8-52. (30 min) FIFO Method: Glasgow Corporation.
a.
Physical
Units
Equivalent Units
Conversion
Costs
Flow of units
Units to be accounted for:
Beginning WIP inventory ………………
20,000
Units started this period ………………..
108,000
Total units to account for ………..
128,000
Units accounted for:
Completed and transferred out
From beginning WIP inventory ……
(20,000 × 20%) ……………………..
Started and completed currently …
Units in ending WIP inventory………..
(48,000 × 50%) ……………………..
128,000
Conversion Costs
Flow of costs:
Costs to be accounted for:
Costs in beginning WIP inventory ………………….
$ 232,200
Current period costs ……………………………………
1,306,800
Total costs to be accounted for ………………….
$1,539,000
Cost per equivalent unit ($1,306,800 ÷ 88,000) …
$ 14.85
Costs accounted for:
Costs assigned to units transferred out:
Costs from beginning WIP inventory …………..
Conversion costs ($14.85 × 4,000) …………
Current costs of units started and completed:
Conversion costs ($14.85 × 60,000) ………….
891,000
Total costs transferred out …………………………...
$1,182,600
Cost of ending WIP inventory:
Conversion costs ($14.85 × 24,000) ……….
356,400
(Answer)
Total costs accounted for ………………………….
$1,539,000
8-52. (continued)
b.
Cost per unit for the previous period is $14.5125 (= $232,200 ÷ 16,000 equiv. units)
[16,000 equiv units = (20,000 equiv units in beginning inventory x 80%)]
Cost per unit for the current period is $14.85 as calculated in (a) above.
8-53.
(50 min.) Prepare a Production Cost Report—Weighted Average Method: Kansas Supplies.
a.
Kansas Supplies
Assembling Department
Production Cost Report—Weighted-Average
Flow of Production Units
(Section 1)
Physical
units
Units to be accounted for:
Beginning WIP inventory ………………
75,000
Units started this period ………………..
375,000
Total units to be accounted for ………….
450,000
(Section 2)
COMPUTE EQUIVALENT UNITS
Prior
department
costs
Materials
Labor
Manufacturing
overhead
Units accounted for:
(90%)
Total units accounted for ………………….
8-53. (continued)
Total costs
Prior
department
costs
Materials
Labor
Manufacturing
overhead
Costs to be accounted for: (Section 3)
Costs in beginning WIP inventory ……………….
$ 382,800
$192,000
$120,000
$ 43,200
$27,600
Current period costs …………………………………
1,865,400
960,000
576,000
216,000
113,400
Total costs to be accounted for ……………………..
$2,248,200
$1,152,000
$696,000
$259,200
$141,000
Cost per equivalent unit: (Section 4)
Prior department costs ($1,152,000 450,000)
$2.56
Materials ($696,000 435,000) ………………….
$1.60
Labor ($259,200 405,000) ………………………
$0.64
Manufacturing overhead ($141,000 352,500)
$0.40
Costs accounted for: (Section 5)
Costs assigned to units transferred out:
480,000
120,000
Total costs of units transferred out ………………
Costs assigned to ending WIP inventory:
384,000
216,000
216,000
Total ending WIP inventory ………………………..
8-53. (continued)
b. The report to management should include the following items:
Materials: The $1.60 per unit goal set by management is currently being achieved by the Assembling Dept.
Labor: Equivalent unit labor costs per unit ($0.64) is below management’s goal of $0.80.
Manufacturing overhead: overhead costs per unit ($0.40) is slightly higher than management’s goal of $0.36.
8-54.
(50 min.) Prepare a Production Cost Report—FIFO Method: Kansas Supplies.
a.
Kansas Supplies
Assembling Department
Production Cost Report—FIFO
Flow of Production Units
(Section 1)
(Section 2)
COMPUTE EQUIVALENT UNITS
Physical
units
Prior
department
costs
Materials
Labor
Manufacturing
overhead
Units to be accounted for:
Beginning WIP inventory …………..
75,000
Units started this period …………….
375,000
Total units to be accounted for ………
450,000
Units accounted for:
Units completed and transferred out:
225,000
225,000
225,000
Units in ending WIP inventory …….
150,000
(90%)
105,000
Total units accounted for ………………
450,000
360,000
a40% = 100% – 60% already done at the beginning of the period.
b50% = 100% – 50% already done at the beginning of the period.
8-54 (continued)
Costs
DETAILS
Total Costs
Prior
department
costs
Materials
Labor
Manufacturing
overhead
Costs to be accounted for: (Section 3)
Costs in beginning WIP inventory ……………….
$ 382,800
$192,000
$120,000
$ 43,200
$27,600
Current period costs …………………………………
1,865,400
960,000
576,000
216,000
113,400
Total costs to be accounted for ……………………..
$2,248,200
$1,152,000
$696,000
$259,200
$141,000
Cost per equivalent unit: (Section 4)
Prior department costs ($960,000 375,000)
Materials ($576,000 360,000) ………………..
Labor ($216,000 360,000) ………………………
Manufacturing overhead ($113,400 315,000)
8-54. (continued)
Details
Total Costs
Prior
department
costs
Materials
Labor
Manufacturing
overhead
Costs accounted for: (Section 5)
Costs assigned to units transferred out:
Costs from beginning WIP inventory ………..
$ 382,800
$192,000
$120,000
$ 43,200
$27,600
Current costs added to complete beginning WIP inventory:
Prior department costs ……………………….
–0–
–0–
Materials …………………………………………..
–0–
–0–
Labor ($0.60 × 30,000) ……………………….
18,000
18,000
Manufacturing overhead ($0.36 × 37,500)
13,500
13,500
Total costs from beginning inventory ……….
$414,300
Current costs of units started and completed:
Prior department costs ($2.56 × 225,000) …
576,000
576,000
Materials ($1.60 × 225,000) ……………………
Labor ($0.60 × 225,000) ………………………..
Manufacturing overhead ($0.36 × 225,000)
Total costs of units started and completed …..
Total costs of units transferred out …………………
Costs assigned to ending WIP inventory:
Prior department costs ($2.56 × 150,000) ……
$384,000
Materials ($1.60 × 135,000) ……………………….
Manufacturing overhead ($0.36 × 52,500) ……
18,900
18,900
Total ending WIP inventory …………………………..
$681,900
8-54. (continued)
b. The report to management should include the following items:
Materials: The equivalent unit materials cost per unit ($1.60) is the same as management’s goal of $1.60.
Labor: Equivalent unit labor costs per unit ($0.60) is below management’s goal of $0.80.
Manufacturing overhead: Overhead costs per unit ($0.36) is equal to management’s goal of $0.36.
8-55. (50 min.) Prepare a Production Cost Report—Weighted Average Method: Erie Products.
Note: The information about what costs would have been transferred in if the Filtering Department had used the
weighted-average method is irrelevant. As noted in the text, departments can use different methods.
Erie Products
Blending Department
Production Cost Report—Weighted-Average
Flow of Production Units
(Section 1)
Physical
units
Units to be accounted for:
Beginning WIP inventory ………………
Units started this period ………………..
116,000
Total units to be accounted for ………….
125,000
Prior
department
costs
Materials
Conversion
Units accounted for:
Units completed and transferred out:
From beginning inventory…………..
9,000
Started and completed currently …
106,000
Total transferred out ………………….
Units in ending WIP inventory ………..
8-55. (continued)
Total costs
Prior
department
costs
Materials
Conversion
Costs to be accounted for: (Section 3)
Costs in beginning WIP inventory ……………….
$ 28,875
$10,540
$ 0
$ 18,335
Current period costs …………………………………
1,077,725
151,960
387,500
538,265
Total costs to be accounted for ……………………..
$1,106,600
$162,500
$387,500
$556,600
Cost per equivalent unit: (Section 4)
Prior department costs ($162,500 125,000).
$1.30
Materials ($387,500 125,000) ………………….
$3.10
Conversion ($556,600 121,000) ………………
$4.60
Costs accounted for: (Section 5)
Costs assigned to units transferred out:
Total costs of units transferred out ………………
Costs assigned to ending WIP inventory:
27,600
Total ending WIP inventory ………………………..
$71,600
Total costs accounted for ……………………………..
8-56.
(50 min.) Prepare a Production Cost Report: FIFO Method: Eire Products.
Note: The information about what costs would have been transferred in if the Filtering Department had used the FIFO
method is irrelevant. As noted in the text, departments can use different methods.
Eire Products
Blending Department
Production Cost Report—FIFO
Flow of Production Units
(Section 1)
Physical
units
Prior
department
costs
Materials
Conversion
Units to be accounted for:
Beginning WIP inventory …………..
9,000
Units started this period …………….
116,000
Total units to be accounted for ………
125,000
Units accounted for:
Units completed and transferred out:
106,000
106,000
Units in ending WIP inventory …….
6,000
Total units accounted for ………………
8-56 (continued)
Costs
Total Costs
Prior
department
costs
Materials
Conversion
Costs to be accounted for: (Section 3)
Costs in beginning WIP inventory ……………….
$ 28,875
$10,540
$ 0
$ 18,335
Current period costs …………………………………
1,077,725
151,960
387,500
538,265
Total costs to be accounted for ……………………..
$1,106,600
$162,500
$387,500
$556,600
Cost per equivalent unit: (Section 4)
Prior department costs ($151,960 116,000)
Materials ($387,500 125,000) ………………..
Labor ($538,265 118,300) ………………………
8-56. (continued)
Total Costs
Prior
department
costs
Materials
Conversion
Costs accounted for: (Section 5)
Costs assigned to units transferred out:
Costs from beginning WIP inventory ………..
$ 28,875
$10,540
–0–
$ 18,335
Current costs added to complete beginning WIP inventory:
Prior department costs ……………………….
–0–
–0–
Materials ($3.10 × 9,000) ……………………
27,900
$ 27,900
Conversion ($4.55 × 6,300) …………………
28,665
28,665
Total costs from beginning inventory ……….
