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CHAPTER 6 Process Costing
P 6-50 (Continued)
Transferred
Costs accounted for: Out Total
Goods transferred out
P 6-51
1. Units to account for: Units accounted for:
Units in beginning WIP……
…
15,000 Transferred out……… 45,000
2. Equivalent
Units
5. To assign costs to spoiled units, they should appear as an item in the
equivalent units schedule:
Equivalent
Units
Transferred out…………………………………………………..………………
…
42,500
Work in Process
Ending
6-19
CHAPTER 6 Process Costing
P 6-51 (Continued)
The cost per equivalent unit is the same calculated without spoilage.
P 6-52
Units to account for: Units accounted for:
Units in beginning WIP……
…
24,000 Units completed………
…
70,000
Costs to account for:
Costs in beginning WIP………………………..………………………………
…
$285,520
Costs added by department…………………..………………………………
…
638,480
Total costs to account for…………………………………………………
…
$924,000
COST INFORMATION
Millie Company
Assembly Department
For the Month of June
(Weighted Average Method)
UNIT INFORMATION
Production Report
P 6-53
Units to account for: Units accounted for:
Units in beginning WIP……
.
24,000 Started and completed…
…
46,000
Units started……..…………
…
56,000 From beginning WIP……
…
24,000
Costs to account for:
Costs in beginning WIP…………………………..……………………………
…
$285,520
Costs added by department……………………..……………………………
…
638,480
Total costs to account for……………………..……………………………
…
$924,000
*Rounded
UNIT INFORMATION
COST INFORMATION
Millie Company
(FIFO Method)
Assembly Department
Production Report
For the Month of June
6-21
CHAPTER 6 Process Costing
P 6-54
1. a. Physical flow schedule:
Units to account for: Units accounted for:
Units in BWIP……
…
30,000 Units completed………
…
480,000
2. Unit cost computation:
Costs in BWIP………………..……………………………………………………
…
$ 270,000
3. Ending work in process (20,000 × $23.225)…………………………………… $464,500
Goods transferred out (480,000 × $23.225)……..…..………………………… $11,148,000
4. Cost reconciliation:
Costs to account for: Costs accounted for:
5. Equivalent unit schedule: Paraffin Pigment
Units completed………………..………………………………
…
480,000 480,000
Units in ending WIP……………………..……………………… 20,000 20,000
6-22
CHAPTER 6 Process Costing
P 6-55
1. Department A
a. Physical flow schedule:
Units in beginning WIP…………..………………
…
5,000
Total units accounted for……………..………
…
30,000
b. Equivalent unit calculation:
c. Costs charged to the department: Materials Conversion Total
Beginning WIP…………..……………… $10,000 $ 6,900 $ 16,900
Incurred during November…………..
…
57,800 95,220 153,020
Total costs…………..………………
…
$67,800 $102,120 $169,920
Unit cost calculation:
Unit cost = $169,920/29,600………….…..…………………………
…
$5.74
d. and e. Cost reconciliation:
*Rounded
2.
Credit
Work in Process—Department A
Raw Materials 57,800
Journal
Date Description
57,800
Debit
CHAPTER 6 Process Costing
P 6-55 (Continued)
Answers may vary, but could (or should) include:
Using a conversion cost control account is more commonly used because direct
P 6-56
1. Department A
a. Physical flow schedule:
Units in beginning WIP……………..…………………
…
5,000
b. Equivalent unit calculation:
Units started and completed……..……………………………………
…
23,000
c. Costs charged to the department: Materials Conversion Total
CHAPTER 6 Process Costing
P 6-56 (Continued)
d. and e. Cost reconciliation:
Costs of unit started and completed (23,000 × $5.54)……………….
…
$127,420
Costs of unit in beginning WIP:
*Difference due to rounding.
2.
Debit Credit
Work in Process—Department A
Raw Materials 57,800
Journal
Date Description
57,800
6-25
CHAPTER 6 Process Costing
P 6-57
1.
Units to account for:
Units in beginning WIP……………………………………………………… 10
Costs to account for: Materials Conversion* Total
Beginning WIP……………………………
…
$ 252 $ 846 $ 1,098
Transferred Ending Work
Costs accounted for: Out Total
Goods transferred out
in Process
Benson Pharmaceuticals
Mixing Department Production Report
For the Month of March
(Weighted Average Method)
UNIT INFORMATION
COST INFORMATION
6-26
CHAPTER 6 Process Costing
P 6-57 (Continued)
2.
Units to account for:
Units accounted for: Flow Trans. In Materials Conversion
Costs to account for: Trans. In Materials Total
Beginning WIP…………………
…
$ 140 $ 32 $ 50 $ 222
Costs accounted for: Total
Goods transferred out
(208,000 × $0.1125)……………………………
…
$23,400 $23,400
Out
Transferred Ending Work
in Process
Equivalent Units
COST INFORMATION
Physical
Conversion
UNIT INFORMATION
Benson Pharmaceuticals
Encapsulating Department Production Report
For the Month of March
(Weighted Average Method)
**
6-27
CHAPTER 6 Process Costing
P 6-57 (Continued)
3. Weighted average is easier to use than FIFO because it does not require separate
tracking for units in BWIP. FIFO requires that prior-period work and costs be
accounted for separately. The weighted average method commingles prior-period
6-28
CHAPTER 6 Process Costing
P 6-58
1.
