CHAPTER 17
Process Costing
ASSIGNMENT CLASSIFICATION TABLE
Learning Objectives
Questions
Brief
Exercises
Do It!
Exercises
A
Problems
* 1. Discuss the uses of a
process cost system and
how it compares to a job
order system.
1, 2, 3, 4, 5,
20
1
1
costs.
10, 11, 13, 14,
5A, 6A
14, 15
method.
ASSIGNMENT CHARACTERISTICS TABLE
Problem
Number
Description
Difficulty
Level
Time
Allotted (min.)
1A
Journalize transactions.
Moderate
20–30
2A
Complete four steps necessary to prepare a production
cost report.
Simple
30–40
3A
Complete four steps necessary to prepare a production
cost report.
Simple
30–40
4A
Assign costs and prepare production cost report.
Moderate
20–30
assign costs.
cost report.
costs for processes; prepare production cost report.
BLOOM’ S TAXONOMY TABLE
Correlation Chart between Bloom’s Taxonomy, Learning Objectives and End–of-Chapter Exercises and Problems
Learning Objective
Knowledge
Comprehension
Application
Analysis
Synthesis
Evaluation
* 1. Discuss the uses of a process cost
system and how it compares to a job
order system.
Q17-1
Q17-2
Q17-3
Q17-4
Q17-5
Q17–20
E17-1
DI17-1
* 2. Explain the flow of costs in a process
cost system and the journal entries to
assign manufacturing costs.
Q17-6
Q17-7
BE17-1
BE17-2
BE17-3
DI17-2
E17-2
E17-3
E17-4
P17-1A
DI17-3
E17–10
P17-4A
Q17–22
BE17–10
BE17–11
E17–17
E17–18
P17–7A
ANSWERS TO QUESTIONS
1. (a) Process cost.
(b) Process cost.
(c) Job order.
(d) Job order.
4. The features of process cost accounting are: (1) separate work in process accounts for each
process, (2) production cost reports, (3) product costs computed for each accounting period, and
(4) unit costs computed based on total manufacturing costs.
5. Sam is correct. The flow of costs is the same in process cost accounting as in job order cost
accounting. The method of assigning costs, however, is significantly different.
7. The entry to assign overhead to production is:
July 31 Work in Process—Machining ……………………………………………. 15,000
Work in Process—Assembly …………………………………………….. 12,000
Manufacturing Overhead …………………………………………… 27,000
Questions Chapter 17 (Continued)
13.
Equivalent Units
Materials
Conversion Costs
14.
Units transferred out were 3,200*
Units to be accounted for
Work in process (beginning)
Started into production
Total units
500
3,000
3,500
Units accounted for
Completed and transferred out
Work in process (ending)
Total units
3,200*
300
3,500
*3,500 – 300
18. The per unit conversion cost is $11.25. [Conversion costs = $6,000 – $2,400 = $3,600. Equivalent units
for conversion costs are 320 (800 X 40%); $3,600 ÷ 320 = $11.25.]
19. Operations costing is similar to process costing in that standardized methods are used to manufacture
the product. At the same time, the product may have some customized individual features that
require the use of a job order cost system.
Units transferred out
Work in process
500 X 100%
500 X 20%
Total equivalent units
500
12,500
SOLUTIONS TO BRIEF EXERCISES
BRIEF EXERCISE 17-1
BRIEF EXERCISE 17-2
BRIEF EXERCISE 17-3
BRIEF EXERCISE 17-4
BRIEF EXERCISE 17-5
BRIEF EXERCISE 17-6
BRIEF EXERCISE 17-7
BRIEF EXERCISE 17-8
BRIEF EXERCISE 17-9
*BRIEF EXERCISE 17–10
*BRIEF EXERCISE 17–11
Equivalent Units
PIX COMPANY
(Partial) Production Cost Report
For the Month Ended March 31
*BRIEF EXERCISE 17–12
SOLUTIONS FOR DO IT! REVIEW EXERCISES
DO IT! 17-1
DO IT! 17-2
DO IT! 17-2 (Continued)
DO IT! 17-3
DO IT! 17-4
DO IT! 17-4 (Continued)
