Chapter 4
Process Costing
Solutions to Questions
4-1 A process costing system should be
used in situations where a homogeneous
product is produced on a continuous basis.
4-2 Job-order and processing costing are
similar in the following ways:
1. Job-order costing and process costing have
the same basic purposes—to assign
4-3 Cost accumulation is simpler under
process costing because costs only need to be
assigned to departments—not individual jobs. A
company usually has a small number of
4-5 The journal entry to record the transfer
of work in process from the Mixing Department
to the Firing Department is:
Work in Process, Firing …………………………..
XXXX
Work in Process, Mixing………………………….
XXXX
equivalent units of production consist of units
transferred to the next department (or to
finished goods) during the period plus the
equivalent units in the department’s ending
Exercise 4-1 (20 minutes)
a. To record issuing raw materials for use in production:
Work in Process—Molding Department ……… 28,000
Work in Process—Firing Department …………. 5,000
Raw Materials ………………………………… 33,000
d. To record transfer of unfired, molded bricks from the Molding
Department to the Firing Department:
Work in Process—Firing Department …………. 67,000
Work in Process—Molding Department … 67,000
Exercise 4-2 (10 minutes)
Weighted-Average Method
Equivalent Units
Materials
Conversion
Units transferred out ………………………………
410,000
410,000
Exercise 4-3 (10 minutes)
Weighted-Average Method
1.
Materials
Labor
Overhead
2.
Cost per equivalent unit for materials …..
$ 85.75
Cost per equivalent unit for labor ………..
34.50
Cost per equivalent unit for overhead …..
Total cost per equivalent unit ……………..
Exercise 4-4 (10 minutes)
Weighted-Average Method
Materials
Conversion
Total
Ending work in process inventory:
Equivalent units of production ……………..
300
100
Cost per equivalent unit ……………………..
$31.56
$9.32
Cost of ending work in process inventory .
$9,468
$932
$10,400
Units completed and transferred out:
Units transferred to the next department .
1,300
Cost per equivalent unit ……………………..
$31.56
$9.32
Cost of units transferred out ………………..
$53,144
Exercise 4-5 (10 minutes)
Baking Department
Cost Reconciliation
Costs to be accounted for:
Cost of beginning work in process inventory .
$ 4,830
Costs added to production during the period .
25,650
Total cost to be accounted for ………………….
$30,480
Costs accounted for as follows:
Cost of ending work in process inventory ……
$ 1,120
Cost of units completed and transferred out ..
*
Total cost accounted for ………………………….
*The cost of units completed and transferred out can be deduced as
follows:
Exercise 4-6 (15 minutes)
Weighted-Average Method
1.
Materials
Labor
Overhead
Units transferred to the next
department ………………………………..
790,000
790,000
790,000
Work in process, ending:
Equivalent units of production ………….
2.
Materials
Labor
Overhead
Cost of beginning work in process ….
$ 68,600
$ 30,000
$ 48,000
Cost added during the period ………..
907,200
370,000
592,000
Total cost (a) …………………………….
Equivalent units of production (b) ….
Cost per equivalent unit (a) ÷ (b) …..
Exercise 4-7 (30 minutes)
Weighted-Average Method
1.
Equivalent units of production
Pulping
Conversion
Transferred to next department ……………………
Ending work in process:
Equivalent units of production ……………………..
2.
Cost per equivalent unit
Pulping
Conversion
Cost of beginning work in process …………….
$ 1,500
$ 400
Cost added during the period …………………..
Total cost (a) ……………………………………….
Equivalent units of production (b) …………….
Cost per equivalent unit, (a) ÷ (b) ……………
3.
Cost of ending work in process inventory and units transferred out
Pulping
Conversion
Total
Ending work in process inventory:
Equivalent units of production…
6,000
4,500
Cost per equivalent unit ………..
Units completed and transferred out:
Cost per equivalent unit ………..
Exercise 4-7 (continued)
4.
Cost reconciliation
Costs to be accounted for:
Costs added to production during the period
Costs accounted for as follows:
Cost of beginning work in process inventory
Exercise 4-8 (10 minutes)
Work in Process—Mixing …………………………..…………….
330,000
Raw Materials Inventory …………………………..
330,000
Work in Process—Mixing …………………………..…………….
260,000
Work in Process—Baking …………………………………………
120,000
Wages Payable …………………………………………………
380,000
Work in Process—Mixing …………………………..…………….
190,000
Manufacturing Overhead …………………………..
280,000
Work in Process—Baking …………………………………………
760,000
Work in Process—Mixing …………………………..
760,000
Finished Goods ……………………………………………………..
980,000
Work in Process—Baking …………………………..
980,000
Exercise 4-9 (20 minutes)
Weighted-Average Method
1. Computation of equivalent units in ending inventory:
Materials
Labor
Overhead
Equivalent units of production …
2. Cost of ending work in process inventory and units transferred out:
Materials
Labor
Overhead
Total
Ending work in process inventory:
Cost of ending work in
Units completed and transferred out:
Cost of units completed
Equivalent units of
3. Cost reconciliation:
Total cost to be accounted for ………………………
$855,000
Costs accounted for as follows:
Exercise 4-10 (10 minutes)
Weighted-Average Method
1.
Kilograms of
Cement
Work in process, May 1 …………………………………….
80,000
Started into production during the month ……………..
