CHAPTER 3
SOLUTONS TO PROBLEMS: SET B
PROBLEM 3-1B
1. Raw Materials Inventory ……………………………………… 25,000
Accounts Payable ……………………………………….. 25,000
3. Factory Labor …………………………………………………….. 25,770
Wages Payable ……………………………………………. 25,770
5. Manufacturing Overhead …………………………………….. 36,500
Accounts Payable ……………………………………….. 36,500
6. Work in Process—Blending (900 X $28) ………………. 25,200
Work in Process—Packaging (300 X $28) …………….. 8,400
Manufacturing Overhead ……………………………… 33,600
8. Finished Goods Inventory …………………………………… 67,490
Work in Process—Packaging ……………………….. 67,490
Cost of Goods Sold ……………………………………………. 62,000
Finished Goods Inventory ……………………………. 62,000
PROBLEM 3-2B
(a)
Physical units
Units to be accounted for
Work in process, January 1
Started into production
Total units
(b)
Equivalent units
Conversion Costs
Units transferred out
Work in process, January 31
47,500
(c)
Unit Costs
(d) Costs accounted for
Transferred out (47,500 X $15.20) ……………… $722,000
Work in process, January 31
Materials (2,500 X $10.20) ………………… $25,500
Total units
50,000
PROBLEM 3-2B (Continued)
(e) STEINER CORPORATION
Molding Department
Production Cost Report
For the Month Ended January 31, 2017
Equivalent Units
Quantities
Physical
Units
Materials
Conversion
Costs
(Step 1)
(Step 2)
Units to be accounted for
Work in process, January 1
Started into production
Total units
0
50,000
50,000
Costs
Materials
Conversion
Costs
Total
Costs to be accounted for
Work in process, January 1
Total costs
Unit costs (Step 3)
Total cost
Equivalent units
Unit costs (a) ÷ (b)
(a)
(b)
$510,000
50,000
$10.20
$242,500
48,500
$5.00
$752,500
$15.20
Cost Reconciliation Schedule (Step 4)
Total costs
Costs accounted for
Transferred out (47,500 X $15.20)
$722,000
Units accounted for
Transferred out
Work in process, January 31
(2,500 X 40%)
Total units
PROBLEM 3-3B
(a) (1) Physical units
R12
Refrigerators
F24
Freezers
Units to be accounted for
Work in process, June 1
Started into production
Total units
0
20,000
20,000
0
20,000
20,000
(2) Equivalent units
R12 Refrigerators
Materials
Conversion
Costs
Units transferred out
Work in process, June 30
16,000
16,000
F24 Freezers
Materials
Conversion
Costs
Work in process, June 30
Units transferred out
17,500
17,500
Units accounted for
PROBLEM 3-3B (Continued)
(3) Unit costs
R12
Refrigerators
F24
Freezers
Materials ($840,000 ÷ 20,000)
($720,000 ÷ 20,000)
Conversion costs ($665,000(a) ÷ 19,000)
$42
35
$36
(4) R12 Refrigerators
Costs accounted for
Transferred out (16,000 X $77) …………. $1,232,000
Work in process
F24 Freezers
Costs accounted for
Transferred out (17,500 X $65) ………….. $1,137,500
Work in process
PROBLEM 3-3B (Continued)
(b) BORMAN CORPORATION
Stamping Department—Plant A
Production Cost Report
For the Month Ended June 30, 2017
Equivalent Units
Quantities
Physical
Units
Materials
Conversion
Costs
(Step 1)
(Step 2)
Units to be accounted for
Work in process, June 1
Started into production
Total units
0
20,000
20,000
Costs
Materials
Conversion
Costs
Total
Costs to be accounted for
Work in process, June 1
Total costs
Unit costs (Step 3)
Total cost
Equivalent units
Unit costs (a) ÷ (b)
(a)
(b)
$840,000
20,000
$ 42
$665,000
19,000
$ 35
$1,505,000
$ 77
Cost Reconciliation Schedule (Step 4)
Materials (4,000 X $42)
Total costs
Costs accounted for
Transferred out (16,000 X $77)
Work in process, June 30
$1,232,000
Units accounted for
Transferred out
Work in process, June 30
Total units
PROBLEM 3-4B
(a)
Equivalent Units
Physical
Units
Materials
Conversion
Costs
Units to be accounted for
Work in process, October 1
Started into production
Total units
25,000
435,000
460,000
Beginning work in
process
Added during month
Total
Materials cost
$ 29,000
1,006,000
$1,035,000
Conversion costs
$ 16,500
246,900
$263,400
($138,900 + $108,000)
(b)
Total costs
Costs accounted for
Transferred out (425,000 X $2.85)
Work in process, October 31
$1,211,250
Total units
35,000
460,000
PROBLEM 3-4B (Continued)
(c) LUXMAN COMPANY
Assembly Department
Production Cost Report
For the Month Ended October 31, 2017
Equivalent Units
Quantities
Physical
Units
Materials
Conversion
Costs
(Step 1)
(Step 2)
Units to be accounted for
Work in process, October 1
Started into production
Total units
25,000
435,000
460,000
Costs
Materials
Conversion
Costs
Total
Costs to be accounted for
Work in process, October 1
Total costs
Unit costs (Step 3)
