Chapter 04 1A EOC

8/13/2019 Chapter 04 1A EOC

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Introduction to Managerial Accounting, 1st Edition, by Folk, Garrison, and NoreenAlternate Problems-Set A, Ca!ter "

PROBLEM 4-1AEquivalent Units; Cost ReconciliationWeighte Ave!age Metho(LO2, LO5)

CHECK FIGURE(2) June 30 WIP: $3,570

Martin Company manufactures a single product. The company uses the weighted-average method in its processcosting system. Activity for June has just been completed. An incomplete production report for the first processingdepartment follows:

Quantity Schedule and Equivalent

Units

Quantity

Schedule

nits to be accounted for:

!or" in process# June $ %materials&'( complete) labor and overhead*'( complete+ $'#'''

,tarted into production *#'''

Total units #'''

Equivalent units (EU)

Materials Labor Overhead

nits accounted for as follows:

Transferred to the ne/t department *''' 0 0 0

!or" in process# June 1' %materials2'( complete# labor and overhead3'( complete+ *#''' 0 0 0

Total units #''' 0 0 0

Cost per Equivalent Unit

Total WholeCost Materials Labor Overhead Unit

Cost to be accounted for:

!or" in process# June $ 4 $$#5'' 4 *#&''4 3#$'

' 4 1#'''

Cost added by the department $'#3' 21#22'33#$3

' 1$#*''

Total cost %a+ 4$$5#$' 4*'#12'43#33

' 41#*''

67uivalent units %b+ $#''' *5#3'' *5#3''

Cost per 6# %a+ 8 %b+ 4'.&2 9 4'.12 9 4'.2' 4$.'

Cost econciliation

TotalCost

Cost accounted for as follows:

0 0

Required:

$. ;repare a schedule showing how the e7uivalent units were computed for the first processing department.3. Complete the part of the production report for the first processing department.

# $e McGra%-&ill Com!anies, Inc', ())(' All rigts reser*ed' 1


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PROBLEM 4-"A#nte!$!eting A P!ouction Re$o!tWeighte-Ave!age Metho(LO2, LO3, LO4)

CHECK FIGURE(1) M!e"#%: 1&1,000 e'u#en! un#!% (2) Cne"%#n: $1*45 +e" un#! (3) 144,000 un#!%

Cooperative ,an Jos? of southern ,onora state in Me/ico ma"es a uni7ue syrup using cane sugar and local herbs.The syrup is sold in small bottles and is pri@ed as a flavoring for drin"s and for use in desserts. The bottles are soldfor 4$$.'' each. %The Me/ican currency is the peso and is denoted by 4.+ The first stage in the production process iscarried out in the Mi/ing epartment# which removes foreign matter from the raw materials and mi/es them in theproper proportions in large vats. The company uses the weighted-average method in its process costing system.

A hastily prepared report for the Mi/ing epartment for April appears below:

Quantity Schedule

nits to be accounted for:

!or" in process# April $ %materials $''(complete) conversion 52( complete+ $$#'''

,tarted into production $2'#'''

Total units $*$#'''

nits accounted for as follows:

Transferred to the ne/t department $22#'''

!or" in process# April 1' %materials $''(complete# conversion 1'( complete+ *#'''

Total units $*$#'''

Total Cost

Cost to be accounted for:

!or" in process# April $4 33#&$

'

Cost added during the month

255#''

'

Total cost4*3$#&$

'

Cost econciliation

Cost accounted for as follows:

Transferred to the ne/t department4*'#2'

'

!or" in process# April 1' $#1$

'

Total cost4*3$#&$

'

Cooperative ,an Jos? has just been ac7uired by another company# and the management of the ac7uiringcompany wants some additional information about its operations.

Required:

$. !hat were the e7uivalent units for the month03. !hat were the costs per e7uivalent unit for the month0 The beginning inventory consisted of the following

costs: materials# 4$5#2')and conversion cost# 41#1*'. The costs added during the month consisted of: materials#412#''')and conversion cost# 433#'''.