SOLUTIONS TO EXERCISES
EXERCISE 17-1
10. True.
EXERCISE 17-2
EXERCISE 17-3
EXERCISE 17-4
1. Raw Materials Inventory …………………………………… 62,500
Accounts Payable …………………………………….. 62,500
5. Work in Process—Cutting ………………………………… 33,000
Work in Process—Assembly ……………………………. 27,000
Factory Labor …………………………………………… 60,000
6. Work in Process—Cutting (1,680 X $18) ……………. 30,240
Work in Process—Assembly (1,720 X $18) ………… 30,960
Manufacturing Overhead …………………………... 61,200
EXERCISE 17-5
(a)
January
May
(b)
(1)
Materials
(2)
Conversion Costs
11,500 (10,000 + 1,500)
EXERCISE 17-6
(a)
(1)
Materials
(2)
Conversion Costs
Total units
EXERCISE 17-7
QUIK FURNITURE COMPANY
Sanding Department
Production Cost Report
For the Month Ended March 31, 2017
EXERCISE 17-8
(a)
(1)
Materials
(2)
Conversion
Costs
EXERCISE 17-9
Unit costs
Materials (1,000 X $50)
Total costs
EXERCISE 17–10
(a)
Physical
Units
Equivalent Units
(b)
Conversion
Materials
Costs
Total
Equivalent units
Unit costs
(c)
Assignment of costs:
Transferred out (160,000 X $2.55)
EXERCISE 17–11
(a)
Work in process, September 30
Physical
EXERCISE 17-11 (Continued)
Equivalent Units
(c) Costs accounted for
EXERCISE 17–12
To: David Skaros
From: Student
Re: Ending inventory
EXERCISE 17–13
HEALTHY COMPANY
Welding Department
Production Cost Report
For the Month Ended February 28, 2017
Equivalent Units
Quantities
Physical
Units
Materials
Conversio
n
Costs
Units accounted for
Total units
Costs
Work in process, February 1
Materials (11,000 X $3.00)
Total costs
EXERCISE 17–14
EXERCISE 17–15
(a)
Materials
Conversion
Costs
Work in process, September 30
Equivalent units
(b)
Conversion costs: $25,480* ÷ 980 = $26.00
Costs accounted for:
Work in process, September 30
Materials (300 X $5.00)
Total costs
*($3,960 + $12,000 + $9,520)
Containers off-loaded
Containers in transit, April 30
*EXERCISE 17–16
Equivalent Units
(a)
Physical
Units
Materials
Conversion
Costs
(b)
Materials: $4,500 ÷ 1,000 = $4.50
Conversion costs: $21,620* ÷ 940 = $23.00
1,350
Applications completed:
Work in process, September 1
100
Started and completed
700
Work in process, September 30
Total units
*EXERCISE 17–17
(a) (1) Materials:
Production Data
Physical
Units
Materials Added
This Period
Equivalent
Units
(2) Conversion Costs:
Production Data
Physical
Units
Work Added
This Period
Equivalent
Units
Total
Work in process, August 31
Total
*EXERCISE 17–18
(a)
(1)
Materials
Physical
Units
Materials Added
This Period
Equivalent
Units
(2)
Conversion Costs
Physical
Units
Work Added
This Period
Equivalent
Units
(c)
Costs to Be
Assigned
Assignment of Costs
Equivalent
Units
Unit
Cost
Total Costs
Assigned
4,800
Total
*EXERCISE 17–19
(b) Materials:
Production Data
Physical
Units
Materials Added
This Period
Equivalent
Units
Work in process, March 31
Total
(c) Conversion costs:
Production Data
Physical
Units
Work Added
This Period
Equivalent
Units
Work in process, March 31
Total
*EXERCISE 17–20
MAJESTIC COMPANY
Welding Department
Production Cost Report
For the Month Ended February 28, 2017
Equivalent Units
Quantities
Physical
Units
Materials
Conversion
Costs
Costs
Materials
Costs
Started into production
Total costs
Conversion
Total
Units accounted for
Total
Work in process, February 28
Total units
*EXERCISE 17-20 (Continued)
SOLUTIONS TO PROBLEMS
PROBLEM 17–1A
PROBLEM 17–2A
(b)
Equivalent units
Total equivalent units
Total unit cost
Total units
PROBLEM 17-2A (Continued)
(e) ROSENTHAL COMPANY
Molding Department
Production Cost Report
For the Month Ended June 30, 2017
Costs
Materials
Conversion
Costs
Total
Total costs
Total costs
6,400
24,400
Quantities
Materials
Conversion
Costs
Work in process, June 30
(2,000 X 40%)
Total units
PROBLEM 17–3A
(a) (1) Physical units
(2) Equivalent units
PROBLEM 17-3A (Continued)
(3) Unit costs
PROBLEM 17-3A (Continued)
(b) THAKIN INDUSTRIES INC.
Cutting Department—Plant 1
Production Cost Report
For the Month Ended July 31, 2017
PROBLEM 17–4A
(a)
Equivalent Units
Physical
Units
Materials
Conversion
Costs
Work in process, November 30
Total units
25,000
695,000
25,000
695,000
Total costs
PROBLEM 17-4A (Continued)
(c) RIVERA COMPANY
Assembly Department
Production Cost Report
For the Month Ended November 30, 2017
PROBLEM 17–5A
(a)
(1)
Equivalent Units
Physical
Units
Materials
Conversion
Costs
PROBLEM 17-5A (Continued)
(b) POLK COMPANY
Basketball Department
Production Cost Report
For the Month Ended July 31, 2017
PROBLEM 17–6A
(a) Computation of equivalent units:
*PROBLEM 17–7A
(a) Bicycles
*PROBLEM 17-7A (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
Tricycles
Total costs transferred out
Work in process, March 31
Total costs
*PROBLEM 17-7A (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
*PROBLEM 17-7A (Continued)
(b) OWEN COMPANY
Production Cost Report—Bicycles
For the Month Ended March 31
CD–17 DECISION-MAKING AT CURRENT DESIGNS
CURRENT DESIGNS
Fabrication Department
Production Cost Report
For the Month Ended April 30, 2017
Equivalent Units
Physical
Conversion
Quantities
Materials
(Step 2)
Costs
BYP 17-1 DECISION-MAKING ACROSS THE ORGANIZATION
BYP 17-1 (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
Units accounted for
Transferred out
Work in process, July 31
(5,000 X 20%)
Total units
108,000
Costs
Materials
Conversion
Total costs
Cost Reconciliation Schedule (Step 4)
Total costs
$1,426,000
BYP 17-2 MANAGERIAL ANALYSIS
BYP 17-3 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.
(b) Materials: water, sweeteners, food ingredients, gelatin, “cough syrup
material”, crayon wax, and food coloring.
BYP 17-4 COMMUNICATION ACTIVITY
To: Diane Barone, Regional Sales Manager
From: Student, Accounting Manager
Re: Production Cost Reports
BYP 17-4 (Continued)
BYP 17-5 ETHICS CASE
(a) The stakeholders in this situation are:
BYP 17-6 CONSIDERING PEOPLE, PLANET, AND PROFIT
(a) Some of the costs that the company now faces include: