CHAPTER 20 Process Cost Systems
Ex. 20–15
a. $23,064; determined as follows:
Beginning work in process balance………………………………………………
…
$ 20,856
b. Cost of beginning work in process………………………………………………… $ 23,064
d. Direct materials cost per equivalent unit: $14.50 ($17,400 ÷ 1,200 units)
20-21
CHAPTER 20 Process Cost Systems
Ex. 20–16
Whole Direct
UNITS Units Materials Conversion
(1) (1)
Units charged to production:
Inventory in process, August 1 700
Received from materials storeroom 14,300
Total units accounted for by the
MORNING BREW COFFEE COMPANY
Cost of Production Report—Roasting Department
For the Month Ended August 31, 2014
Equivalent Units
20-22
CHAPTER 20 Process Cost Systems
Ex. 20–16 (Concluded)
Direct
COSTS Materials Conversion Total
Costs per equivalent unit:
Total costs for August in Roasting
Department $65,780 $21,942
Total costs accounted for by the
Roasting Department $91,201
Costs allocated to completed and
1$65,780 + $21,942
b. Materials: From current period…………………………………………………
…
…
Costs
$ 4.60
20-23
CHAPTER 20 Process Cost Systems
Ex. 20–17
a.
Whole Direct
UNITS Units Materials Conversion
Units charged to production:
Inventory in process, January 1 1,400
Units to be assigned cost:
Inventory in process, January 1
(75% completed) 1,400 0350
KARACHI CARPET COMPANY
Cost of Production Report—Cutting Department
For the Month Ended January 31, 2014
Equivalent Units
1
20-24
CHAPTER 20 Process Cost Systems
Ex. 20–17 (Concluded)
Direct
COSTS Materials Conversion Total
Costs per equivalent unit:
Total costs for January in Cutting
Department $742,400 $286,161
Cost allocated to completed and
partially completed units:
1$134,550 + $151,611
b. Materials: From current period……………………………………………
From beginning inventory………………………………………
Costs
$12.80
12.65
1
20-25
CHAPTER 20 Process Cost Systems
Ex. 20–18
a. 1. Work in Process—Casting Department 350,000
*Supporting calculations:
Cost of 2,530 transferred-out pounds:
Inventory in process, May 1…………………………………………………………… $ 32,844
Cost to complete May 1 inventory:
Supporting equivalent unit and cost per equivalent unit calculations:
Whole Units Materials Conversion
Inventory in process, May 1
(60% completed) 230 0 92
1230 units × (1 – 60%)
$350,000
2,500
Equivalent Units
= $140 per poundCost per equivalent unit of materials:
1
20-26
CHAPTER 20 Process Cost Systems
Ex. 20–18 (Concluded)
b. $29,760; determined as follows:
c. Materials: From current period……………………………………
…
$140
…
20-27
CHAPTER 20 Process Cost Systems
Ex. 20–19
a. 1. Work in Process—Papermaking Department 330,750
Materials—Pulp 330,750
*Supporting calculations:
Cost of 103,900 transferred-out units:
Inventory in process, March 1………………………………………………………… $ 9,139
Cost to complete March 1 inventory:
Supporting equivalent unit and cost per equivalent unit calculations:
Whole Units Materials Conversion
Inventory in process, March 1
(35% completed) 2,600 0 1,690
$330,750
105,000
105,950
b. $14,319; determined as follows:
Direct materials (3,700 × $3.15)……………… $11,655
Equivalent Units
= $3.15 per unitCost per equivalent unit of materials:
1
20-28
CHAPTER 20 Process Cost Systems
Ex. 20–20
Memo
To: Production Manager
The cost of production report is used to identify the cost per case for each of the
four flavors as shown below.