1. Bow many of the units transferred to the ne/t department were started and completed during the month0

# $e McGra%-&ill Com!anies, Inc', ())(' All rigts reser*ed' "


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. The manager of the Mi/ing epartment# an/ious to ma"e a good impression on the new owner# stated#


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PROBLEM 4-%AP!ouction Re$o!tWeighte-Ave!age Metho(LO2, LO3, LO4, LO5)

CHECK FIGUREJune 30 WIP: $13,150

,unspot Eeverages# Ftd. of Giji ma"es blended tropical fruit drin"s in two stages. Gruit juices are e/tracted fromfresh fruits and blended in the Elending epartment. The blended juices are then bottled and pac"ed for shipping inthe Eottling epartment. The following information pertains to the operations of the Elending epartment for June.%The currency in Giji is the Gijian dollar.+

!ercent Co"pleted

Units Materials Conversion

!or" in process# beginning 1'#''' $''( &'(

,tarted into production32'#''

'

Completed and transferred out3*'#''

'

!or" in process# ending 3'#''' $''( 2(

Cost in the beginning wor" in process inventory and cost added during June were as follows for the Elendingepartment:

Material

s

Conversio

n

!or" in process# beginning 4 $3#''' 4$'#&''

Cost added during June $3''' &1#12'

Required:

;repare a production report for the Elending epartment for June assuming that the company uses the weighted-average method.



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PROBLEM 4-4A&te$-B'-&te$ P!ouction Re$o!tWeighte-Ave!age Metho(LO2, LO3, LO4, LO5)

CHECK FIGURE(2) M!e"#%: $0*74 +e" un#! (3) M 31 WIP: $23,--0

Euilder ;roducts# Dnc.# manufactures a caul"ing compound that goes through three processing stages prior tocompletion. Dnformation on wor" in the first department# Coo"ing# is given below for May:

;roduction data:nits in process# May $ %materials 52( complete)

labor and overhead *2( complete+ 2#'''nits started into production during May &'#'''nits completed and transferred out '#'''nits in process# May 1$ %materials &'( complete)

labor and overhead 2'( complete+ 0

Cost data:!or" in process inventory# May $:

Materials cost 4 1#3'Fabor cost 1#$'verhead cost 3#*'

Cost added during May:Materials cost 2#3*'Fabor cost &1#'5'verhead cost *2#'

Materials are added at several stages during the coo"ing process# whereas labor and overhead costs are incurreduniformly. The company uses the weighted-average method.

Required:

;repare a production report for the Coo"ing epartment for May. se the following three steps in preparing yourreport:$. ;repare a 7uantity schedule and a computation of e7uivalent units.3. Compute the costs per e7uivalent unit for the month.1. sing the data from %$+ and %3+ above# prepare a cost reconciliation.

# $e McGra%-&ill Com!anies, Inc', ())(' All rigts reser*ed' (


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PROBLEM 4-(AP!e$a!ation o) P!ouction Re$o!t *!o+ Anal'sis o) Wo!, #n P!ocessWeighte-Ave!age Metho(LO2, LO3, LO4, LO5)

CHECK FIGURE(1) M!e"#%: $1*30 +e" un#!. M 31 WIP $40,105

!eston ;roducts manufactures an industrial cleaning compound that goes through three processing departmentsHIrinding# Mi/ing# and Coo"ing. All raw materials are introduced at the start of wor" in the Irinding epartment#with conversion costs being incurred evenly throughout the grinding process. The !or" in ;rocess T-account for theIrinding epartment for a recent month is given below:

Wor# in !rocess$%rindin& 'epart"ent

Dnventory# May $ %3#''' units#1 processed+ #2'

Completed and transferredto mi/ing % 0 units+ 0

May costs added:

=aw material %31'#''' units+ 35*

Fabor and overhead 3$$#1&

Dnventory# May 1$ %3*#''' units#$ processed+ 0

The May $ wor" in process inventory consists of 41$#*11 in materials cost and 4$*#$$ in labor and overheadcost. The company uses the weighted-average method to account for units and costs.

