred this period………………………
$683,750
$446,050
Wild and Shaw, Financial & Managerial Accounting, 8e Solutions Manual: Chapter 16
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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 …………………………………………….
Conversion …………………………..……………………….
53,493
Costs to complete beginning work in process
Direct materials (37,500 EUP x $2.50 per EUP) .
Conversion (12,500 EUP x $2.20 per EUP) ………
27,500
Total costs to complete …………………………………
Cost of units started and completed this period
Direct materials (175,000 EUP x $2.50 per EUP).
437,500
Conversion (175,000 EUP x $2.20 per EUP)……
385,000
Total cost of units started and completed……..
822,500
Cost of ending work in process inventory
Direct materials (61,000 EUP x $2.50 per EUP)..
152,500
Conversion (15,250 EUP x $2.20 per EUP)……..
Total costs of ending work in process…………
Wild and Shaw, Financial & Managerial Accounting, 8e Solutions Manual: Chapter 16
990
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
Direct materials (40,000 x 50%)…..
Conversion (40,000 x 30%)………..
Wild and Shaw, Financial & Managerial Accounting, 8e Solutions Manual: Chapter 16
991
Problem 16-7B (Continued)
Cost per EUP
Direct
Materials
Conversion
Costs incurred this period…………
$ 223,200
$1,233,960
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
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
Wild and Shaw, Financial & Managerial Accounting, 8e Solutions Manual: Chapter 16
993
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
• 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
Wild and Shaw, Financial & Managerial Accounting, 8e Solutions Manual: Chapter 16
994
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
Raw Materials Inventory ………………………………………..
125,000
Cash ………………………………………………………………..
125,000
Work in Process Inventory ……………………………………..
52,440
Factory Overhead ………………………………………………….
10,000
Raw Materials Inventory ……………………………………
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
Factory Overhead ………………………………………………….
80,000
Cash ……………………………………………………………….
Paid other overhead with cash.
Work in Process Inventory ……………………………………..
101,125
Factory Overhead …………………………………………….
101,125
Wild and Shaw, Financial & Managerial Accounting, 8e Solutions Manual: Chapter 16
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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
Costs incurred this period
Total costs to account for
$363,950
Unit cost information
Units to account for
Units accounted for
Beginning work in process…
Complete & transferred out …………
Units started this period…….
Total units accounted for …………….
Equivalent units of production
Conversion
Units completed & transferred out..
Units of ending work in process
Cost per EUP
Direct
Materials
Conversion
Cost of beginning work in process…
$ 2,660
$ 5,475
Costs incurred this period……………
52,440
303,375
$55,100
÷ EUP
Wild and Shaw, Financial & Managerial Accounting, 8e Solutions Manual: Chapter 16
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Comprehensive Problem (Continued)
(Using weighted-average)
Cost assignment and reconciliation
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.
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
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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
Purchases
150,000
Work in Process Inventory
Acct. No. 133
Date
Explanation
Debit
Credit
Balance
June
30
Balance
8,135
Direct materials
262,825
Overhead allocation
363,950
Transfer to Fin. Goods
Finished Goods Inventory
Acct. No. 135
Date
Explanation
Debit
Credit
Balance
June
30
Balance
110,000
381,150
July sales
115,450
Wild and Shaw, Financial & Managerial Accounting, 8e Solutions Manual: Chapter 16
Comprehensive Problem (Concluded)
Part 4 (Using weighted-average)
Factory Wages Payable
Acct. No. 212
Date
Explanation
Debit
Credit
Balance
202,500
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
265,700
Acct. No. 540
Date
Explanation
Debit
Credit
Balance
(b)
115,000
Overhead application
Part 5 (Using weighted-average)
Computation of gross profit for July
Sales …………………………..…………………………………………………………..
$ 625,000
$ 345,425
Wild and Shaw, Financial & Managerial Accounting, 8e Solutions Manual: Chapter 16
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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
Costs incurred this period
Total costs to account for……………………………
Unit cost information
Units to account for
Units accounted for
Beginning work in process…
5,000
Complete & transferred out …………
11,000
Units started this period…….
14,000
Ending work in process ………………
8,000
Total units to account for……
19,000
Total units accounted for …………….
19,000
Equivalent units of production
Direct
Materials
Conversion
Units to complete beginning WIP