Total cost
Equivalent units
Unit costs (a) ÷ (b)
(a)
(b)
$1,035,000
460,000
$2.25
$263,400
439,000
$.60
$1,298,400
$2.85
Cost Reconciliation Schedule (Step 4)
Materials (35,000 X $2.25)
Total costs
$1,298,400
Costs accounted for
Transferred out (425,000 X $2.85)
Work in process, October 31
$1,211,250
Units accounted for
Transferred out
Work in process, October 31
Total units
460,000
460,000
PROBLEM 3-5B
(a)
(1)
Equivalent Units
Physical
Units
Materials
Conversion
Costs
Units to be accounted for
Work in process, May 1
Started into production
Total units
500
2,000
2,500
(2)
Materials cost
Conversion costs
Cost per unit
Beginning work in
process
Added during month
Total
$15,000
50,000
$65,000
$18,000
52,700
$70,700
($19,020 + $33,680)
(3)
Costs accounted for
Transferred out (1,700 X $61)
Work in process, May 31
$103,700
PROBLEM 3-5B (Continued)
(b) SWINN COMPANY
Bicycle Department
Production Cost Report
For the Month Ended May 31, 2017
Equivalent Units
Quantities
Physical
Units
Materials
Conversion
Costs
(Step 1)
(Step 2)
Units to be accounted for
Work in process, May 1
Started into production
Total units
500
2,000
2,500
Costs
Materials
Conversion
Costs
Total
Costs to be accounted for
Total costs
Unit costs (Step 3)
Total cost
Equivalent units
Unit costs (a) ÷ (b)
(a)
(b)
$65,000
2,500
$26
$70,700
2,020
$35
$135,700
$61
Cost Reconciliation Schedule (Step 4)
Total costs
Costs accounted for
Transferred out (1,700 X $61)
Work in process, May 31
$103,700
Units accounted for
Transferred out
1,700
Work in process, May 31
(800 X .40)
Total units
2,500
2,500
PROBLEM 3-6B
(a) Computation of equivalent units:
Equivalent Units
Physical
Units
Materials
Conversion
Costs
Units accounted for
Transferred out
Work in process, March 31
66,000
66,000
66,000
Computation of March unit costs
(b) Cost Reconciliation Schedule
Costs accounted for
Transferred out (66,000 X $3.40)……………….. $224,400
Work in process, March 31
*PROBLEM 3-7B
(a) Basketballs
(1) Equivalent units—Materials
Physical
Units
Materials
Added
This Period
Equivalent
Units
Work in process, August 1
Started and completed
Work in process, August 31
Total
500
1,400
600
2,500
(2,000 – 600)
* 0%*
100%
100%
0
1,400
600
2,000
(2) Unit costs
Materials
Conversion
Costs in August (a)
$1,600
**$2,280**
Units
Conversion
This Period
Units
Work in process, August 1
500
Started and completed
Total
2,500
(2,000 – 600)
1,900
*PROBLEM 3-7B (Continued)
(3) Assignment of costs to units transferred out and in process
Costs to Be
Assigned
Assignment of Costs
Equivalent
Units
Unit
Cost
Total Costs
Assigned
Total mfg. costs
Transferred out
***$5,005***
Work in process, August 1
Conversion
200
1.20
$1,125
240
Soccer balls
(1) Equivalent units—Materials
Physical
Units
Materials
Added
This Period
Equivalent
Units
Total
2,200
2,000
Work in process, August 1
Started and completed
200
1,850
(2,000 – 150)
* 0%*
100%
0
1,850
Equivalent units—Conversion
Physical
Units
Conversion
Added
This Period
Equivalent
Units
Work in process, August 1
200
20% (1 – .8) 40
Started and completed
Total
1,850
150
2,200
(2,000 – 150)
1,995
Started and completed
Total costs transferred out
2.00
2,800
$4,165
Total costs
$5,005
*PROBLEM 3-7B (Continued)
(2) Unit costs
Materials
Conversion
Costs in August (a)
$2,800
$2,394**
(3) Assignment of costs to units transferred out and in process
Costs to Be
Assigned
Assignment of Costs
Equivalent
Units
Unit
Cost
Total Costs
Assigned
Total mfg. costs
Transferred out
***$5,644***
Work in process, August 31
Conversion costs
Total costs
Work in process, August 1
Conversion
40
$1.20
$ 450
48
*PROBLEM 3-7B (Continued)
(b) HOLIDAY COMPANY
Production Cost Report—Basketballs
For the Month Ended August 31
Equivalent Units
Quantities
Physical
Units
Materials
Conversion
Costs
(Step 1)
(Step 2)
Started into production
Units to be accounted for
Work in process, August 1
Units accounted for
Completed and transferred out
Work in process, August 1
Started and completed
500
500
1,400
0
1,400
200
1,400
Costs
Materials
Conversion
Costs
Total
Unit costs (Step 3)
Costs in August (a)
Costs to be accounted for
Work in process, August 1
Cost Reconciliation Schedule
Costs accounted for
Transferred out
Work in process, August 1
Conversion costs to complete
beginning inventory (200 X $1.20)
$1,600
$1,125
240
$2,280
$1,125
$3,880
(1,400 X $2.00)
Materials (600 X $.80)