Required:

$. ;repare a production report for the Irinding epartment for the month.3. !hat criticism can be made of the unit costs that you have computed on your production report0

# $e McGra%-&ill Com!anies, Inc', ())(' All rigts reser*ed'


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PROBLEM 4-ACosting #nvento!ies; .ou!nal Ent!ies; Cost O) /oos &olWeighte-Ave!age Metho(LO1, LO2, LO4, LO5)

CHECK FIGURE/(1) L": $0*- +e" un#!(2)eee" 31 WIP: $1,240

(4) COG/: $15,20

Kou are employed by ,pirit Company# a manufacturer of digital watches. The companyLs chief financial officer istrying to verify the accuracy of the ending wor" in process and finished goods inventories prior to closing the boo"sfor the year. Kou have been as"ed to assist in this verification. The year-end balances shown on ,pirit CompanyLsboo"s are as follows:

Units Costs

!or" in process# ecember 1$ %labor andoverhead 1'( complete+ '#''' 4&3#2''

Ginished goods# ecember 1$ 22#''' 4$&*#'''

Materials are added to production at the beginning of the manufacturing process# and overhead is applied to

each product at the rate of 2'( of direct labor cost. There was no finished goods inventory at the beginning of theyear. A review of ,pirit CompanyLs inventory and cost records has disclosed the following data# all of which areaccurate:

Costs

Units Materials Labor

!or" in process# January $ %labor andoverhead 5'( complete+ 12#''' 421#5'' 435#*$'

nits started into production $$5#'''

Cost added during the year:

Materials cost 4335#*'

Fabor cost 451#&'

nits completed during the year $$#'''

The company uses the weighted-average cost method.

Required:

$. etermine the e7uivalent units and costs per e7uivalent unit for materials# labor# and overhead for the year.3. etermine the amount of cost that should be assigned to the ending wor" in process and finished goods

inventories.1. ;repare the necessary correcting journal entry to adjust the wor" in process and finished goods inventories to

the correct balances as of ecember 1$.. etermine the cost of goods sold for the year assuming there is no under- or overapplied overhead.

%C;A# adapted+



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PROBLEM 4-0ACo+$!ehensive P!ocess Costing P!ole+Weighte-Ave!age Metho(LO1, LO2, LO3, LO4, LO5)

CHECK FIGUREM" 31 Re6#n#n e+"!en! WIP: $1-3,4-0

Fubricants# Dnc.# produces a special "ind of grease that is widely used by racecar drivers. The grease is produced intwo processes: refining and blending. =aw materials are introduced at various points in the =efining epartment)labor and overhead costs are incurred evenly throughout the refining operation. The refined output is thentransferred to the Elending epartment.

The following incomplete !or" in ;rocess account has been provided for the =efining epartment for March:

!or" in ;rocess H=efining epartment

March $ inventory %$&'#''' gallons)materials $''( complete) laborand overhead 2( complete+ 3&$#5'

Completed and transferred toElending % 0 gallons+ 0

March costs added:

=aw materials %5''#''' gallons+ &$#1&'

irect labor 5*#2''

verhead 1#1'

March 1$ inventory %$3'#''')materials 5'( complete) labor andoverhead 2'( complete+ 0

The March $ wor" in process inventory in the =efining epartment consists of the following cost elements: rawmaterials# 4$2#2'') direct labor# 45#2'') and overhead# 435#5'. Costs incurred during March in the Elendingepartment were: materials used# 41'#''') direct labor# 4$'#''') and overhead cost applied to production#43'#'''.

The company accounts for units and costs using the weighted-average method.

Required:

$. ;repare journal entries to record the costs incurred in both the =efining epartment and Elending epartmentduring March. ey your entries to the items %a+ through %g+ below.a. =aw materials were issued for use in production.

b. irect labor costs were incurred.c. Manufacturing overhead costs for the entire factory were incurred# 4*2'#'''. %Credit Accounts ;ayable.+d. Manufacturing overhead cost was applied to production using a predetermined overhead rate.e. nits that were complete as to processing in the =efining epartment were transferred to the Elending

epartment# 43#31*#&''.f. nits that were complete as to processing in the Elending epartment were transferred to Ginished Ioods#

41#$5'#'''.g. Completed units were sold on account# 41#5''#'''. The Cost of Iood ,old was 41#'''#'''.

