Wild and Shaw, Financial & Managerial Accounting, 8e Solutions Manual: Chapter 16
947
Exercise 16–11 (continued)
3.
Cost assignment and reconciliation – FIFO
Beginning inventory
$ 167,066
61,920
77,760
Costs of units started and completed
518,400
Costs of units in ending inventory
53,136
222,384
Total costs assigned
$1,666,730
Costs to be assigned:
Beginning inventory
$167,066
Direct materials – current period
Conversion costs – current period
649,296
$1,666,730
Dept. 1 – WIP
Beg. Inv
167,066
850,368
Conv
Transferred out
End. Inv.
222,384
Wild and Shaw, Financial & Managerial Accounting, 8e Solutions Manual: Chapter 16
948
Exercise 16-12 (30 minutes)
ASHAD COMPANY—Molding Department
Process Cost Summary – Weighted Average Method
For Month Ended July 31
Costs Charged to Production
Costs of beginning work in process ($18,550 + $2,280) ………………………
$ 20,830
Costs incurred this period ($357,500 + $188,670) ……………………………….
Total costs to account for …………………………………………………………………
$567,000
Unit Information
Units to Account For
Equivalent Units of Production (EUP)
Direct
Materials
Conversion
Units completed and transferred out …………………………..
32,000 EUP
32,000 EUP
Units of ending work in process …………………………..
2,500 EUP
1,500 EUP
Equivalent units of production …………………………..
34,500 EUP
33,500 EUP
Cost per EUP
Materials
Conversion
Costs of beginning work in process …………………………..
$ 18,550
Costs incurred this period …………………………..
Total costs ……………………………………………………….
$376,050
Cost Assignment and Reconciliation
Costs transferred out
Direct materials (32,000 x $10.90) …………………………..
$348,800
Conversion (32,000 x $5.70) ……………………………………………………….
182,400
Cost of ending work in process
Wild and Shaw, Financial & Managerial Accounting, 8e Solutions Manual: Chapter 16
949
Exercise 16-13 (40 minutes)
ASHAD COMPANY—Molding Department
Process Cost Summary – FIFO Method
For Month Ended July 31
Costs Charged to Production
Costs of beginning work in process
Direct materials…………………………………………
Conversion………………………………………………
Costs incurred this period
Direct materials…………………………………………
Conversion………………………………………………
Unit cost information
Units to account for
Units accounted for
Total units accounted for …………….
Equivalent units of production
Direct
Materials
Conversion
Units to complete beginning WIP
Direct materials (2,000 x 0%)……………
0 EUP
Conversion (2,000 x 80%)………………..
Direct materials…………………………….
Conversion…………………………………..
Wild and Shaw, Financial & Managerial Accounting, 8e Solutions Manual: Chapter 16
950
Exercise 16–13 (Concluded)
Cost per EUP
Direct
Materials
Conversion
Costs incurred this period…………
$ 357,500
$ 188,670
Cost assignment and reconciliation
Costs transferred out
Cost of beginning work in process…
$20,830
Cost to complete beginning work in process
Direct materials (0 EUP x $11.00 per EUP)……..
$ 0
Costs of units started and completed this period
Costs of ending work in process
Direct materials (2,500 EUP x $11.00 per EUP)….
Conversion (1,500 EUP x $5.70 per EUP)…………
Wild and Shaw, Financial & Managerial Accounting, 8e Solutions Manual: Chapter 16
951
Exercise 16-14 (30 minutes)
Part 1: Cost of goods transferred and cost of goods sold
Weaving
Sewing
Finished
Department
Department
Goods
Beginning inventory …………………………….
$ 300,000
$ 570,000
$1,266,000
Direct materials ……………………………………
240,000
75,000
Direct labor ………………………………………….
360,000
540,000
Less ending inventory—Weaving ……….
Less ending inventory—Sewing ………..
3,215,000
Less ending inventory—Finished goods ….
(1,206,000)
COST OF GOODS SOLD (c) ……………………….
$3,275,000
Part 2: Summary journal entries.
June 30
Work in Process Inventory—Sewing ……………………..
2,370,000
(a)
Work in Process Inventory—Weaving ……………….
2,370,000
Transferred products from weaving to sewing.
June 30
Finished Goods Inventory …………………………..
3,215,000
(b)
Work in Process Inventory—Sewing …………………
3,215,000
sewing to finished goods inventory.
June 30
Accounts Receivable …………………………………………….
4,000,000
(c)
Sales ……………………………………………………….
