COMM 305 CHAPTER 4 REVIEW
Questions1. Identify which costing system—job-order or process—the following companies would primarily use: (a)
Quaker Oats, (b) Ford Motor Company of Canada, (c) Kinko's Print Shop, and (d) Warner Bros. Motion Pictures.
2. Contrast the primary focus of job-order cost accounting and of process cost accounting.3. What are the similarities between a job-order and a process cost system?4. Your roommate is confused about the features of process cost accounting. Identify and explain the
distinctive features for your roommate.5. Mel Storrer believes there are no significant differences in the flow of costs between job-order cost
accounting and process cost accounting. Is Mel correct? Explain.6. (a) What source documents are used in assigning (1) materials and (2) labour to production in a process cost
system? (b) What criterion and basis are commonly used in allocating overhead to processes?7. At Ace Company, overhead is assigned to production departments at the rate of $5 per machine hour. In
July, machine hours were 3,000 in the machining department and 2,400 in the assembly department. Prepare the entry to assign overhead to production.
8. Gary Weiss is uncertain about the steps used to prepare a production cost report. State the procedures that are required in the sequence in which they are performed.
9. What is meant by the term “equivalent units of production”?10. How are equivalent units of production calculated?11. Wetaskawin Company had zero units of beginning work in process. During the period, 9,000 units were
completed, and there were 600 units of ending work in process. What were the units started into production?
12. Mendle Co. has zero units of beginning work in process. During the period, 12,000 units were completed, and 800 units of ending work in process were one-fifth complete in terms of conversion cost and 100% complete in terms of materials cost. What were the equivalent units of production for (a) materials and (b) conversion costs?
13. Venturino Co. started 3,000 units for the period. Its beginning inventory is 500 units one-fourth complete in terms of conversion costs and 100% complete in terms of materials costs. Its ending inventory is 200 units one-fifth complete in terms of conversion costs and 100% complete in terms of materials costs. How many units were transferred out during this period?
14. Kiner Company transfers out 14,000 units and has 2,000 units of ending work in process that are 25% complete. Materials are entered at the beginning of the process and there is no beginning work in process. Assuming unit materials costs of $3 and unit conversion costs of $6, what are the costs to be assigned to units (a) transferred out and (b) in ending work in process?
15. (a) Eve Adams believes the production cost report is an external report for shareholders. Is Eve correct? Explain.
(b) Identify the sections in a production cost report.16. What purposes are served by a production cost report?
17. At El Dakiky Company, there are 800 units of ending work in process that are 100% complete in terms of materials and 40% complete in terms of conversion costs. If the unit cost of materials is $4 and the costs assigned to the 800 units is $6,000, what is the per-unit conversion cost?
18. What is the difference between operations costing and a process costing system?
19. How does a company decide whether to use a job-order or a process cost system?
*20. Silva Co. started and completed 2,000 units for the period. Its beginning inventory is 600 units 25% complete and its ending inventory is 400 units 20% complete. Silva uses the FIFO method to calculate equivalent units. How many units were transferred out this period?
ANSWERS TO QUESTIONS
1. (a) Process cost.(b) Process cost.(c) Job-order.(d) Job-order.
2. The primary focus of job-order cost accounting is on the individual job. In process cost accounting, the primary focus is on the processes involved in producing homogeneous products.
3. The similarities are: (1) all three manufacturing cost elements—direct materials, direct labour, and overhead—are the same; (2) the accumulation of the costs of materials, labour, and overhead is the same; and (3) the flow of costs is the same.
4. The features of process cost accounting are: (1) separate work in process accounts for each process, (2) production cost reports, (3) product costs that are computed for each accounting period, and (4) unit costs that are computed based on total manufacturing costs.
5. Mel 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.
6. (a) (1) Materials are charged to production on the basis of materials requisition slips.
(2) Labour is usually charged to production on the basis of the payroll register or departmental payroll summaries.
(b) The criterion used in assigning overhead to processes is to identify the activity that “drives” or causes the cost. In many companies this activity is machine time, not direct labour.
7. The entry to assign overhead to production is:
July 31 Work in Process—Machining....................................................... 15,000Work in Process—Assembly....................................................... 12,000
Manufacturing Overhead.....................................................27,000
8. To prepare a production cost report, four steps are followed: (a) compute the physical unit flow, (b) compute equivalent units of production, (c) compute production costs per unit, and (d) prepare a cost reconciliation schedule.
9. Equivalent units of production measure the work done during the period, expressed in fully completed units. This involves determining the amount of work completed on unfinished units in ending inventory.
10. Equivalent units of production are the sum of: (1) units completed and transferred out and (2) equivalent units of ending work in process.
11. Units started into production were 9,600 or (9,000 + 600).
12. Equivalent Units
a) Materials
b) Conversion
Costs
Units transferred outWork in process
800 X 100%800 X 20%
Total equivalent units
12,000
800 12,800
12,000
16012,160
13. Units transferred out were 3,300.Units to be accounted for
Work in process (beginning)Started into production
Total units
500 3,000 3,500
Units accounted forCompleted and transferred outWork in process (ending)
Total units
3,300 200 3,500
14. (a) The cost of the units transferred out is $126,000, or (14,000 × $9).(b) The cost of the units in ending inventory is $9,000, or [(2,000 × $3) + (2,000×25% × $6)].
15. (a) Eve is incorrect. The report is an internal report for management.(b) There are four sections in a production cost report: (1) number of physical units, (2)
equivalent units determination, (3) unit costs, and (4) cost reconciliation schedule.16. The production cost report provides the basis for evaluating: (1) the productivity of a
department, (2) whether unit and total costs are reasonable, and (3) whether current performance is meeting planned objectives.
17. The per unit conversion cost is $8.75. [Conversion costs = $6,000 – $3,200 = $2,800. Equivalent units for conversion costs are 320 (800 × 40%); $2,800 ÷ 320 = $8.75.]
18. 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.
19. In deciding which system to use, a cost-benefit tradeoff occurs. In a job order system, detailed information related to the cost of the product is involved. The cost of implementing this system is often expensive. In a process cost system, an average cost of the product will suffice and therefore the cost to implement is less. In summary, the cost of implementing the system must be balanced against the benefits provided from the additional information.
*20. Unit transferred out = beginning WIP + units started and completed = 2,000 + 600 = 2,600.
Brief ExercisesJournalize entries for accumulating costs.
BE4-1 Sargunaraj Manufacturing purchases $75,000 of raw materials on account, and it incurs $80,000 of factory labour costs. Journalize the two transactions on March 31 assuming the labour costs are not paid until April.
Journalize the assignment of materials and labour costs.
BE4-2 Data for Sargunaraj Manufacturing are given in BE4-1. Supporting records show that (a) the assembly department used $64,000 of raw materials and $45,000 of the factory labour, and (b) the finishing department used the remainder. Journalize the assignment of the costs to the processing departments on March 31.
Journalize the assignment of overhead costs.
BE4-3 Factory labour data for Sargunaraj Manufacturing are given in BE4-2. Manufacturing overhead is assigned to departments on the basis of 200% of labour costs. Journalize the assignment of overhead to the assembly and finishing departments.
Calculate physical units of production.
BE4-4 Bowyer Manufacturing Company has the following production data for selected months.
Ending Work in Process
Month Beginning Work in Process
Units Transferred Out
Units % Complete in Terms of Conversion Costs
January 0 30,000 10,000 40%
March 0 40,000 8,000 75%
July 0 40,000 16,000 25%
Calculate the physical units for each month.