Units to account for:
Units in beginning WIP……………
…
10
Units started…………………………
…
150
Total units ………………………
…
160
Costs to account for: Total
Beginning WIP…………………………… $ 1,098
Incurred during March…………………
…
17,490
Costs accounted for: Total
Units started and completed
(130 × $119.7945)………………………
…
— $15,573
Units in beginning WIP:
Ending Work
Conversion
$ 846
13,854
Materials
$15,573
Out
$ 252
3,636
in Process
Benson Pharmaceuticals
Mixing Department Production Report
(FIFO Method)
COST INFORMATION
UNIT INFORMATION
For the Month of March
Transferred
***
6-29
CHAPTER 6 Process Costing
P 6-58 (Continued)
2.
Units to account for:
Physical
Units accounted for: Flow Trans. In Materials Conversion
Units started and completed………
…
204,000 204,000 204,000 204,000
Costs to account for: Trans. In Materials Total
Ending
Costs accounted for: Work in Process Total
Units started and completed
(204,000 × $0.1136)………………… $23,174 — $23,174
*Difference due to rounding.
Transferred
Out
Conversion
COST INFORMATION
Equivalent Units
Benson Pharmaceuticals
UNIT INFORMATION
Encapsulating Department Production Report
(FIFO Method)
For the Month of March
6-30
CHAPTER 6 Process Costing
Case 6-59
1. Unit cost computation:
Physical flow schedule:
Units, beginning work in process…………………………………………
…
0
Direct Conversion
Costs charged to the department: Materials Cost Total
Costs in BWIP………………………………
…
$0$0 $0
Costs added by department*………………
…
114,000 82,201 196,201
Total costs………………………………… $114,000 $82,201 $196,201
*$45,667 + (0.80 × $45,667)
Direct Conversion
Equivalent units calculation: Materials Cost
Units completed………………………………………………
…
2,500 2,500
2. Since conversion activity is the same for both bows, only the materials cost will
differ. Thus, the unit materials cost is computed and then added to the unit
conversion cost obtained in Requirement 1.
Econo Model
CASES
Case 6-59 (Continued)
Units completed and transferred out:
Started and completed…………………..……………………………………… 1,500
Direct materials cost charged to the department: Direct
Materials
Costs in beginning work in process……..………………………………………
…
$0
Costs added by department………………..……………………………………… 30,000
Total costs…………………………………..……………………………………
…
$30,000
Equivalent units calculation: Direct
Materials
Units completed……………………………..………………………………………
…
1,500
Add: Equivalent units in ending work in process…………..………………… 100
Total equivalent units…………………………………………..………………
…
1,600
Unit cost calculation:
Total units to account for…………………………………..………………
…
1,200
Units completed and transferred out:
Started and completed……………………………………..…………………… 1,000
From beginning work in process…………………………..…………………
…
0
Units, ending work in process……………………………..…………………
…
200
Total units accounted for…………………………………..………………
…
1,200
6-32
CHAPTER 6 Process Costing
Case 6-59 (Continued)
Equivalent units calculation: Direct
Materials
3. Unit cost for Econo model……………………………..……………………………
…
$ 48.75
Unit cost for Deluxe model…………………………..………………………………
…
100.00
Unit cost for both together……………………………..……………………………
…
$148.75
4. The profitability of the Econo line was being understated by nearly $22 while that of
the Deluxe line was overstated by over $29 producing an erroneous $51 difference
in profitability under the current process-costing system. This easily could be enough
CHAPTER 6 Process Costing
Case 6-60
1. Physical flow schedule:
Units, beginning work in process……………………………………………
…
10,000
Units started (transferred in)…………………..………………………………
…
51,000
Total units to account for……………………..…………………………
…
61,000
Units completed and transferred out:
*Assumes that overhead is used in the same proportion as direct labor
Direct Conversion
Equivalent units calculation: Materials Costs
Units started and completed……………………………………
…
40,000 40,000
Units completed from beginning work in process…………… 4,000
*Rounded
Value of ending work in process:
Direct materials (11,000 × $1.70)…..…………..……………………………… $18,700
Conversion costs (6,600 × $8.12)…..…………..……………………………
…
53,592
Total cost of units in ending work in process………………..…………
…
$72,292
Assumptions: Overhead is used at the same rate as direct labor.
CHAPTER 6 Process Costing
Case 6-60 (Continued)
2. Units, beginning work in process…………………..……………………………
…
8,000
Units started (transferred in)………………………………………………………
…
50,000
Total units to account for………………………………………………………
…
58,000
Units completed and transferred out:
Direct Conversion Transferred
Equivalent units calculation: Materials Costs In
Units started and completed…..…………………
…
42,000 42,000 42,000
Costs:
Transferred-in cost (50,000 × $9.82)*…………………………
…
$491,000
*Assumes that all units transferred out, including those finished from beginning work in process, have
a cost of $9.82 per unit. In essence, this assumes that the unit cost of this period equals the unit cost
of the prior period.
Unit Cost = Unit Direct Materials Cost + Unit Conversion Costs + Unit Tranferred-In
Cost
$16.84
Units, ending work in process:*
CHAPTER 6 Process Costing
Case 6-60 (Continued)
In addition to the same assumptions made for the first department, we had to assume
Case 6-61
1. Gary’s proposal requires Donna to falsify the equivalent unit calculation so that
income and assets can be inflated and reported incorrectly. Falsification of the
2. Donna has an obligation to report Gary to a superior only if an actual ethical problem
exists. If Gary decides that the course of action he is suggesting is not really in his or
the company’s best interests, then no ethical problem exists and no action by Donna
is needed.
3. If Gary insists on his idea of falsification of the division’s reports, Donna should
attempt to resolve the conflict by appealing to Gary’s immediate supervisor (and on
4. In this situation, the ethical dilemma is complicated by two factors: Donna’s age
and a low likelihood of resolution by appealing to higher-level authorities. Donna’s
