CHAPTER 6 Process Costing
P 6-57 (Concluded)
2. Cabinets Components Conversion
Units completed………………………………………………………………………………………………………..
150,000 150,000 150,000 150,000
Units in EWIP………………………………………………………………………………………………..
30,000 30,000 6,000 30,000
Equivalent units………………………………………………………………………………………………..
180,000 180,000 156,000
*0.20 × 30,000 20% × 30,000 = 6,000
3. Costs to account for: Cabinets Components Conversion Total
Beginning WIP…………………………………………………………………………………………………..
Incurred during April…………………………………………………………………………………………………..
Equivalent units…………………………………………………………….
Cost per equivalent unit…………………………………………………………………………………………………..
4. Costs Transferred Out
=
150,000 × $320 150,000 × 320 = 48,000,000 60,000
=
Cost of Ending WIP
=
(30,000 × $20) + (30,000 × $210) + (6,000 × $90) 30,000 × 20 + 30,000 × 210 +
=
$7,440,000 6,000 × 90 = 7,440,000
5. Costs to account for:
$48,000,000
*
CHAPTER 6 Process Costing
P 6-58
1.
Physical flow:
Units to account for: Units accounted for: Beg. WIP 60,000
Units in beginning WIP…………………………………………………………………………………………………………………….
60,000
Units completed…………………………………………………………………………………………………………….
150,000 Units completed 150,000
Units started…………………………………………………………………………………………………………….
120,000
Units in ending WIP…………………………………………………………………………………………………………….
30,000 End WIP 30,000
Total units to acct. for…………………………………………………………………………………………………………….
180,000
Total units acct’d. for…………………………………………………………………………………………………………….
180,000 Units started 120,000
Equivalent units: Cabinets Components Conversion
Units completed…………………………………………………………………………………………………………….
Units in EWIP…………………………………………………………………………………………………………….
Equivalent units…………………………………………………………………………………………………………….
Costs to account for: Cabinets Components Conversion Total
Beginning WIP…………………………………………………………………………………………………………….
$1,200,000 $12,600,000 5,400,000$ $19,200,000 1,200,000 + 12,600,000 + 5,400,000 = 19,200,000
Incurred during April…………………………………………………………………………………………………………….
2,400,000 25,200,000 8,640,000 36,240,000 2,400,000 + 25,200,000 + 8,640,000 = 36,240,000
Total costs to acct. for…………………………………………………………………………………………………………….
$3,600,000 $37,800,000 $14,040,000 $55,440,000
Equivalent units…………………………………………………………………………………………………………….
180,000 180,000 156,000 150,000 + 6,000 = 156,000
Cost per equivalent unit…………………………………………………………………………………………………………….
$20 $210 $90 $320
Transferred Ending Work
Costs accounted for: Out in Process Total
($320 × 150,000)……………………………………………………………………………………………………………………………………………………………………
Cabinets ($20 × 30,000)……………………………………………………………………………………………………………………………………………
Components ($210 × 30,000)……………………………………………………………………………………………………………………………………………
Conversion ($90 × 6,000)……………………………………………………………………………………………………………………………………………
Unit Information
Stillwater Designs
Production Report
For the Month of April
(Weighted Average Method)
Assembly Department
CHAPTER 6 Process Costing
P 6-58 (Concluded)
2. Although the answers may vary, some essential elements should be mentioned in
the report. The job cost sheet summarizes the manufacturing activity for a job,
whereas the production report summarizes the manufacturing activity in a process
department for a period of time. Both reports provide unit cost information, although
the production report only provides the unit cost for a given process. Only the last
P 6-59
1. Units to account for:
Units in beginning work in process (60% complete)…………..…………………………………………………………………………………………………………………..
40,000 60%
Units started during the period………………..…………………………………………………………………………………………………………………..
120,000
Total units to account for……………………..…………………………………………………………………………………………………………………
160,000
Units accounted for:
Units completed and transferred out:
Started and completed……………………..…………………………………………………………………………………………………………………….