$ 85,440
Current costs of units started and completed:
Prior department costs ($1.31 × 106,000) …
Materials ($3.10 × 106,000) ……………………
Conversion ($4.55 × 106,000)………………..
Total costs of units started and completed …..
$949,760
Total costs of units transferred out …………………
Costs assigned to ending WIP inventory:
Prior department costs ($1.31 × 10,000) ……..
31,000
Conversion ($4.55 × 6,000) ……………………….
27,300
27,300
Total ending WIP inventory …………………………..
Total costs accounted for ……………………………..
$556,600
8-57. (60 min.) Prepare a Production Cost Report and Adjust Inventory Balances—Weighted-Average Method:
Fremont Corporation.
a.
Fremont Corporation
Production Cost Report—Weighted-Average
Flow of Production Units
(Section 1)
Physical units
Units to be accounted for:
Beginning WIP inventory ………………..
80,000
Units started this period ………………….
400,000
Total units to be accounted for ……………
480,000
(Section 2)
COMPUTE EQUIVALENT UNITS
Materials
Labor
Overhead
Units accounted for:
Units completed and transferred out:
360,000
360,000
360,000
Units in ending WIP inventory ………….
Total units accounted for ……………………
480,000
408,000
408,000
8-57. (continued)
Costs
Details
Total costs
Materials
Labor
Overhead
Costs to be accounted for: (Section 3)
Costs in beginning WIP inventory ……………….
$ 1,222,800
$ 240,000
$ 546,000
$ 436,800
Current period costs …………………………………
5,534,400
1,560,000
2,208,000
1,766,400
Total costs to be accounted for ……………………..
$6,757,200
$1,800,000
$2,754,000
$2,203,200
Cost per equivalent unit: (Section 4)
Materials ($1,800,000 480,000) ……………..
$3.75
Labor ($2,754,000 408,000) ………………….
$6.75
Overhead ($2,203,200 408,000) …………….
$5.40
Costs accounted for: (Section 5)
Costs assigned to units transferred out:
$1,350,000
$2,430,000
Total costs of units transferred out ……………..
Costs assigned to ending WIP inventory:
Total ending WIP inventory………………………..
Total costs accounted for ……………………………..
$6,757,200
$1,800,000
$2,754,000
$2,203,200
8-57. (continued)
b. Adjustment required:
Work in
Process
Finished
Goods
Per problem statement ……
$793,152
$337,560
Correct …………………………
1,033,200
318,000
a
Difference ……………………..
$(240,048)
$ 19,560
Journal entry:
8-58. (40 min.) Prepare a Production Cost Report and Show Cost Flows Through
Accounts: FIFO Method: Recyclers, Inc.
Recyclers, Inc.
Production Cost Report—FIFO
a.
Flow of Production Units
(Section 2)
Compute Equivalent
Units
(Section 1)
Physical units
Conversion
costs
Units to be accounted for:
Beginning WIP inventory ………………………
300
Units started this period ……………………….
2,700
Total units to be accounted for …………………
3,000
Units accounted for:
Units completed and transferred out:
2,550
Units in ending WIP inventory ……………….
150
Total units accounted for …………………………
3,000
8-58. (continued)
Costs
Total costs
Conversion
costs
Costs to be accounted for: (Section 3)
Costs in beginning WIP inventory ………………….
$ 576
$ 576
Current period costs ……………………………………
10,800
10,800
Total costs to be accounted for ………………………..
$11,376
$11,376
Cost per equivalent unit: (Section 4)
Conversion costs ($10,800 2,700) ………………
$4.00
Costs accounted for: (Section 5)
Costs assigned to units transferred out:
Costs from beginning inventory ………………….
$ 576
$ 576
Current costs added to complete beginning
WIP inventory:
Conversion costs ($4.00 × 120)………………
Total costs from beginning inventory ……………..
$1,056
Current costs of units started and completed:
Conversion costs ($4.00 × 2,550) ………………
Total costs of units started and completed ……..
Total costs of units transferred out ………………..
Costs assigned to ending WIP inventory:
Conversion costs ($4.00 × 30) …………………..
Total ending WIP inventory ………………………….
$ 120
Total costs accounted for ………………………………..
$11,376
$11,376
b.
Work in Process
Beginning inventory:
Conversion costs
576
This period’s costs:
Conversion costs
10,800
11,256a
To Finished Goods Inventory
Ending inventory
120
All costs have been accounted for.
10,800
8-59. (40 min.) Prepare a Production Cost Report and Show Cost Flows Through
Accounts—Weighted-Average Method: Recyclers, Inc.
Recyclers, Inc.
Production Cost Report—Weighted Average
a.
Flow of Production Units
(Section 2)
Compute Equivalent
Units
(Section 1)
Physical units
Conversion
costs
Units to be accounted for:
Beginning WIP inventory …………………….
300
Units started this period ……………………..
2,700
Total units to be accounted for ……………….
3,000
Units accounted for:
Units completed and transferred out:
2,850
Units in ending WIP inventory ……………..
150
3,000