Calculate equivalent units of production.
BE4-5 Using the data in BE4-4, calculate equivalent units of production for materials and conversion costs, assuming materials are entered at the beginning of the process.
Calculate unit costs of
BE4-6 Blue-Red Company started 9,000 units during the month of March. There were 2,000 units in the beginning work in process inventory and 3,000 units in the ending work in process inventory. Calculate units completed and transferred out during March.
production.Assign costs to units transferred out and in process.
BE4-7 Hindi Company has the following production data for April: 40,000 units transferred out, and 5,000 units in ending work in process that are 100% complete for materials and 40% complete for conversion costs. If unit materials cost is $4 and unit conversion cost is $9, determine the costs to be assigned to the units transferred out and the units in ending work in process.
Calculate unit costs.
*BE4-8 On September 1, Delta Company had 30,000 units in process, which were 30% completed. Materials are added at the beginning of the process. During the month 170,000 units were started and 180,000 completed. Ending work in process was 50% complete.Calculate (a) the equivalent units of production for materials if weighted average were used and (b) the equivalent units of production for materials if FIFO were used.
Prepare a cost reconciliation schedule.
BE4-9 Production costs chargeable to the Finishing Department in June at Yeun Company are materials $15,000, labour $29,500, and overhead $18,000. Equivalent units of production are 20,000 for materials and 19,000 for conversion costs. Production records indicate that 18,000 units were transferred out, and 2,000 units in ending work in process were 60% complete in terms of conversion costs and 100% complete in terms of materials. Prepare a cost reconciliation schedule.
Calculate equivalent units of production.
BE4-10 The smelting department of Massaro Manufacturing Company has the following production and cost data for November.
Production: 2,000 units in beginning work in process that are 100% complete in terms of materials and 20% complete in terms of conversion costs; 8,000 units transferred out; and 5,000 units in ending work in process that are 100% complete in terms of materials and 40% complete in terms of conversion costs.
Calculate the equivalent units of production for (a) materials and (b) conversion costs for the month of November.
Assign costs to units transferred out and in process.
*BE4-11 Mora Company has the following production data for March: no beginning work in process, 30,000 units started and completed, and 5,000 units in ending work in process that are 100% complete for materials and 40% complete for conversion costs. Mora uses the FIFO method to calculate equivalent units. If unit materials cost is $8 and unit conversion cost is $12, determine the costs to be assigned to the units transferred out and the units in ending work in process. The total costs to be assigned are $664,000.
Prepare a partial production cost report.
*BE4-12 Using the data in BE4-11, prepare the cost section of the production cost report for Mora Company.
SOLUTIONS TO BRIEF EXERCISES
BRIEF EXERCISE 4-1
Mar. 31 Raw Materials Inventory................................... 75,000Accounts Payable.....................................
75,000
31 Factory Labour.................................................. 80,000Wages Payable..........................................
80,000
BRIEF EXERCISE 4-2
a)Mar.31 Work in Process—Assembly Department...... 64,000Work in Process—Finishing Department....... 11,000
Raw Materials Inventory...........................75,000
b) Mar. 31Work in Process—Assembly Department....... 45,000Work in Process—Finishing Department....... 35,000
Factory Labour..........................................80,000
BRIEF EXERCISE 4-3
Mar. 31 Work in Process—Assembly Department...... 90,000 ($45,000 × 200%)Work in Process—Finishing Department....... 70,000 ($35,000 × 200%)
Manufacturing Overhead..........................160,000
BRIEF EXERCISE 4-4
January March July
Beginning work in processStarted into productionTotal units
Transferred outEnding work in processTotal units
–40,00040,000
30,00010,00040,000
–48,00048,000
40,000 8,00048,000
–56,00056,000
40,00016,00056,000
BRIEF EXERCISE 4-5Materials Conversion Costs
JanuaryMarchJuly
40,000 (30,000 + 10,000)48,000 (40,000 + 8,000)56,000 (40,000 + 16,000)
34,000 (30,000 + 4,000)1
46,000 (40,000 + 6,000)2
44,000 (40,000 + 4,000)3
1 40% × 10,000 units, 2 75% × 8,000 units, 3 25% × 16,000 units
BRIEF EXERCISE 4-6
Units in beginning WIP + units started = units transferred out + ending WIP2,000 + 9,000 = units transferred out + 3,000Units completed and transferred out = 8,000
BRIEF EXERCISE 4-7
Assignment of Costs Equivalent Units Unit Cost
Transferred out 40,000 $13.00 $520,000
Work in process, MaterialsConversion costs
Total costs
5,000 2,0001$ 4.00$ 9.00
$20,000 18,000 38,000
$558,0001 40% × 5,000 units
*BRIEF EXERCISE 4-8
PhysicalUnits
Equivalent UnitsMaterials
WeightedAv. (a)
FIFO(b)
Units completed & transferredUnits in ending inventory Units accounted for
Complete beginning units: 30,000 × 0%; 0%*Units completed & transferred Work in process, ending
20,000 × 100%
Total equivalent units
180,000 20,000200,000
N/A180,000
20,000
0180,000
20,000
200,000 200,000
*Direct materials are added at the beginning of the process
BRIEF EXERCISE 4-9
Per unit cost for materials: $15,000 ÷ 20,000 units = $0.75Per unit for conversion costs: ($29,500 + $18,000) ÷ 19,000 units =
$2.50Total per unit cost: $0.75 + $2.50 = $3.25
Costs accounted for Transferred out Work in process, June 30
MaterialsConversion costs
Total costs
(18,000 × $3.25)
(2,000 × $0.75)(1,2001 × $2.50)
$1,500 3,000
$58,500
4,500$63,000
1 2,000 × 60% = Equivalent units for conversion costs
BRIEF EXERCISE 4-10a)Materials b)Conversion
Costs
Units transferred outWork in process, November 30
Materials (5,000 × 100%)Conversion costs (5,000 × 40%)
Total equivalent units
8,000
5,000 13,000
8,000
2,00010,000
*BRIEF EXERCISE 4-11
Costs to BeAssigned Assignment of Costs
EquivalentUnits
UnitCost
Total CostsAssigned
Transferred outStarted and completed 30,000 $20.00 $600,000
Work in process, 3/31
$664,000
MaterialsConversion costs
5,000 2,0001
$ 8.00$12.00
$40,000 24,000 64,000
$664,0001 40% × 5,000 units
*BRIEF EXERCISE 4-12Equivalent Units
MaterialsConversion
CostsUnits accounted for Completed and transferred out Work in process, March 1 Started and completed Work in process, March 31Total units
-0- 30,000 5,00035,000
-0-30,000 2,00032,000
MORA COMPANY(Partial) Production Cost ReportFor the Month Ended March 31
COSTS
MaterialsConversion
Costs Total
Unit costsCosts in March (a)Equivalent units (b)Unit costs (a) ÷ (b)
Costs to be accounted forIn process, March 1Costs in March
Total costs:Costs accounted for
Transferred outIn process, March 1Started and completed (30,000 units × $20.00)
In process, March 31Materials (5,000 × $8.00)Conversion costs (2,000 × $12.00) Total costs:
$280,000 35,000 $8.00
1 $384,000 32,000 $12.00
$ 40,000
24,000
2 $664,000
$20.00
$ 0 664,000$664,000
$ 0 600,000
64,000$664,000
135,000 equivalent units × $8.00 per unit
232,000 equivalent units × $12.00 per unit
Do It! ReviewCompare job-order and process cost systems.