Orange Cola Lemon-Lime Root Beer
Total cost $19,125 $391,800 $324,000 $36,000
Orange Cola Lemon-Lime Root Beer
Concentrate $1.85 $2.15 $2.10 $1.90
Water 0.50 0.50 0.50 0.50
The table above indicates that the concentrate per case is actually less for Orange
and Root Beer than for Cola and Lemon-Lime. This is because the concentrate
supplier charges a higher price for the more popular flavors. The costs per case
for water, sugar, and bottles are the same for each flavor. However, the costs per
Cost per Case by Cost Element
20-29
CHAPTER 20 Process Cost Systems
Ex. 20–21
The solution to this exercise is to determine if the cost per pound trends in paper
stock, conversion, and coating costs are remaining stable over time. The
following table can be developed from the data:
a. January February March April May June
Paper stock
($ ÷ pounds output) $0.70 $0.70 $0.70 $0.70 $0.70 $0.70
Coating
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
20-30
CHAPTER 20 Process Cost Systems
Ex. 20–22
The Hawkeye Machining managers are displaying typical fears to a just-in-time
processing system. Just-in-time removes the safety provided by materials, in-
process, and finished goods inventory balances. Indeed, these types of comments
The in-process inventories can be reduced significantly if the underlying
manufacturing processes are made reliable. The director of manufacturing is
correct in his observation, but his solution is wrong. The solution is not to
increase inventory but to improve the reliability of the machines so that they do
not experience emergency breakdowns. Thus, the manufacturing operation must
20-31
CHAPTER 20 Process Cost Systems
Appendix Ex. 20–23
a. and b.
a. Whole b. Equivalent Units
Units of Production
Units to be accounted for:
Beginning work in process 1,900
20-32
CHAPTER 20 Process Cost Systems
Appendix Ex. 20–24
a. Drawing Department
Whole Equivalent Units
Units of Production
Units to be accounted for:
Beginning work in process 500
b. Winding Department
Whole Equivalent Units
Units of Production
Units to be accounted for:
Beginning work in process 350
20-33
CHAPTER 20 Process Cost Systems
Appendix Ex. 20–25
a. Units in process, May 1…………………………………………………………
…
4,200
Units placed into production for May…………………………………………
…
23,600
20-34
CHAPTER 20 Process Cost Systems
Appendix Ex. 20–26
a. and b.
Equivalent
Whole Units of
Units Production
Units to be accounted for:
Beginning work in process 900
Total Equivalent Units
c. Cost per Equivalent Unit =
Total Production Costs
20-35
CHAPTER 20 Process Cost Systems
Appendix Ex. 20–27
a. Equivalent
Whole Units of
Units Production
Units to be accounted for:
Beginning work in process 500
Total Equivalent Units
Cost per Equivalent Unit =
Total Production Costs
20-36
CHAPTER 20 Process Cost Systems
Appendix Ex. 20–28
Whole Equivalent Units
UNITS Units of Production
Units to account for during production:
Inventory in process, May 1 1,150
COSTS Costs
Costs per equivalent unit:
Total costs for May in Roasting Department $42,804
HIGHLANDS COFFEE COMPANY
Cost of Production Report—Roasting Department
For the Month Ended May 31, 2014
1
20-37
CHAPTER 20 Process Cost Systems
Appendix Ex. 20–29
Whole Equivalent Units
UNITS Units of Production
Units charged to production:
Inventory in process, January 1 3,400
Received from Weaving Department 64,000
COSTS
Costs per equivalent unit:
Costs allocated to completed and partially completed units:
Transferred to finished goods in January
DALTON CARPET COMPANY
Cost of Production Report—Cutting Department
For the Month Ended January 31, 2014
20-38
CHAPTER 20 Process Cost Systems
Prob. 20–1A
1. a. Materials 74,200
Accounts Payable 74,200
b. Work in Process—Spinning Department 38,300
c. Work in Process—Spinning Department 22,300
Work in Process—Tufting Department 16,900
e. Factory Overhead—Spinning Department 1,000
20-39
CHAPTER 20 Process Cost Systems
Prob. 20–1A (Concluded)
2. Work in Work in
Process— Process— Finished
Materials Spinning Dept. Tufting Dept. Goods
Balance, August 1…
…
$ 3,700 $ 1,200 $ 1,900 $ 4,800
3.
Balance, August 1…
…
$0 $0
Factory Overhead— Factory Overhead—
Spinning Dept. Tufting Dept.
20-40