4,000,000
June 30
Cost of Goods Sold …………………………..………………….
3,275,000
(d)
Finished Goods Inventory …………………………..
3,275,000
Wild and Shaw, Financial & Managerial Accounting, 8e Solutions Manual: Chapter 16
952
Exercise 16-15 (25 minutes)
Summary journal entries (all dated June 30)
a.
Raw Materials Inventory ………………………………………..
500,000
Accounts Payable ……………………………………………
500,000
Purchased raw materials.
240,000
Raw Materials Inventory …………………………..
315,000
Used direct materials.
c.
Factory Overhead …………………………..…………………….
120,000
Raw Materials Inventory …………………………..
120,000
Used indirect materials.
1,200,000
360,000
Factory Wages Payable …………………………..
1,560,000
Used direct labor.
e.
Factory Overhead …………………………..…………………….
1,500,000
Factory Wages Payable …………………………..
1,500,000
Used indirect labor.
f.
Factory Overhead …………………………..…………………….
156,000
Other Accounts ……………………………………………….
156,000
Incurred other overhead costs.
960,000
540,000
Factory Overhead …………………………………………….
1,500,000
Factory Wages Payable …………………………………………
Cash ……………………………………………………….
Paid total payroll.
Wild and Shaw, Financial & Managerial Accounting, 8e Solutions Manual: Chapter 16
953
Exercise 16–16 (25 minutes)
ELLIOTT COMPANY
Process Cost Summary – Weighted Average Method
For Month Ended March 31
Costs Charged to Production
Costs of beginning work in process
Direct materials ……………………………………………..
$ 2,500
Conversion …………………………………………………….
6,360
$ 8,860
Costs incurred this period
Direct materials ……………………………………………..
Conversion …………………………………………………….
Total costs to account for ………………………………..
Unit information
Units to account for
Units accounted for
Beginning work in process …………………………..
Units started this period …………………………..
5,000
Total units to account for …………………………..
Total units accounted for …………….
Equivalent units of production
Direct
Materials
Conversion
Units completed & transferred out..
17,000 EUP
17,000 EUP
Units of ending work in process
22,000 EUP
18,750 EUP
Cost per EUP
Direct
Materials
Conversion
Cost of beginning work in process..
22,000 EUP
18,750 EUP
Wild and Shaw, Financial & Managerial Accounting, 8e Solutions Manual: Chapter 16
954
Exercise 16-16 (continued)
Cost assignment and reconciliation
Costs transferred out
Direct materials (17,000 EUP x $7.75 per EUP)…
Costs of ending work in process
Direct materials (5,000 EUP x $7.75 per EUP)……
Conversion (1,750 EUP x $25.92 per EUP)……….
Exercise 16-17 (40 minutes)
OSLO COMPANY
Process Cost Summary – Weighted Average Method
For Month Ended May 31
Costs Charged to Production
Costs of beginning work in process
Direct materials……………………………………………
$ 2,880
Conversion…………………………………………………
5,358
$ 8,238
Costs incurred this period
Direct materials……………………………………………
Conversion…………………………………………………
Units started this period ………………
Total units to account for …………….
Total units accounted for …………………………..
Wild and Shaw, Financial & Managerial Accounting, 8e Solutions Manual: Chapter 16
955
Exercise 16–17 (Concluded)
Equivalent units of production
Direct
Materials
Conversion
Units completed & transferred out…
13,000 EUP
13,000 EUP
Units of ending work in process
Direct materials (3,000 x 100%)……
3,000 EUP
Conversion (3,000 x 25%)…………..
16,000 EUP
13,750 EUP
Costs incurred this period……………
234,992
$240,350
16,000 EUP
13,750 EUP
Cost assignment and reconciliation
Costs transferred out
Direct materials (13,000 EUP x $12.50 per EUP)..
$162,500
Conversion (13,000 x $17.48 per EUP)……………
227,240
$389,740
Direct materials (3,000 EUP x $12.50 per EUP)…
Conversion (750 EUP x $17.48 per EUP)…………
Exercise 16-18 (10 minutes)
Equivalent units of production—FIFO
Units of
Percent
Equivalent
EUP (for materials and conversion)
Product
Added
Units
Beginning work in process ………….
30,000
70%
21,000 EUP
Goods started and completed ……..
100
Wild and Shaw, Financial & Managerial Accounting, 8e Solutions Manual: Chapter 16
956
Exercise 16–19 (20 minutes)
[Note: Solution key is on the following page.]