D4-13 InstructionsIndicate whether each of the following statements is true or false.(a) Many hospitals use job-order costing for small, routine medical procedures.(b) A manufacturer of computer flash drives would use a job-order cost system.(c) A process cost system uses multiple work in process accounts.(d) A process cost system keeps track of costs on job cost sheets.
Assign and journalize manufacturing costs.
D4-14 Yussuff Company manufactures CH-21 through two processes: mixing and packaging. In July, the following costs were incurred.
Mixing Packaging
Raw materials used $10,000
$24,000
Factory labour costs 8,000 36,000
Manufacturing overhead costs 12,000 54,000
Units completed at a cost of $21,000 in the mixing department are transferred to the packaging department. Units completed at a cost of $102,000 in the packaging department are transferred to Finished Goods.InstructionsJournalize the assignment of these costs to the two processes and the transfer of units as appropriate.
Calculate equivalent units.
D4-15 The assembly department has the following production and cost data for the current month.
Beginning Work in Process Units Transferred Out Ending Work in Process
–0– 20,000 16,000
Materials are entered at the beginning of the process. The ending work in process units are 70% complete as to conversion costs.Instructions
Calculate the equivalent units of production for (a) materials and (b) conversion costs.Prepare cost reconciliation schedule.
D4-16 In March, Lasso Manufacturing had the following unit production costs: materials $10 and conversion costs $8. On March 1, it had zero work in process. During March, Lasso transferred out 22,000 units. As of March 31, 2,000 units that were 40% complete as to conversion costs and 100% complete as to materials were in ending work in process.Instructions(a) Calculate the total units to be accounted for.(b) Calculate the equivalent units of production.(c) Prepare a cost reconciliation schedule, including the costs of materials transferred out
and the costs of materials in process.
SOLUTIONS TO DO IT! REVIEW
DO IT! REVIEW 4-13
(a) False. Process costing is normally used when there are a large number of homogeneous products or services.
(b) False. Same as (a)
(c) True.
(d) False. A process cost system uses a cost report to determine total cost and per unit cost.
DO IT! REVIEW 4-14
Work in Process—Mixing Department ............................ 10,000Work in Process—Packaging Department ...................... 24,000
Raw Materials Inventory...................................34,000
Work in Process—Mixing Department............................. 8,000Work in Process—Packaging Department....................... 36,000
Factory Labour..................................................44,000
Work in Process—Mixing Department............................. 12,000Work in Process—Packaging Department....................... 54,000
Manufacturing Overhead.................................66,000
Work in Process—Packaging Department....................... 21,000Work in Process—Mixing Department............
21,000
Finished Goods Inventory................................................. 102,000
Work in Process—Packaging Department.....102,000
DO IT! REVIEW 4-15
Equivalent Units
a)Materialsb)Conversion
CostsCompleted and transferred out Started and completedWork in process, endingTotal equivalent units
20,00016,00036,000
20,00011,2001
31,2001 70% × 16,000 units
DO IT! REVIEW 4-16Physical
UnitsEquivalent Units
Material Conversion
(a)
(b)
Units to be accounted for:Units in beginning inventoryUnits started into production
Units completed & transferredUnits in ending inventory Equivalent units of prod.
-24,00024,000
22,000 2,00024,000
22,000 2,00024,000
22,000 8001
22,800
1 40% × 2,000 units
DO IT! REVIEW 4-16 (Continued)
(c)LASSO MANUFACTURING
(Partial) Production Cost ReportFor the Month Ended March 31
COSTS
MaterialsConversion
Costs Total
Unit costsCosts in March (a)Equivalent units (b)Unit costs (a) ÷ (b)
Costs to be accounted forIn process, March 1Costs in March
Total costs:Costs accounted for
Transferred outIn process, March 1Started and completed (22,000 units × $18.00)
In process, March 31Materials (2,000 × $10.00)Conversion costs (800 × $8.00) Total costs:
$240,000 24,000 $10.00
$182,400 22,800 $8.00
$ 20,000
6,400
$422,400
$18.00
$ 0 422,400$422,400
$ 0 396,000
26,400$422,400
ExercisesUnderstand process cost accounting.
E4-17 Wojtek Nakowski has prepared the following list of statements about process cost accounting.
1. Process cost systems are used to apply costs to similar products that are mass-produced in a continuous fashion.
2. A process cost system is used when each finished unit is indistinguishable from another.
3. Companies that produce soft drinks, motion pictures, and computer chips would all use process cost accounting.
4. In a process cost system, costs are tracked by individual jobs.5. Job-order costing and process costing track different manufacturing cost elements.6. Both job-order costing and process costing account for direct materials, direct
labour, and manufacturing overhead.7. Costs flow through the accounts in the same basic way for both job-order costing
and process costing.8. In a process cost system, only one work in process account is used.9. In a process cost system, costs are summarized in a job cost sheet.10. In a process cost system, the unit cost is total manufacturing costs for the period
divided by the units produced during the period.
InstructionsIdentify each statement as true or false. If false, indicate how to correct the statement.
Journalize transactions.
E4-18 Fernando Company manufactures pizza sauce through two production departments: cooking and canning. In each process, materials and conversion costs are incurred evenly throughout the process. For the month of April, the work in process accounts show the following debits:
Cooking Canning
Beginning work in process $ 0 $ 4,000
Materials 25,000 8,000
Labour 8,500 7,000
Overhead 29,000 25,800
Costs transferred in 55,000
InstructionsJournalize the April transactions.
Answer questions on costs and production.
E4-19 The ledger of Magdy Company has the following work in process account:
Work in Process—Painting
5/1 Balance $3,570 5/31 Transferred out $?
5/31 Materials 6,460
5/31 Labour 2,400
5/31 Overhead 1,626
5/31 Balance $?
Production records show that there were 400 units in the beginning inventory, 30% complete, 1,200 units started, and 1,200 units transferred out. The beginning work in process had materials cost of $2,020 and conversion costs of $1,550.The units in ending inventory were 40% complete. Materials are entered at the beginning of the painting process.InstructionsAnswer the following questions:(a) How many units are in process at May 31?(b) What is the unit materials cost for May?(c) What is the unit conversion cost for May?(d) What is the total cost of units transferred out in May?(e) What is the cost of the May 31 inventory?
Journalize transactions for two processes.
E4-20 Douglas Manufacturing Company has two production departments: cutting and assembly. July 1 inventories are Raw Materials $6,200, Work in Process—Cutting $4,900, Work in Process—Assembly $12,600, and Finished Goods $35,000. During July, the following transactions occurred:
1. Purchased $65,500 of raw materials on account.2. Incurred $47,000 of factory labour (Credit Wages Payable).3. Incurred $75,000 of manufacturing overhead; $55,000 was paid and the remainder
is unpaid.4. Requisitioned $14,700 in materials for cutting and $11,900 in materials for
assembly.5. Used factory labour of $27,000 for cutting and $19,000 for assembly.6. Applied overhead at the rate of $22 per machine hour. Machine hours were 1,700 in
cutting and 1,650 in assembly.7. Transferred goods costing $70,700 from the cutting department to the assembly
department.8. Transferred goods costing $140,000 from Assembly to Finished Goods.9. Sold goods costing $165,000 for $210,000 on account.
InstructionsJournalize the transactions. (Omit explanations.)
Calculate physical units and equivalent units of production.