3. ;ost the journal entries from %$+ above to T-accounts. The following account balances e/isted at the beginningof March. %The beginning balance in the =efining epartmentLs !or" in ;rocess account is given above.+

=aw Materials4$#3*'#'

''

!or" in ;rocessHElending epartment *2#'''

Ginished Ioods 1$'#'''

After posting the entries to the T-accounts# find the ending balance in the inventory accounts and themanufacturing overhead accounts.

1. ;repare a production report for the =efining epartment for March.



9/10


PROBLEM 4-2ACo+$!ehensive P!ocess Costing P!ole+Weighte-Ave!age Metho(LO1, LO2, LO3, LO4, LO5)

CHECK FIGUREM 31 C8#n e+"!en! WIP: $7,000

Bilo/# Dnc.# produces a hot sauce that goes through two departmentsHCoo"ing and Eottling. The company hasrecently hired a new assistant accountant# who has prepared the following summary of production and costs for theCoo"ing epartment for May using the weighted-average method.

Coo"ing epartment costs:

!or" in process inventory# May $: 1#''' 7uarts# materials5'( complete and labor and overhead 2( complete.........

4 *' N

Materials added during May.................................................... 1#''

Fabor added during May.......................................................... 11#2&'

verhead applied during May................................................. $*#$2

'

Total departmental costs..........................................................4$53#''

'

Coo"ing epartment costs assigned to:

Ouarts completed and transferred to the Eottlingepartment: $''#''' 7uarts at 0 per 7uart.................. 4 0

!or" in process inventory# May 1$: $'#''' 7uarts# materials2'( complete and labor and overhead 3'( complete......... 0

Total departmental costs assigned............................................ 4 0

NConsists of materials# 4$#&'') labor# 4$#3') and overhead# 45#12'.

The new assistant accountant has determined the cost per 7uart transferred to be 4$.53' as follows:

Total departmental costs 4$53#''': : 4$.53' per 7uart

Ouarts completed and transferred $''#''' 7uarts

Bowever# the assistant accountant is unsure how to use this unit cost figure in assigning cost to the ending wor" inprocess inventory. Dn addition# the companyLs general ledger shows only 4$&2#''' in cost transferred from theCoo"ing epartment to the Eottling epartment# which does not agree with the 4$53#''' figure above.

The general ledger also shows the following costs incurred in the Eottling epartment during May: materialsused# 4$33#''') direct labor cost incurred# 4*$#''') and overhead cost applied to products# 412#'''.

Required:

$. ;repare journal entries as follows to record activity in the company during May. ey your entries to the letters%a+ through %g+ below.a. =aw materials were issued to the two departments for use in production.

b. irect labor costs were incurred in the two departments.c. Manufacturing overhead costs were incurred# 42'#'2'. %Credit Accounts ;ayable.+ The company maintains

a single Manufacturing verhead account for the entire plant.d. Manufacturing overhead cost was applied to production in each department using predetermined overhead

rates.e. nits completed as to processing in the Coo"ing epartment were transferred to the Eottling epartment#

4$&2#'''.f. nits completed as to processing in the Eottling epartment were transferred to Ginished Ioods# 4$'#'''.g. nits were sold on account# 422'#'''. The Cost of Iood ,old was 4'1#'''.



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3. ;ost the journal entries from %$+ above to T-accounts. Ealances in selected accounts on May $ are given below:

=aw Materials43$#''

'

!or" in ;rocessHEottling epartment 3#'''

Ginished Ioods #'''

After posting the entries to the T-accounts# find the ending balance in the inventory accounts and theManufacturing verhead accounts.

1. ;repare a production report for the Coo"ing epartment for May.


Chapter 04 1A EOC

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