Punching
Bending
$12,750
Warehouse
Beginning Work in
Process
$7,500
Direct
Materials
$60,000
Direct
Labor
$12,000
Factory
Overhead
$15,000
Beginning Work in
Process
$9,750
Direct
Materials
(3) $83,250
Direct
Labor
$30,750
Factory
Overhead
$36,900
Beginning
Inventory
$18,000
Cost of Goods Available
For Sale
(5) $254,400
Ending
Inventory
(6) $22,500
Wild and Shaw, Financial & Managerial Accounting, 8e Solutions Manual: Chapter 16
957
Exercise 16–19 (Continued)
Key to solution of flowchart:
(1)
Beginning work in process in punching
$ 7,500
Direct materials added
$ 60,000
Direct labor added
Factory overhead added
Total manufacturing costs added
87,000
Total costs in process in punching department
$ 94,500
(2)
Total costs in process in punching department
$ 94,500
Less ending work in process
6,000
Costs transferred to bending
$ 88,500
(3)
Beginning work in process in bending
$ 9,750
Total costs added
[?]
Total costs in process in bending department
$249,150
Total costs added = $249,150 – $9,750 = $239,400
Direct materials added
$ [?]
Direct labor added
Factory overhead added
Costs transferred from punching
88,500
= $83,250
(4)
Total costs in process in bending department
$249,150
Ending work in process
12,750
Costs transferred to finished goods
$236,400
(5)
Beginning Finished Goods inventory
$ 18,000
Add costs transferred to finished goods
236,400
(6)
Cost of goods available for sale
$254,400
Less ending inventory
[?]
Wild and Shaw, Financial & Managerial Accounting, 8e Solutions Manual: Chapter 16
Exercise 16–20 (20 minutes)
1. and 2.
Equivalent Units of Production (EUP)
Direct
Materials
Conversion
Units completed and transferred out…
23,000 EUP
23,000 EUP
3. and 4.
Cost per EUP
Direct
Materials
Conversion
Costs incurred this period………………
5.
Costs transferred out
6.
Cost of ending work in process
Wild and Shaw, Financial & Managerial Accounting, 8e Solutions Manual: Chapter 16
959
Exercise 16-21 (10 minutes)
1.
Raw Materials Inventory ………………………………………..
80,000
Accounts Payable ……………………………………………
80,000
2.
Work in Process Inventory—Roasting …………………….
42,000
Raw Materials Inventory …………………………………..
42,000
3.
Factory Overhead ………………………………………………….
22,500
Raw Materials Inventory …………………………………..
22,500
Exercise 16–22 (10 minutes)
1.
Work in Process Inventory—Roasting …………………….
42,000
Factory Wages Payable …………………………………….
2.
Factory Overhead …………………………………………………..
20,000
Factory Wages Payable …………………………………….
20,000
3.
Factory Wages Payable ………………………………………….
95,000
Cash ………………………………………………………………..
Exercise 16–23 (5 minutes)
1.
Factory Overhead ………………………………………………….
38,750
Cash ……………………………………………………………….
38,750
2.
Work in Process Inventory—Roasting …………………….
46,200
Factory Overhead ……………………………………………
82,500
Wild and Shaw, Financial & Managerial Accounting, 8e Solutions Manual: Chapter 16
Exercise 16–24 (10 minutes)
1.
Finished Goods Inventory ………………………………………
135,600
135,600
2.
Accounts Receivable ……………………………………………..
315,000
Sales ………………………………………………………………..
315,000
Cost of Goods Sold ………………………………………………..
175,000
Finished Goods Inventory …………………………………
175,000
Exercise 16–25 (25 minutes)
1.
Work in Process Inventory—Shredding ………………….
522,000
Raw Materials Inventory …………………………..
522,000
2.
Work in Process Inventory—Shredding ………………….
26,000
Factory Wages Payable …………………………..
130,000
3.
Work in Process Inventory—Shredding ………………….
45,500
4.
Work in Process Inventory—Bagging …………………….
595,000
595,000
5.
Finished Goods Inventory ………………………………………
580,000
6.
Accounts Receivable ……………………………………………..
950,000
Sales ……………………………………………………….
950,000
7.
Cost of Goods Sold ……………………………………………….
540,000
Finished Goods Inventory …………………………..