E4-21 In Lee Wen Company, materials are entered at the beginning of each process. Work in process inventories, with the percentage of work done on conversion costs, and production data for its sterilizing department in selected months during 2012 are as follows:
Beginning Work in
Process Ending Work in Process
Month Units Conversion Cost %
Units Transferred Out
Units Conversion Cost %
January 0 — 9,000 2,000
60
March 0 — 12,000 4,000
30
May 0 — 14,000 6,000
80
July 0 — 10,000 1,500
20
Instructions(a) Calculate the physical units for January and May.(b) Calculate the equivalent units of production for (1) materials and (2) conversion costs
for each month.
Determine equivalent units and unit costs and assign costs.
E4-22 The cutting department of Groneman Manufacturing has the following production and cost data for July.
Production Costs
1. Transferred out 9,000 units. Beginning work in process
$ 0
2. Started 1,000 units that are 30% complete in terms of conversion costs and 100% complete in terms of materials at July 31.
Materials 45,000
Labour 16,200
Manufacturing overhead
17,280
Materials are entered at the beginning of the process. Conversion costs are incurred uniformly during the process.
Instructions(a) Determine the equivalent units of production for (1) materials and (2) conversion costs.(b) Calculate unit costs and prepare a cost reconciliation schedule.
Prepare a production cost report.
E4-23 The sanding department of Hanninen Furniture Company has the following production and manufacturing cost data for March 2012, the first month of operation.
Production: 11,000 units finished and transferred out; 4,000 units started that are 100% complete in terms of materials and 25% complete in terms of conversion costs. Manufacturing costs: materials $48,000; labour $42,000; overhead $36,000.
InstructionsPrepare a production cost report.
Determine equivalent units using FIFO, unit costs, and assignment of costs.
*E4-24 Montreal Manufacturing Inc. has the following cost and production data for the month of April.
Beginning WIP 18,000 units
Started in production 100,000
Completed production 94,000
Ending WIP 24,000
The beginning inventory was 60% complete for conversion costs. The ending inventory was 40% complete for conversion costs. Materials are added at the beginning of process.Costs pertaining to the month of April are as follows:
Beginning inventory costs are
Materials $ 65,000
Direct labour 20,000
Factory overhead 15,000
Costs incurred during April include
Materials $550,000
Direct labour 195,000
Factory overhead 380,000
Instructions(a) Calculate the equivalent units of production for (1) materials and (2) conversion costs
for the month of April using the first-in, first-out (FIFO) method.(b) Calculate the unit costs for the month.(c) Determine the costs to be assigned to the units transferred out and in ending work in
process.
Determine equivalent units, unit costs, and assignment of costs.
E4-25 Toronto Manufacturing Inc. has the following cost and production data for the month of November.
Beginning WIP 18,000 units
Started in production 100,000
Completed production 94,000
Ending WIP 24,000
The ending inventory was 40% complete for conversion costs. Materials are added at the beginning of process.Costs pertaining to the month of November are as follows:
Beginning inventory costs are
Materials $ 65,000
Direct labour 20,000
Factory overhead 15,000
Costs incurred during November include
Materials $550,000
Direct labour 195,000
Factory overhead 380,000
Instructions(a) Calculate equivalent units of production for materials and for conversion costs.(b) Determine the unit costs of production.(c) Show the assignment of costs to units transferred out and in process.
Calculate equivalent units, unit costs, and costs assigned.
E4-26 The polishing department of Lacroix Manufacturing Company has the following production and manufacturing cost data for September. Materials are entered at the beginning of the process.
Production: Beginning inventory of 2,500 units that are 100% complete in terms of materials and 30% complete in terms of conversion costs; units started during the period are 12,000; ending inventory of 3,000 units 10% complete in terms of conversion costs.
Manufacturing costs: Beginning inventory costs, comprising $25,000 of materials and $28,080 of conversion costs; materials costs added in polishing during the month, $120,725; labour and overhead applied in polishing during the month, $100,020 and
$300,240, respectively.
Instructions(a) Calculate the equivalent units of production for materials and conversion costs for the
month of September.(b) Calculate the unit costs for materials and conversion costs for the month.(c) Determine the costs to be assigned to the units transferred out and in process.
Explain the production cost report.
E4-27 Wilbur Kumar has recently been promoted to production manager and has just started to receive various managerial reports. One of the reports he has received is the production cost report that you prepared. It showed that his department had 2,000 equivalent units in ending inventory. His department has had a history of not keeping enough inventory on hand to meet demand. He has come to you, very angry, and wants to know why you credited him with only 2,000 units when he knows he had at least twice that many on hand.InstructionsExplain to Wilbur why his production cost report showed only 2,000 equivalent units in ending inventory. Write an informal memo. Be kind and explain very clearly why he is mistaken.
Prepare a production cost report.
E4-28 The welding department of Balogh Manufacturing Company has the following production and manufacturing cost data for February 2012. All materials are added at the beginning of the process.
Manufacturing Costs Production Data
Beginning work in process
Beginning work in process
24,000 units
Materials $30,000 1/10 complete
Conversion costs 4,175 $ 34,175 Units transferred out 54,000
Materials 146,400 Units started 60,000
Labour 32,780 Ending work in process 30,000 units
Overhead 53,045 1/5 complete
InstructionsPrepare a production cost report for the welding department for the month of February.
Calculate physical units and equivalent units of production.
E4-29 Container Shipping, Inc. is contemplating the use of process costing to track the costs of its operations. The operation consists of three segments (departments): receiving, shipping, and delivery. Containers are received at Container Shipping's docks and sorted according to the ship they will be carried on. The containers are loaded onto a ship, which carries them to the appropriate port of destination. The containers are then off-loaded and delivered to the receiving company.Container Shipping wants to begin using process costing in the shipping department. Direct materials represent the fuel costs to run the ship, and “Containers in transit” represents work in process. Listed below is information about the shipping department's first month of activity.
Containers in transit, April 1 0
Containers loaded 900
Containers in transit, April 30
400 (40% of direct materials and 30% of conversion costs)
Instructions(a) Determine the physical flow of containers for the month.(b) Calculate the equivalent units for direct materials and conversion costs.
Determine equivalent units, unit costs, and assignment of costs.
E4-30 Hi-Tech Mortgage Company uses a process costing system to accumulate costs in its loan application department. When an application is completed, it is forwarded to the loan department for final processing. The following processing and cost data pertain to September:
1.
Applications in process on Beginning work in process:
September 1,100 Direct materials
$1,000
2.
Applications started in Conversion costs
4,000
September, 1,000 September costs:
3.
Completed applications during Direct materials
$ 4,500
September, 900 Direct labour 12,000
4.
Applications still in process at September 30 were 100% complete in terms of materials (forms) and
Overhead 8,480
60% complete in terms of conversion costs.
Materials are the forms used in the application process, and these costs are incurred at the beginning of the process. Conversion costs are incurred uniformly during the process.Instructions(a) Determine the equivalent units of service (production) for materials and conversion
costs.(b) Calculate the unit costs and prepare a cost reconciliation schedule.
Calculate equivalent units, unit costs, and costs assigned.
*E4-31 Using the data in E4-31, assume Hi-Tech Mortgage Company uses the FIFO method. Also assume that the applications in process on September 1 were 100% complete in terms of materials (forms) and 40% complete in terms of conversion costs.Instructions(a) Determine the equivalent units of service (production) for materials and conversion
costs.(b) Calculate the unit costs and prepare a cost reconciliation schedule.
Determine equivalent units, unit costs, and assignment of costs.
*E4-32 The cutting department of Chan Manufacturing has the following production and cost data for August.