Total kilograms in process …………………………………
Deduct work in process, May 31 …………………………
Completed and transferred out during the month ……
2.
Equivalent Units (EU)
Materials
Conversion
Units transferred out …………………………..
330,000
330,000
Work in process, ending:
Equivalent units of production ……………….
Exercise 4-11 (30 minutes)
Weighted-Average Method
1.
Materials
Conversion
Units transferred to the next process ……………
300,000
300,000
Ending work in process:
Equivalent units of production …………………….
320,000
310,000
2.
Materials
Conversion
Cost of beginning work in process ………………
$ 56,600
$ 14,900
Cost added during the period …………………….
214,500
Total cost (a) …………………………………………
Equivalent units of production (b) ……………….
320,000
Cost per equivalent unit (a) ÷ (b) ……………….
3.
Materials
Conversion
Total
Ending work in process inventory:
Equivalent units of production
(see above) ……………………
20,000
10,000
Cost per equivalent unit (see
above) ………………………….
$1.38
$0.74
Cost of ending work in process
inventory ……………………….
$27,600
$7,400
$35,000
Units completed and transferred out:
300,000
Cost per equivalent unit
(see previous exercise) ……..
$1.38
$0.74
Cost of units completed and
transferred out ……………….
Exercise 4-12 (10 minutes)
Weighted-Average Method
Materials
Labor &
Overhead
Pounds transferred to the Packing Department
during May* ………………………………………………..
490,000
490,000
510,000
508,000
Problem 4-13 (45 minutes)
Weighted-Average Method
1.
Equivalent Units of Production
Materials
Conversion
Transferred to next department* ………………….
380,000
380,000
Ending work in process:
Equivalent units of production ……………………..
2.
Cost per Equivalent Unit
Materials
Conversion
Cost of beginning work in process …………….
$ 86,000
$ 36,000
Cost added during the period …………………..
198,000
Total cost (a) ……………………………………….
Equivalent units of production (b) …………….
390,000
Cost per equivalent unit, (a) ÷ (b) ……………
3.
Cost of Ending Work in Process Inventory and Units Transferred Out
Materials
Conversion
Total
Ending work in process inventory:
Cost per equivalent unit …….
$45,000
Units completed and transferred out:
380,000
Cost per equivalent unit …….
Equivalent units of production
(materials: 40,000 units x 75%
complete; conversion: 40,000
Problem 4-13 (continued)
4.
Cost Reconciliation
Costs to be accounted for:
Costs added to production during the period
Costs accounted for as follows:
Cost of beginning work in process inventory
Problem 4-14 (45 minutes)
Weighted-Average Method
1.
Equivalent Units of Production
Materials
Conversion
Transferred to next department ……………………
450,000
Ending work in process:
Equivalent units of production ……………………..
2.
Cost per Equivalent Unit
Materials
Conversion
Cost of beginning work in process …………….
$ 13,500
Cost added during the period …………………..
Total cost (a) ……………………………………….
Equivalent units of production (b) …………….
510,000
470,000
Cost per equivalent unit, (a) ÷ (b) ……………
$0.84
$0.64
3.
Applying Costs to Units
Materials
Conversion
Total
Ending work in process inventory:
Equivalent units of production
60,000
20,000
Cost per equivalent unit …….
$0.84
$0.64
Cost of ending work in process
inventory ………………………
$50,400
$12,800
$63,200
Units completed and transferred out:
Units transferred to the next
department …………………..
450,000
450,000
Cost per equivalent unit …….
$0.84
$0.64
Problem 4-14 (continued)
4.
Cost Reconciliation
Costs to be accounted for:
Costs added to production during the period
Costs accounted for as follows:
Cost of beginning work in process inventory
Problem 4-15 (45 minutes)
Weighted-Average Method
1.
Equivalent units of production
Materials
Conversion
Transferred to next department* ………………….
270,000
270,000
Ending work in process:
Equivalent units of production ……………………..
2.
Cost per equivalent unit
Materials
Conversion
Cost of beginning work in process …………….
$ 43,400
$ 20,300
Cost added during the period …………………..
Total cost (a) ……………………………………….
Equivalent units of production (b) …………….
Cost per equivalent unit, (a) ÷ (b) ……………
3.
Cost of ending work in process inventory and units transferred out
Materials
Conversion
Total
Ending work in process inventory:
Equivalent units of production…
45,000
27,000
Cost per equivalent unit ………..
Units completed and transferred out:
270,000
Cost per equivalent unit ………..
Problem 4-16 (45 minutes)
Weighted-Average Method
1.
a.
Work in Process—Blending …………………………..
147,600
Work in Process—Bottling …………………………..
45,000
Raw Materials …………………………………………………..
192,600
b.
Work in Process—Blending …………………………..
73,200
Work in Process—Bottling …………………………..
17,000
Salaries and Wages Payable …………………………..
90,200
Manufacturing Overhead …………………………..
Work in Process—Blending …………………………..
481,000
Work in Process—Bottling …………………………..
Manufacturing Overhead …………………………..
108,000
Work in Process—Bottling …………………………..
Work in Process—Blending …………………………..
722,000
Finished Goods ……………………………………………………..
Work in Process—Bottling …………………………..
920,000
g.
Accounts Receivable …………………………..
Cost of Goods Sold …………………………..
890,000
Finished Goods …………………………..
890,000