80,000 120,000 – 40,000 = 80,000
From beginning work in process………..……………………………………………………………………………………………………………………..
40,000 120,000
Units in ending work in process (60% complete)…………..…………………………………………………………………………………………………………………..
40,000 60%
Total units accounted for………………………….…..………………………………………………………………………………………………………….
160,000
(40,000 × 0.60)…..…………………………………………………………………………………………………………
144,000
CHAPTER 6 Process Costing
P 6-59 (Concluded)
4. First, calculate the cost per unit for the equivalent units in beginning
inventory (0.60 × 40,000 = 24,000 equivalent units in BWIP) = 24,000 60% × 40,000 = 24,000
Prior-Period Unit Cost = $144,000/24,000………………………………………………………………..…..………
$6.00 144,000 /24,000 = 6.00
Next, calculate the current-period (FIFO) cost per unit:
= Weighted Average Equivalent
Units – Prior-Period
Equivalent Units
=144,000 – 24,000 144,000 – 24,000 = 120,000
P 6-60
Physical flow:
Units to account for: Units accounted for:
Units in beginning WIP……………………………………………………………………………………
40,000
Units completed…………………………………………………………………………………
120,000
Units started…………………………………………………………………………………
120,000
Units in ending WIP…………………………………………………………………………………
40,000
Total units to acct. for…………………………………………………………………………………
160,000
Total units acct’d. for…………………………………………………………………………………
160,000
Equivalent units:
Units completed…………………………………………………………………………………
120,000
Units in ending WIP…………………………………………………………………………………
24,000 40,000 × 60% = 24,000
Total equivalent units…………………………………………………………………………………
144,000
Costs in beginning WIP…………………………..………………………………………………………………………………………………………………………….
Costs added by department………………………..……………………………………………………………………………………………………………………….
Total costs to account for…………………………..……………………………………………………………………………………………………………….
Cost per equivalent unit…………………………..…………………………………………………………………………………………………………………………….
FIFO Equivalent Units for Materials
Alfombra Inc.
Production Report
For the Month of August
(Weighted Average Method)
UNIT INFORMATION
Throw Rug Department
CHAPTER 6 Process Costing
P 6-60 (Concluded)
Transferred
Costs accounted for: Out Total
Goods transferred out
($5.20 × 120,000)…………………………………………………………………………………………………………………………………………….
$624,000 $624,000 5.20 × 120,000 = 624,000
Goods in ending WIP:
Conversion ($5.20 × 24,000)………………………………………………………………………………………………….
$124,800 124,800 5.20 × 24,000 = 124,800
Total costs accounted for……………………………………………………………………………………………………………
$624,000 $124,800 $748,800
50,000
50,000
2. Equivalent
Units
Transferred out………………………………………..………………………………………………………………………………………………………………………………
45,000
Ending WIP (5,000 × 0.25)…………..…………………………………………………………………………………………………………….…..………….…………………
1,250 5,000 × 25% = 1,250
Total………………………………………………………………..…………………………………………………………………………………………………
46,250
3.
Unit cost [($1,656 + $26,094)/46,250]……..……………………………………………………………………………………………………………………………………………
$0.60 1,656 + 26,094 / 46,250 = 0.60
4.
Cost transferred out (45,000 × $0.60)………………………..…………………………………………………………………………………………………………………..…
$27,000 45,000 × 60% = 27,000
Cost of ending WIP (1,250 × $0.60)…………………………………………………………………………………………….…………………………………………. ………………
$750 1,250 × 60% = 750
5.
To assign costs to spoiled units, they should appear as an item in the
Units
Transferred out…………………………………………………..………………………………………………………………………………………………………………………
Spoiled units…………………………………………………………..…………………………………………………………………………………………………………………
Ending WIP (5,000 × 0.25)…………..…………………………………………………………………………………………………………….…..………….…………………
Total………………………………………………………………………..……………………………………………………………………………………………
46,250
Work in Process
Ending
P 6-61 (Concluded)
The cost per equivalent unit is the same calculated without spoilage.
Spoilage Cost = 2,500 × $0.60 = $1,500 2,500 × 0.60 = 1,500
P 6-62
Units to account for: Units accounted for: 24,000 70,000 10,000
Units in beginning WIP………………………………………………………………………………………………………………………………………
24,000
Units completed………………………………………………………………………………………………………………………………
70,000 60% 70%
Units started………………………………………………………………………………………………………………………………………
56,000
Units in ending WIP………………………………………………………………………………………………………………………………
10,000
Total units to acct. for………………………………………………………………………………………………………………………………………
80,000
Total units acct’d. for ………………………………………………………………………………………………………………………………
80,000 70,000 – 24,000 + 10,000 = 56,000
Units completed………………………………………………………………………………………………………………………………………
Units in ending WIP (10,000 × 0.70)………………………………………………………………………………………………………………………………
Total equivalent units………………………………………………………………………………………………………………………………
77,000
Costs to account for:
Costs in beginning WIP………………………..…………………………………………………………………………………………………………………………………
$285,520
Costs added by department…………………..…………………………………………………………………………………………………………………………………
638,480
Total costs to account for…………………………………………………………………………………………………………………………………………
$924,000
Goods transferred out (70,000 × $12.00)………..…………………………………………………………………………………………………………………………….………………………….
Ending WIP (7,000 × $12.00)……..……………………………………………………………………………………………………………………………….………………………….
Total costs accounted for……………………………………..………………………………………………………………………………………………………………
$924,000
COST INFORMATION
Millie Company
Assembly Department
For the Month of June
(Weighted Average Method)
UNIT INFORMATION
Production Report
CHAPTER 6 Process Costing
P 6-63
24,000 70,000 10,000
60% 70%
Units to account for: Units accounted for: 70,000 – 24,000 + 10,000 = 56,000
Units in beginning WIP……..………………………………………………………………………………………………………
24,000
Started and completed……………………………………………………………………………………………………
46,000
Units started……..………………………………………………………………………………………………………
56,000
From beginning WIP……………………………………………………………………………………………………
24,000
From ending WIP……………………………………………………………………………………………………
10,000 70,000 – 24,000 = 46,000
Total units to acct. for……..………………………………………………………………………………………………………
80,000
Total units acct’d for……………………………………………………………………………………………………
80,000
Started and completed……………………………………………………………………………………………………
To complete beginning WIP (24,000 × 0.40)……………………………………………………………………………………………………
Units in ending WIP (10,000 × 0.70)……………………………………………………………………………………………………
Total equivalent units……………………………………………………………………………………………………
62,600
Costs to account for:
Costs in beginning WIP…………………………..………………………………………………………………………………………………………………
$285,520 186,256 + 64,864 + 34,400 = 285,520
Costs added by department……………………..…………………………………………………………………………………………………………………
638,480 267,880 + 253,000 + 117,600 = 638,480
Total costs to account for……………………..…………………………………………………………………………………………………………………
$924,000
Cost per equivalent unit ($638,480/62,600)……………………………………..………………………………………………………………………………………………………………
$10.1994 638,480 / 62,600 = 10.1994
Costs accounted for:
Transferred out:
Units started and completed (46,000 × $10.1994)………………………………..…………………………………………………………………………………………………………………………...
$469,172 46,000 × 10.1994 = 469,172
Units in beginning WIP:
Goods in ending work in process (7,000 × $10.1994)………………………………………..……………………………………………………………………………………………………………………………….
Total costs accounted for……………………………………………………………..……………………….
$924,002
UNIT INFORMATION
COST INFORMATION
Millie Company
(FIFO Method)
Assembly Department
Production Report
For the Month of June
CHAPTER 6 Process Costing
P 6-64
1. a. Physical flow schedule:
Units to account for:
Units accounted for: Completed End. Beg.
Units in BWIP……………………………………..…………………………………………………………………………
30,000
Units completed……………………………………..…………………………………………………………………………
480,000 480,000 + 50,000 – 30,000 = 500,000
Units started……………………………………..…………………………………………………………………………
500,000
From EWIP……………………………………..…………………………………………………………………………
50,000 40% 20%
Total units……………………………………..…………………………………………………………………………
530,000
Total units……………………………………..…………………………………………………………………………
530,000
b. Equivalent unit schedule:
Units completed………………………………..……………………………………………………………………………………………………………………………………………………….
480,000
Units in ending WIP (50,000 × 0.40)…..…………………………………..…………………………………………………………………………………………………………….………
20,000 50,000 × 0.40 = 20,000
Total equivalent units…………..…………………………………………………………………………………………………………………………………
500,000
2. Unit cost computation:
Costs in BWIP………………..………………………………………………………………………………………………………………………….…………
Costs added……………..…………………………………………………………………………………………………………………………………………
Total costs……………..………………………………………………………………………………………………………………………………………………
$11,612,500
Unit Cost = $11,612,500/500,000…………..………………………………………………………………………………………………………………..…………………………………...……
3.
Ending work in process (20,000 × $23.225)……………………………………………..…………………………………………………………………………………………………………...…….
$464,500 20,000 × 23.225 = 464,500
Goods transferred out (480,000 × $23.225)……..…..………………………………………………………………………………………………………….…………………………………..……
$11,148,000 480,000 × 23.225 = 11,148,000
4. Cost reconciliation:
Costs to account for: Costs accounted for:
Beginning WIP…..…………………………………………………………………………………………………………………
$ 270,000
Transferred out…..…………………………………………………………………………………………………………………
$11,148,000
August costs…..…………………………………………………………………………………………………………………
11,342,500
Ending WIP…..…………………………………………………………………………………………………………………
464,500
Total to acct. for…..…………………………………………………………………………………………………………………
$11,612,500
Total to acct. for…..…………………………………………………………………………………………………………………
$11,612,500
5. Equivalent unit schedule: Paraffin Pigment Paraffin Pigment
Units completed………………..……………………………………………………………………………………………………………………………………………..
480,000 480,000 480,000 480,000
Units in ending WIP……………………..……………………………………………………………………………………………………………………………………..
20,000 20,000 20,000 20,000
Total equivalent units……………………..……………………………………………………………………………………………………………………………..
500,000 500,000
Costs in BWIP…………………………..………………………………………………………………………………………………………………………………….
Costs added……………………………..……………………………………………………………………………………………………………….……………………….
Total costs………….……..……………………………………………………………………………………………………………………………………
$3,370,000 $2,650,000
Unit paraffin cost = $3,370,000/500,000….……………..………………………………………………………………………………………………………….….…
Unit pigment cost = $2,650,000/500,000………….…..………………………………………………………………………………………………………….………
CHAPTER 6 Process Costing
P 6-65
1. Department A
a. Physical flow schedule: Dept. A Dept. B
Units in beginning WIP…………..……………………………………………………………………………………………………………………………………………
5,000 Beg. 5,000 8,000
Units started in November…………..………………………………………………………………………………………………………………………………………..
25,000 Started 25,000 ?
Total units to account for………..………………………………………………………………………………………………………………………………………..
30,000 Transf. Out 28,000 33,000
Units completed and transferred out: 40% 50%
Units completed………..………………………………………………………………………………………………………………………………………………………
28,000 80% 50%
Units in ending WIP……………..……………………………………………………………………………………………………………………………………………..
2,000
Total units accounted for……………..…………………………………………………………………………………………………………………………………..
30,000
Units completed……………..…………………………………………………………………………………………………………………………………………………
Add: Equivalent units in ending WIP (2,000 × 0.80)………..……………………………………………………………………………………………………………..
Total equivalent units……………………………………..………………………………………………………………………………………………………………..
c. Costs charged to the department: Materials
Conversion
Total Materials Conversion
Beginning WIP…………..……………………………………………………………………………………………………
$10,000 $ 6,900 $ 16,900 10,000 6,900
Incurred during November…………..……………………………………………………………………………………………………
57,800 95,220 153,020 57,800 95,220
Total costs…………..……………………………………………………………………………………………………
$67,800 $102,120 $169,920
Unit cost calculation:
Unit cost = $169,920/29,600………….…..…………………………………………………………………………………………………………..……………..