Production Costs
1. Started and completed 8,000 units. Beginning work in process
$ 0
2. Started 1,000 units that are 60% completed at August 31.
Materials 54,000
Labour 17,000
Manufacturing overhead 26,000
Materials are entered at the beginning of the process. Conversion costs are incurred uniformly during the process. Chan Manufacturing uses the FIFO method to calculate equivalent units.Instructions(a) Determine the equivalent units of production for (1) materials and (2) conversion
costs.(b) Calculate unit costs and show the assignment of manufacturing costs to units
transferred out and in work in process.
Calculate equivalent units, unit costs, and costs assigned.
*E4-33 The smelting department of Amber Manufacturing Company has the following production and cost data for September.
Production: Beginning work in process of 2,000 units that are 100% complete in terms of materials and 20% complete in terms of conversion costs; 8,000 units started and finished; and 1,000 units in ending work in process that are 100% complete in terms of materials and 40% complete in terms of conversion costs.
Manufacturing costs: Work in process, September 1, $15,200; materials added, $63,000; labour and overhead, $143,000.
Amber uses the FIFO method to calculate equivalent units.Instructions(a) Calculate the equivalent units of production for (1) materials and (2) conversion costs
for the month of September.(b) Calculate the unit costs for the month.(c) Determine the costs to be assigned to the units transferred out and in process.
Answer questions on costs and production.
*E4-34 The ledger of Platt Company has the following work in process account:
Work in Process—Painting
3/1 Balance $3,080 3/31 Transferred out $?
3/31 Materials 6,600
3/31 Labour 2,230
3/31 Overhead 1,280
3/31 Balance ?
Production records show that there were 900 units in the beginning inventory, 30% complete, 1,200 units started, and 1,300 units transferred out. The units in ending inventory were 40% complete. Materials are entered at the beginning of the painting process. Platt uses the FIFO method to calculate equivalent units.Instructions
Answer the following questions:(a) How many units are in process at March 31?(b) What is the unit materials cost for March?(c) What is the unit conversion cost for March?(d) What is the total cost of units started in February and completed in March?(e) What is the total cost of units started and finished in March?(f) What is the cost of the March 31 inventory?
Prepare a production cost report for a second process.
*E4-35 The welding department of Hirohama Manufacturing Company has the following production and manufacturing cost data for February 2012. All materials are added at the beginning of the process. Hirohama uses the FIFO method to calculate equivalent units.
Manufacturing Costs Production Data
Beginning work in process
$ 23,600 Beginning work in process
10,000 units, 10% complete
Costs transferred in 135,000
Materials 57,000 Units transferred out 65,000
Labour 35,100 Units transferred in 80,000
Overhead 68,400 Ending work in process 25,000, 20% complete
InstructionsPrepare a production cost report for the welding department for the month of February. Transferred-in costs are considered materials costs.
SOLUTIONS TO EXERCISESEXERCISE 4-17
1. True.2. True.3. False. Companies that produce soft drinks and computer chips
would all use process cost accounting, but companies producing motion pictures would use job-order costing since the motion pictures are not homogeneous.
4. False. In a job-order cost system, costs are tracked by individual jobs.
5. False. Job-order costing and process costing track the same three manufacturing cost elements.
6. True.7. True.8. False. In a process cost system, multiple work in process
accounts by department are used.9. False. In a process cost system, costs are summarized in a
production cost report for each department.10. False. In a process cost system, the unit cost of production is the
sum of two unit costs: materials costs divided by the equivalent units of production for materials, and conversion costs divided by the equivalent units of production for conversion.
EXERCISE 4-18
April 30 Work in Process—Cooking................................ 25,000Work in Process—Canning................................ 8,000
Raw Materials Inventory.............................33,000
30 Work in Process—Cooking................................ 8,500
Work in Process—Canning................................ 7,000Factory Labour............................................
15,500
30 Work in Process—Cooking................................ 29,000Work in Process—Canning................................ 25,800
Manufacturing Overhead...........................54,800
30 Work in Process—Canning................................ 55,000Work in Process—Cooking........................
55,000
EXERCISE 4-19
(a) Work in process, May 1 400Started into production 1,200Total units to be accounted for 1,600Less: Transferred out 1,200Work in process, May 31 400
(b) Equivalent Units
Materials Conversion Costs
Units transferred outWork in process, May 31 400 × 100% 400 × 40%
1,200
400 1,600
1,200
1601,360
DirectMaterials Conversion Costs
Work in process, May 1Costs addedTotal materials cost
$2,020 6,460$8,480
$1,550 4,026$5,576
$8,480 ÷ 1,600 = $5.30
(c) $5,576 ÷ 1,360 = $4.10
(d) Transferred out: 1,200 × ($5.30 + $4.10) = $11,280; Per unit cost = $5.30 + $4.10 is calculated in (b) and (c)
(e) Work in process, May 31Materials (400 × $5.30) $2,120Conversion costs (160 × $4.10) 656
$2,776
EXERCISE 4-20
1. Raw Materials Inventory........................................... 65,500Accounts Payable.............................................
65,500
2. Factory Labour.......................................................... 47,000Wages Payable..................................................
47,000
3. Manufacturing Overhead......................................... 75,000Cash...................................................................
55,000Accounts Payable.............................................
20,000
4. Work in Process—Cutting........................................ 14,700Work in Process—Assembly................................... 11,900
Raw Materials Inventory...................................26,600
5. Work in Process—Cutting........................................ 27,000Work in Process—Assembly................................... 19,000
Factory Labour..................................................46,000
6. Work in Process—Cutting (1,700 × $22)................. 37,400Work in Process—Assembly (1,650 × $22)............. 36,300
Manufacturing Overhead..................................73,700
7. Work in Process—Assembly................................... 70,700Work in Process—Cutting................................
70,700
8. Finished Goods Inventory........................................ 140,000Work in Process—Assembly...........................
140,000
9. Cost of Goods Sold.................................................. 165,000
Finished Goods Inventory................................165,000
Accounts Receivable................................................ 210,000Sales...................................................................
