PROBLEM 21-4A (Continued)
(c) RIVERA COMPANY
Assembly Department
Production Cost Report
For the Month Ended November 30, 2017
Equivalent Units
Quantities
Physical
Units
Materials
Conversion
Costs
(Step 1)
(Step 2)
Work in process, November 30
25,000
(25,000 X 40%)
Total units
695,000
Units to be accounted for
Work in process, November 1
Started into production
35,000
660,000
Costs
Conversion
Costs
Total
Unit costs (Step 3)
Total cost
Equivalent units
Unit costs (a) ÷ (b)
(a)
(b)
$612,000
680,000
$.90
$2,280,000
$3.30
Cost Reconciliation Schedule (Step 4)
Costs accounted for
Transferred out (670,000 X $3.30)
Work in process, November 30
$2,211,000
PROBLEM 21–5A
(a)
(1)
Equivalent Units
Physical
Units
Materials
Conversion
Costs
Units to be accounted for
Work in process, July 1
Started into production
Total units
500
1,000
1,500
(2)
Beginning work
in process
Added during month
Materials cost
$ 750
2,400
Conversion costs
$ 600
2,820
($1,580 + $1,240)
(3)
Costs accounted for
Transferred out (900 X $5.10)
Work in process, July 31
$4,590
PROBLEM 21-5A (Continued)
(b) POLK COMPANY
Basketball Department
Production Cost Report
For the Month Ended July 31, 2017
Equivalent Units
Quantities
Physical
Units
Materials
Conversion
Costs
(Step 1)
(Step 2)
Work in process, July 31
Total units
Units to be accounted for
Work in process, July 1
500
Costs
Materials
Conversion
Costs
Total
Unit costs (Step 3)
Total costs
Equivalent units
Unit costs (a) ÷ (b)
(a)
(b)
$3,150
1,500
$2.10
$3,420
1,140
$3.00
$6,570
$5.10
Cost Reconciliation Schedule (Step 4)
Costs accounted for
Transferred out (900 X $5.10)
$4,590
PROBLEM 21–6A
(a) Computation of equivalent units:
Equivalent Units
Physical
Units
Materials
Conversion
Costs
Units accounted for
Computation of October unit costs
Materials: $240,000 ÷ 150,000 equivalent units = $1.60
(b) Cost Reconciliation Schedule
Costs accounted for
Transferred out (120,000 X $2.35) $282,000
Work in process, October 31
*PROBLEM 21-7A
(a) The allocation of total manufacturing overhead using activity-based
costing is as follows:
Royale
Majestic
Overhead Rate
Drivers
Used
Cost
Assigned
Drivers
Used
Cost
Assigned
Total
Overhead
$ 161.40
$ 356.50
Purchase orders @ $30
Machine setups @ $50
17,000
5,000
$ 510,000
250,000
23,000
13,000
$ 690,000
650,000
$1,200,000
900,000
(b) The cost per unit and gross profit of each model under ABC costing
were:
Royale
Majestic
Direct materials
Direct labor
$ 700.00
120.00
$ 420.00
100.00
(c) Management’s future plans for the two television models are not
sound. Under ABC costing, the Royale model is $195.10 ($618.60 –
$423.50) per unit more profitable than the Majestic model. If any
CD21 CURRENT DESIGNS
CURRENT DESIGNS
Fabrication Department
Production Cost Report
For the Month Ended April 30, 2017
Equivalent Units
Quantities
Physical
Units
Materials
Conversion
Costs
(Step 1)
(Step 2)
Units to be accounted for
Work in process, April 1
Started into production
Total units
Units accounted for
30
72
102
Costs
Materials
Conversion
Costs
Total
Total costs
Unit costs (Step 3)
Total cost*
Costs to be accounted for
Cost Reconciliation Schedule (Step 4)
Costs accounted for
Transferred out (67 X $950)
(a) $25,900
$48,600
$74,500
$63,650
BYP 21-1 DECISION-MAKING ACROSS THE ORGANIZATION
(a) The unit cost suggests that Joe took the highest total costs and divided
these costs by the units started into production. The highest total costs
(b) The principal errors made by Joe were: (1) he did not compute equivalent
BYP 21-1 (Continued)
(c) FLORIDA BEACH COMPANY
Mixing Department
Production Cost Report
For the Month Ended July 31, 2017
Equivalent Units
Quantities
Physical
Units
Materials
Conversion
Costs
(Step 1)
(Step 2)
Work in process, July 31
(5,000 X 20%)
Total units
Units to be accounted for
Work in process, July 1
8,000
Costs
Materials
Conversion
Costs
Total
Unit costs (Step 3)
Total cost
Equivalent units
Unit costs (a) ÷ (b)
(a)
(b)
$594,000
108,000
$5.50
$832,000
104,000
$8.00
$1,426,000
$13.50
Cost Reconciliation Schedule (Step 4)
Costs accounted for
Transferred out (103,000 X $13.50)
$1,390,500
BYP 21-2 MANAGERIAL ANALYSIS
(a) The unit cost of materials is $150 ($450,000 ÷ 3,000).
(b) The materials cost of the goods transferred out is $375,000 (2,500 X
BYP 21-3 REAL-WORLD FOCUS
(a) The outer shell of the paintballs is made from a mixture that includes
water, sweeteners, food ingredients, and most importantly, gelatin. All
of the ingredients used to make paintballs are food grade, biodegradable
products. The “paint” filling inside a paintball is comprised of the same
inert ingredient used in cough syrup, as well as crayon wax.
After mixing the gelatin and other materials, the mixture is heated, and
then spread on rolling drums which create thin gelatin ribbons. Each of
the ribbons then passes over a rotating die. The dies are designed so
(b) Materials: water, sweeteners, food ingredients, gelatin, “cough syrup
material”, crayon wax, and food coloring.
Labor: People would be needed run the various machines.
Overhead: Depreciation and maintenance of the various machines.
(c) This would appear to be a perfect situation for the use of process
costing. Paintballs are a high volume product, and the paintballs are
very homogenous. While there may be some differences in various
types of paintballs that would merit keeping track of specific costs to
make the various types, the primary method of cost determination
would be process costing.
BYP 21-4 ETHICS CASE
(a) The stakeholders in this situation are:
Jan Wooten, molding department head.
Tony Ferneti quality control inspector.
(b) Tony is placed in an ethical dilemma. He can offend his department head
by disregarding Jan’s instructions and lose the support of his supervisor,
BYP 21-5 CONSIDERING PEOPLE, PLANET, AND PROFIT
(a) Some of the costs that the company now faces include:
• Monetary damages: The company paid $21.4 million in fines as a
result of an OSHA investigation; $1.6 billion to compensate those
affected by the accident; and $1 billion to repair and update its
refinery (plus an additional $250 million to install safety valves)
• Bad publicity
• Lost sales
(b) Some steps that the company could have taken to reduce the environ–
mental failure costs include:
• Install up to date safety equipment