540,000
Wild and Shaw, Financial & Managerial Accounting, 8e Solutions Manual: Chapter 16
Exercise 16–26 (25 minutes)
a. Purchased raw materials on credit at a cost of $52,000.
b. Used direct materials costing $42,000 in production.
c. Incurred direct labor costing $32,000 in production.
Wild and Shaw, Financial & Managerial Accounting, 8e Solutions Manual: Chapter 16
962
PROBLEM SET A
Problem 16-1A (45 minutes)
Part 1: Cost of goods transferred and cost of goods sold
(a) Beginning work in process inventory—Cutting …………..
$ 43,500
Direct materials used in production …………………………..
21,750
15,600
Overhead applied (150% of direct materials cost)…………….
Transferred to work in process—Stitching (a) ………………….
(b) Beginning work in process inventory—Stitching ………..
$ 63,300
Direct materials used in production …………………………..
62,400
Overhead applied (120% of direct labor cost) …………………..
Transferred to finished goods (b) ……………………………………
Transferred-in from Cutting …………………………………………….
61,975
(c) Beginning finished goods inventory …………………………..
$ 20,100
Transferred-in from Stitching ………………………………………….
202,055
Wild and Shaw, Financial & Managerial Accounting, 8e Solutions Manual: Chapter 16
Problem 16-1A (continued)
Part 2: Summary journal entries
a.
May 31
Raw Materials Inventory ………………………………………..
25,000
Accounts Payable ……………………………………………
25,000
Purchased raw materials.
May 31
Work in Process Inventory—Cutting ………………………
21,750
Raw Materials Inventory …………………………..
21,750
Used direct materials.
May 31
Raw Materials Inventory …………………………..
Used indirect materials.
d.
May 31
Work in Process Inventory—Cutting ……………………..
15,600
Work in Process Inventory—Stitching ……………………
Factory Wages Payable …………………………..
62,400
78,000
Incurred direct labor costs.
May 31
55,000
Factory Wages Payable …………………………..
55,000
Incurred indirect labor costs.
May 31
Cash ……………………………………………………….
Paid factory payroll.
May 31
Other Accounts ……………………………………………….
Incurred other overhead costs.
h.
May 31
Work in Process Inventory—Cutting ………………………
32,625
Work in Process Inventory—Stitching ……………………
Factory Overhead ……………………………………………
74,880
107,505
Applied overhead at 150% of direct materials
costs (Cutting) and 120% of direct labor cost
(Stitching).
964
Problem 16-1A (continued)
i.
May 31
j.
May 31
Work in Process Inventory—Stitching ……………………
Work in Process Inventory—Cutting …………………
Transferred costs of partially completed goods.
Finished Goods Inventory …………………………..
61,975
202,055
61,975
Work in Process Inventory—Stitching ………………
202,055
k.
May 31
213,905
May 31
Accounts Receivable …………………………………………….
256,000
Wild and Shaw, Financial & Managerial Accounting, 8e Solutions Manual: Chapter 16
965
Problem 16-2A (40 minutes)
For the first process:
Part 1
(a) and (b) Equivalent units with respect to direct materials and conversion
Direct
Equivalent units of production (EUP)
Materials
Conversion
Units completed and transferred out ……………….
700,000
700,000
Units of ending work in process ……………………..
180,000
Part 2
Cost per equivalent unit of production
Direct
Materials
Conversion
Costs of beginning work in process ……………………….
$ 420,000
$ 139,000
Costs incurred this period ……………………………………..
Cost per equivalent unit of production ……………………
Part 3 Assigning product costs to units
Costs transferred out
Direct materials (700,000 EUP x $3.00 per EUP) …….
$2,100,000
Conversion (700,000 EUP x $4.50 per EUP) …………..
Costs of ending work in process
Direct materials (180,000 EUP x $3.00 per EUP) …….
Conversion (54,000 EUP x $4.50 per EUP) …………….
966
Problem 16-3A (75 minutes)
Part 1
Weighted average
Units
Cutting Dept.—Units
Units in Beg. inventory
30,000
Beg. Inv
30,000
Units started
Units in ending inventory
Units transferred out
End. Inv
FAST CO.—Cutting Department
Process Cost Summary – Weighted Average Method
For the month ended October 31
Costs Charged to Production
Costs of beginning work in process
Direct materials……………………………………………
$ 17,100
Conversion…………………………………………………
67,200
$ 84,300
Costs incurred this period
Direct materials……………………………………………
Conversion costs…………………………………………
Unit cost information
Beginning work in process …………………………..
Units started this period…………………………..
140,000
Total units to account for …………………………..
170,000