210,000
EXERCISE 4-21
(a) Jan. MayUnits to be accounted for
Beginning work in processStarted into production
Total unitsUnits accounted for
Transferred outEnding work in process
Total units
–0–11,00011,000
9,0002,000
11,000
–0–20,00020,000
14,000 6,00020,000
(b)(1) Equivalent Units of
Production Materials
(2) Equivalent Units of Production
Conversion Costs
JanuaryMarchMayJuly
11,000 (9,000 + 2,000)16,000 (12,000 + 4,000)20,000 (14,000 + 6,000)11,500 (10,000 + 1,500)
10,200 (9,000 + 1,2001)13,200 (12,000 + 1,2002)18,800 (14,000 + 4,8003)10,300 (10,000 + 3004)
1 2,000 × 60% 2 4,000 × 30% 3 6,000 × 80% 4 1,500 × 20%
EXERCISE 4-22
(a) Materials Conversion Costs
Units transferred outWork in process, July 31
1,000 × 100%1,000 × 30%
Total equivalent units
9,000
1,000 10,000
9,000
300 9,300
(b) Materials: $45,000 ÷ 10,000 = $4.50Conversion costs: ($16,200 + $17,280) ÷ 9,300 = $3.60
Costs accounted forTransferred out (9,000 × $8.10)Work in process, July 31
Materials (1,000 × $4.50)Conversion costs (300 × $3.60)
Total costs(Total costs: $45,000 + $16,200 + $17,280 = $78,480)
$4,500 1,080
$72,900
5,580$78,480
EXERCISE 4-23
HANNINEN FURNITURE COMPANYSanding Department
Production Cost ReportFor the Month Ended March 31, 2012
Equivalent Units
Quantities
Physical
Units Materials
Conversion
Costs
Units to be accounted for
Work in process, March 1
Started into production
Total units
Units accounted for
Transferred out
–0–
15,000
15,000
11,000 11,000 11,000
Work in process, March 31 4,000 4,000 1,000 (4,000 × 25%)
Total units 15,000 15,000 12,000
Costs Materials
Conversion
Costs Total
Unit costs
Costs in March
Equivalent units
Unit costs (a) ÷ (b)
Costs to be accounted for
Work in process, March 1
Started into production
Total costs
$48,000
15,000
$3.20
$78,0001
12,000
$6.50
$126,000
$9.70
$ 0
126,000
$126,000
Cost Reconciliation Schedule
Costs accounted for
Transferred out (11,000 × $9.70)
Work in process, March 31
Materials (4,000 × $3.20)
Conversion costs (1,000 × $6.50)
Total costs
$12,800
6,500
$106,700
19,300
$126,0001 ($42,000 + $36,000)
*EXERCISE 4-24
PhysicalUnits
Equivalent Units (a) Quantities Material
Con-version
Units to be accounted forWork in process, beginning 18,000
Started this period 100,000Total units 118,000
Units accounted for Work in process, beginning 18,000 Materials (0%) –0– Conversion (40%) 7,200 Started and completed 76,000 76,000 76,000 Work In process, ending 24,000 Materials (100%) 24,000 Conversion (40%) 9,600
Total equivalent units 118,000 100,000 92,800
Current period costs $1,125,000 $550,000 $575,000
(b) Per equivalent unit cost $5.500 $6.196 $11.696
Total costs: Work in Process, beginning $ 100,000 Costs added during the month 1,125,000
Total costs to be allocated $1,225,000
*EXERCISE 4-24 (Continued)
(c) Costs for completed goods and ending work in process (Some amounts have been rounded.)
Total MaterialConversi
onBeginning Inventory $100,000 $65,000 $35,000
Complete beginning WIP 44,610 Materials (0 × $5.500) –0– Conversion (7,200 × $6.196) 44,610
Started and completed 888,900 Materials (76,000 × $5.500) 418,000 Conversion (76,000 × $6.196) 470,900Cost for units transferred out $1,033,510 $483,000 $550,510
Ending work in process 191,490 Materials (24,000 × $5.500) 132,000 Conversion (9,600 × $6.196) 59,490
Total costs $1,225,000 $615,000 $610,000
EXERCISE 4-25
(a)Materials
Conversion Costs
Units transferred outWork in process, ending 24,000 × 100% 24,000 × 40%Equivalent units of production
94,000
24,000 118,000
94,000
9,600103,600
(b)Materials
Conversion Costs Total
Costs during the monthEquivalent unitsUnit costs
$615,0001
118,000 $5.212
$610,0002
103,600 $5.888
$1,225,000
$11.10
1 $65,000 + $550,000 2
$35,000 + $575,000
(c) Transferred out (94,000 × $11.10)Work in process Materials (24,000 × $5.212) Conversion costs (9,600 × $5.888)
Total costs
$125,100 56,500
$1,043,400
181,600$1,225,000
Some numbers have been rounded.
EXERCISE 4-26(a) Physical
Units
Work in process, September 1Units started into production
Units transferred outWork in process, September 30
2,50012,00014,500
11,500 3,00014,500
Equivalent Units
Materials Conversion Costs
Units transferred outWork in process 3,000 × 100% 3,000 × 10%
11,500
3,000 14,500
11,500
30011,800
(b)
Materials Conversion Costs
Work in process, September 1Direct materials
Conversion costs Costs added to production in polishing during SeptemberMaterial costsConversion costs ($100,020 + $300,240)Total cost
$ 25,000
120,725
$145,725
$28,080
400,260$428,340
$145,725 ÷ 14,500 = $10.05 (Material costs per equivalent unit)
$428,340 ÷ 11,800 = $36.30 (Conversion costs per equivalent unit)
$10.05 + $36.30 = $46.35 cost per unit
(c) Costs accounted forTransferred out (11,500 × $46.35)$533,025Work in process, September 30
Materials (3,000 × $10.05) $30,150Conversion costs (300 × $36.30) 10,890 41,040Total costs
$574,065
Prove total costs: Beginning Inventory $ 53,080 Added during the month: Materials 120,725 Conversion costs 400,260 Total [as in (c) above] $574,065
EXERCISE 4-27
To: Stan MaleyFrom: StudentRe: Ending inventory
The reason for any confusion related to your department’s ending inventory quantity stems from the fact that the quantity can be measured in two different ways, depending on what the information is used for.
The ending inventory quantity can be measured in physical units or equivalent units. Physical units are actual units present without regard to the stage of completion. Your department’s ending inventory in physical units is at least double the amount reported as equivalent units.
Equivalent units measure the work done on the physical units, expressed in terms of fully completed units. Therefore, if your ending inventory contains 4,000 units which are 50% complete, that is equivalent to having 2,000 completed units at month end. Therefore, the ending inventory could be expressed as containing 4,000 physical units or 2,000 equivalent units. I hope this clears up any misunderstandings. Please contact me if you have any further questions.