$5.7405 169,920 / 29,600 = 5.74
Beginning WIP…………………………..……………………………………………………………………………………………………………………………………..
Costs incurred…………………………………..……………………………………………………………………………………………………………………………..
Total costs to account for………………..……………………………………………………………………………………………………………………………….
Goods transferred out (28,000 × $5.7405)……..…..……………………………………………………………………………………………………………….…………
Costs in ending WIP (1,600 × $5.74)…………..……………………………………………………………………………………………………………..….………….
Total costs accounted for*…………………..……………………………………………………………………………………………………………………………
*Rounded
2.
Credit
Work in Process—Department A 57,800
Raw Materials 57,800
Work in Process—Department A 95,220
Conversion Costs—Department A 95,220
57,800
Debit
Journal
95,220
Date
Description
CHAPTER 6 Process Costing
P 6-65 (Concluded)
Answers may vary, but could (or should) include:
Using a conversion cost control account is more commonly used because direct
labor is becoming a small percentage of total manufacturing costs. Automation is
Dept. A Dept. B
P 6-66 Beg. 5,000 8,000
1. Department A Started 25,000 ?
a. Physical flow schedule: Transf. Out 28,000 33,000
Units in beginning WIP……………..………………………………………………………………………………………………………………………………………..
5,000
Units started in November………..…………………………………………………………………………………………………………………………………………
25,000 40% 50%
Total units to account for…………..…………………………………………………………………………………………………………………………………….
30,000 80% 50%
Units completed and transferred out:
Started and completed…..…………………………………………………………………………………………………………
23,000 28,000 – 5,000 = 23,000
From beginning WIP………………..………………………………………………………………………………………………………………………………………..
5,000
Units in ending WIP………………..…………………………………………………………………………………………………………………………………………….
2,000 25,000 + 5,000 – 28,000 = 2,000
Total units accounted for…………..………………………………………………………………………………………………………………………………………..
30,000
b. Equivalent unit calculation:
Units started and completed……..………………………………………………………………………………………………………………………………………………………………..……………………
23,000
Equivalent units in beginning WIP [(1 – 0.40) × 5,000]…………………………………………..………………………………………………………………………………………………………………………..….
3,000 100% – 40% × 5,000 = 3,000
Equivalent units in ending WIP (2,000 × 0.80)…………………………………………..……………………………………………………………………………………………………………………..…………
1,600 2,000 × 80% = 1,600
Total equivalent units…………………..………………………………………………………………………………………………………………………………………………………………………………………
27,600
Unit Cost = $153,020/27,600……………..………………………………………………………………………………………………………………………………
CHAPTER 6 Process Costing
P 6-66 (Concluded)
d. and e. Cost reconciliation: New amounts had to be entered manually in solution as Excel wanted to round.
Costs of unit started and completed (23,000 × $5.544)……………….………………..…………………………………………………………………………………………………………………………….
$127,512 23,000 × 5.54 = 127,517
Costs of unit in beginning WIP:
Prior period costs………………..………………………………………………………………………………………………………………………….……………………………………………..
16,900 16,900
Current cost to finish units (3,000 × $5.54)………….………..…………………………………………………………………………………………………………………………………….………..……
16,632 3,000 × 5.54 = 16,633
Costs in ending WIP (1,600 × $5.54)……………………………………..…………………………………………………………………………………………………………..……………...………
Beginning WIP………………………..…………………………………………………………………………………………………………………………..……………………………………………………
Costs incurred………………………..……………………………………………………………………………………………………………………………...………………………………………………
*Difference due to rounding.
2.
Debit Credit
Work in Process—Department A 57,800
Raw Materials 57,800
Work in Process—Department A 95,220
Conversion Costs—Department A 95,220
Work in Process—Department B 161,044
Work in Process—Department A 161,044
95,220
161,044
Journal
Date
Description
57,800