EXERCISE 4-28BALOGH MANUFACTURING COMPANY
Welding DepartmentProduction Cost Report
For the Month Ended February 29, 2012
Equivalent Units
QuantitiesPhysical
Units MaterialsConversion
Costs
(Step 1) (Step 2)Units to be accounted for
Work in process, February 1Started into production
Total units
Units accounted forTransferred out
24,00060,00084,000
54,000 54,000 54,000Work in process, February 29 30,000 30,000 6,000
Total units 84,000 84,000 60,000
Costs MaterialsConversion
Costs Total
Unit costs (Step 3)Costs in FebruaryEquivalent unitsUnit costs (a) ÷ (b)
Costs to be accounted forWork in process, February 1Started into production 1
Total costs
(a)(b)
$176,400 84,000 $2.10
$90,000 60,000
$1.50
$266,400
$3.60
$ 34,175 232,225$266,400
1 ($146,400 + $32,780 + $53,045)
Cost Reconciliation Schedule (Step 4)
Costs accounted forTransferred out (54,000 × $3.60)
Work in process, February 29 Materials (30,000 × $2.10) Conversion costs (6,000 × 1.50)Total costs
$63,000 9,000
$194,400
72,000$266,400
EXERCISE 4-29
(a) Containers in transit, April 1 –0–Containers loaded 900
Total containers 900
Containers off-loaded1 500Containers in transit, April 30 400
Total containers 9001Total containers less containers in transit
Equivalent Units(b) Physica
lUnits
Direct Materials
Conversion Costs
Containers off-loaded 500 500 500Containers in transit, April 30 400 1602 1203
Total equivalent units 660 620
2 400 × 40% = 160 3 400 × 30% = 120
EXERCISE 4-30
(a) PhysicalUnits
Work in process, beginningUnits started into production
Units transferred outWork in process, ending
1001,0001,100
900 2001,100
MaterialsConversion
CostsCompleted Applications transferred out 900 900Work in process, ending (100%, 60%) 200 120
Equivalent units 1,100 1,020 (b)
Costs MaterialsConversion
Costs Total
Unit costs (Step 3)Costs in SeptemberEquivalent unitsUnit costs (a) ÷ (b)
Costs to be accounted forWork in process, September 1Started into production
Total costs
(a)(b)
$5,500 1,100 $5.00
$24,480 1,020 $24.00
$29,980
$29.00
$ 5,000 24,980$29,980
Cost Reconciliation Schedule (Step 4)
Costs accounted forTransferred out (900 × $29.00)
Work in process, September 30 Materials (200 × $5.00) Conversion costs (120 × $24.00)Total costs
$1,000 2,880
$26,100
3,880$29,980
*EXERCISE 4-31
Equivalent Units(a) Physical
Units MaterialsConversion
CostsApplications completed:Work in process, September 1 100 0 601
Started and completed 800 800 800Work in process, September 30 200 200 120Total units 1,100 1,000 980
1 40% complete as to conversion costs, thus needs 60% more to complete the units,
60% × 100 units = 60 equivalent units
*EXERCISE 4-31 (Continued)
(b) Materials: $4,500 ÷ 1,000 = $4.50 Conversion costs: ($12,000 + $8,480) ÷ 980 = $20.898
Costs to be accounted for:
Work in process, September 1 $5,000Costs put into production in September 24,980Total costs $29,980
Costs accounted for:Applications completed:
Work in process, September 1 $5,000Conversion costs (60 × $20.898) 1,254 $ 6,254Started and completed (800 × $25.398) 20,318 $26,572
Work in process, September 30:Materials (200 × $4.50) 900Conversion costs (120 × $20.898) 2,508 3,408
Total costs $29,980
*EXERCISE 4-32 (a) (1) Materials:
Production Data PhysicalUnits
Materials Added
This PeriodEquivalent
Units
Work in process, Aug1 Started and completedWork in process, Aug 31
Total
–0– 8,000 1,000 9,000
–0–100%100%
–0– 8,000 1,000 9,000
(2) Conversion Costs:
Production DataPhysical
Units %Equivalent
Units
Work in process, Aug 1Started and completedWork in process, Aug 31
Total
–0– 8,000 1,000 9,000
–0–100 60
–0–8,000 6008,600
(b) Unit costs are:Materials $54,000 ÷ 9,000 = $6.00Conversion costs $43,0001 ÷ 8,600 = 5.00Total $11.00
1 $17,000 (Labour) + $26,000 (Manufacturing Overhead) = $43,000
Costs to BeAssigned Assignment of Costs
Equivalent
UnitsUnitCost
Total Costs
AssignedTotal mfg.
costsTransferred out
Started and completed 8,000 $11 $88,000
Work in process, 8/31
$97,000
Materials Conversion costs
1,000 600
$6$5
6,000
3,000 9,000
$97,0002
2 $54,000 (Materials) + $17,000 (Labour) + $26,000 (Manufacturing Overhead).
*EXERCISE 4-33 (a) (1)
MaterialsPhysical
UnitsMaterials Added
This PeriodEquivalent
Units
Work in process, beg. Started and completedWork in process, end Total
2,000 8,000 1,00014,000
Q 0%100%100%
–0– 8,000 1,000 9,000
(2)Conversion Costs
PhysicalUnits
Work AddedThis Period
EquivalentUnits
Work in process, beg.Started and completedWork in process, end
Total
2,000 8,000 1,00014,000
80%1
100% 40%
1,600 8,000 40010,000
1 20% complete as to conversion costs, thus needs 80% more to
complete the units,
(b) Materials $ 63,000 ÷ 9,000 = $7.00Conversion costs $143,000 ÷ 10,000 = 14.30
$21.30
(c) Costs to BeAssigned Assignment of Costs
EquivalentUnits
UnitCost
Total CostsAssigned
Total mfg. costs Transferred outWork in process, begConversion costsStarted and completed
1,600 8,000
$14.30$21.30
$15,200 22,880 $ 38,080
170,400 Total costs transferred out 208,480Work in process, end
$221,200*
MaterialsConversion costs Total costs
1,000 400
$7.00$14.30
$7,000 5,720 12,720
$221,200
*Work in process, September 1, $15,200 + materials costs $63,000 + labour and overhead costs $143,000 = $221,200.
*EXERCISE 4-34
(a) Work in process, beginning 900Started into production 1,200Total units to be accounted for 2,100Less: Transferred out 1,300Work in process, March 31 800
(b) Materials:
Production DataPhysical
UnitsMaterials Added
This PeriodEquivalent
Units
Work in process, March 1Started and completedWork in process, March 31
Total
900 400 8002,100
–0–100%100%
–0– 400 8001,200
Unit cost = $6,600 ÷ 1,200 = $5.50.
(c) Conversion costs:
Production DataPhysical
UnitsWork AddedThis Period
EquivalentUnits
Work in process, March 1Started and completedWork in process, March 31
Total
900 400 8002,100
70%1
100% 40%
630 400 3201,350
1 70% to complete the units, 70% × 900 units
Unit cost = $2,230 (Labour) + $1,280 (Overhead) ÷ 1,350 = $2.60
(d) In process, March 1........................................................... $3,080Conversion costs in March (630 × $2.60)........................ 1,638Total cost of units started in Feb & completed in Mar... $4,718
(e) 400 × ($5.50 + $2.60) = $3,240
(f) Materials (8002 × $5.50)..................................................... $4,400Conversion costs (800 × 40% × $2.60)............................ 832Total cost of work in process, March 31......................... $5,232
2 Work in process ending March 31st
*EXERCISE 4-35
HIROHAMA MANUFACTURING COMPANYWelding Department
Production Cost ReportFor the Month Ended February 29, 2012
Equivalent Units
QuantitiesPhysical
Units MaterialsConversion
Costs
(Step 1) (Step 2)Units to be accounted for
Work in process, February 1Units transferred in
Total units
Units accounted forCompleted and transferred out
10,00080,00090,000
Work in process, February 1Started and completed2
Total CompletedWork in process, February 29
10,00055,00065,00025,000
0 55,000 55,000 25,000
9,0001
55,000 64,000 5,0003
Total units 90,000 80,000 69,000
CostsMaterials
ConversionCosts Total
Unit costs (Step 3)Costs in FebruaryEquivalent unitsUnit costs (a) ÷ (b)
Costs to be accounted forWork in process, February 1
Costs Transferred inStarted into productionTotal costs
(a)(b)
$192,0004
80,000 $2.40
$103,5005
69,000 $1.50
$295,500
$3.90
$ 23,600 135,000 160,500$319,100
*EXERCISE 4-35 (Continued)
Cost Reconciliation ScheduleCosts accounted for (Step 4)
Transferred outWork in process, February 1Costs to complete beginning
work in processConversion costs
(9,000 × $1.50)Total costs
Units started and completed (55,000 × $3.90)Total costs transferred outWork in process, February 29
Materials (25,000 × $2.40)Conversion costs (5,000 × $1.50)
Total costs
$23,600
13,500$ 37,100 214,500
60,000 7,500
$251,600
67,500$319,100
110% complete as to conversion costs; needs 90% more to complete the units,
90% × 10,000 = 9,000 equivalent units 280,000 – 25,000 = 55,000
325,000 × 20% = 5,0004Cost of materials added $57,000 plus costs transferred in $135,000.5Labour $35,100 plus overhead $68,400.
Problems: Set ACalculate equivalent units, unit costs, and costs assigned.
P4-36A Toronto Timers Inc.'s costing system uses two cost categories: direct materials and conversion costs. Each of its products must go through the assembly department and the testing department. Direct materials are added at the beginning of production. Conversion costs are allocated evenly throughout production. Data for the assembly department for June 2012 are as follows:
Production Data—Units
Work in process, beginning inventory (60% complete in terms of conversion costs)
850 units
Units started during June 1,300 units
Work in process, ending inventory 450 units
Cost Data
Work in process, beginning inventory costs
Direct materials 382,500
Conversion costs 255,000
Direct materials costs added during June 2,500,000
Conversion costs added during June 2,800,000
Instructions(a) Determine what unit cost can be calculated from the information provided for work in
process beginning inventory.(b) Calculate how many units were completed and transferred out of the assembly
department during June 2012.
Complete the four steps necessary to prepare a production cost report.
P4-37A Kasten Company manufactures bowling balls through two processes: moulding and packaging. In the moulding department, urethane, rubber, plastic, and other materials are moulded into bowling balls. In the packaging department, the balls are placed in cartons and sent to the finished goods warehouse. All materials are entered at the beginning of each process.Labour and manufacturing overhead are incurred uniformly throughout each process. Production and cost data for the moulding department during June 2012 are presented below:
Production Data June
Beginning work in process units 0
Units started into production 30,000
Ending work in process units 4,000
Percent complete—ending inventory 80%
Cost Data
Materials $298,000
Labour 60,400
Overhead 150,800
Total $509,200
Instructions(a) Prepare a schedule showing physical units of production.(b) Determine the equivalent units of production for materials and conversion costs.(c) Calculate the unit costs of production.(d) Determine the costs to be assigned to the units transferred and in process for June.(e) Prepare a production cost report for the moulding department for the month of June.
Complete the four steps necessary to prepare a production cost report.
P4-38A Sweet Corporation is in the dairy manufacturing business. Products go through two production departments (A first, then B). Data from those departments for October 2012 are presented below.
Department A Department B
Beginning work in process Beginning work in process
Number of units 1000 200
% complete for materials 100%
% complete for transferred-in 100%
% complete for conversion 60% 30%
Total materials cost $24,000 -0-
Total conversion cost $30,000 $40,000
Total transferred-in costs 15,000
Department A Department B
Ending work in process Ending work in process
Number of units 600 300
% complete for materials 100%
% complete for transferred-in
100%
% complete for conversion 30% 40%
Sweet Corporation started 2,600 units of product during the month in department A. Costs incurred in department A for October 2012 totalled $64,000 for material and $132,000 for conversion. Additionally, department B incurred conversion costs in September 2012 of $600,000. Department B adds no materials to the product.Instructions(a) Journalize the transfer of goods from department A to department B during October
2012. Sweet Corporation accounts for its costs using the weighted-average method.(b) Prepare a production cost report for department B for October 2012.
Journalize transactions.
P4-39A Fiedel Company manufactures its product, Vitadrink, through two manufacturing processes: mixing and packaging. All materials are entered at the beginning of each process. On October 1, 2012, inventories consisted of $26,000 in Raw Materials, $0 in Work in Process—Mixing, $250,000 in Work in Process—Packaging, and $289,000 in Finished Goods. The beginning inventory for Packaging consisted of 10,000 units that were 50% complete in terms of conversion costs and fully complete in terms of materials. During October, 50,000 units were started into production in the mixing department and the following transactions were completed:
1. Purchased $300,000 of raw materials on account.2. Issued raw materials for production: mixing $210,000 and packaging $45,000.3. Incurred labour costs of $248,900.4. Used factory labour: mixing $182,500 and packaging $66,400.5. Incurred $790,000 of manufacturing overhead on account.6. Applied manufacturing overhead on the basis of $22 per machine hour. Machine
hours were 28,000 in mixing and 6,000 in packaging.7. Transferred 45,000 units from mixing to packaging at a cost of $979,000.8. Transferred 53,000 units from packaging to Finished Goods at a cost of
$1,315,000.9. Sold goods costing $1,604,000 for $2,500,000 on account.
InstructionsJournalize the October transactions.
Determine assignment of costs.
P4-40A The following is partial information for the month of March for Macmillan International Inc., a two-department manufacturer that uses process costing:
Work in process, beginning (67% converted) 15,000 units
Costs of beginning work in process:
Transferred in from department A $ 9,500
Materials 0
Conversion 11,200
Units completed and transferred out during March 45,000 units
Units transferred in during March from department A
? units
Work in process, ending (37.5% converted) 16,000 units
Materials costs added during March $13,000
Conversion costs added during March $63,000
Other information:
1. Material is introduced at the beginning in department A and more material is added at the very end in department B.
2. Conversion costs are incurred evenly throughout both processes.3. As the process in department A is completed, goods are immediately transferred
to department B; as goods are completed in department B, they are transferred to finished goods.
4. Unit costs of production in department A in March were
Materials $0.55
Conversion 0.40
Total $0.95
5. The company uses the weighted-average method.
Instructions(a) Calculate the cost of goods transferred out of department B in March.(b) Calculate the cost of the March ending work in process inventory in department B.
(adapted from CGA-Canada)
Assign costs and prepare a production cost report.
P4-41A Cavalier Company has several processing departments. Costs charged to the assembly department for November 2012 totalled $2,229,000 as follows:
Work in process, November 1
Materials $69,000
Conversion costs 48,150 $ 117,150
Materials added 1,548,000
Labour 225,920
Overhead 337,930
Production records show that 35,000 units were in beginning work in process, 30% complete in terms of conversion costs, 700,000 units were started into production, and 25,000 units were in ending work in process, 40% complete in terms of conversion costs. Materials are entered at the beginning of each process.Instructions(a) Determine the equivalent units of production and the unit production costs for the
assembly department.(b) Determine the assignment of costs to goods transferred out and in process.(c) Prepare a production cost report for the assembly department.
Determine equivalent units and unit costs and assign costs.
P4-42A Chen Company manufactures basketballs. Materials are added at the beginning of the production process and conversion costs are incurred uniformly. Production and cost data for the month of July 2012 are as follows:
Production Data—Basketballs Units Percent Complete
Work in process units, July 1 500 60%
Units started into production 1,000
Work in process units, July 31
600 30%
Cost Data—Basketballs
Work in process, July 1
Materials $ 750
Conversion costs 600 $1,350
Direct materials 2,400
Direct labour 1,580
Manufacturing overhead 1,060
Instructions(a) Calculate the following:
1. The equivalent units of production for materials and conversion costs2. The unit costs of production for materials and conversion costs3. The assignment of costs to units transferred out and in process at the end of the
accounting period
(b) Prepare a production cost report for the month of July for the basketballs.Calculate equivalent units and complete a production cost report.
P4-43A Luther Processing Company uses a weighted-average process costing system and manufactures a single product—a premium rug shampoo and cleaner. The company has just completed the manufacturing activity for the month of October. A partially completed production cost report for the month of October for the mixing department is shown below.
Equivalent Units
QuantitiesPhysical
Units MaterialsConversion
Costs
Units to be accounted for
Work in process, October 1 (all materials, 70% conversion costs)
20,000
Started into production 160,000
Total units 180,000
Units accounted for
Transferred out 130,000 ? ?
Work in process, October 31 (60% materials, 40% conversion costs)
50,000 ? ?
Total units accounted for 180,000 ? ?
Costs Materials Conversion Costs Total
Unit costs
Costs in October $240,000 $105,000 $345,000
Equivalent units ? ?
Unit costs $ ? $ ? $ ?
Costs to be accounted for
Work in process, October 1 $ 30,000
Started into production 315,000
Total costs $345,000
Cost Reconciliation Schedule
Costs accounted for
Transferred out $ ?
Work in process, October 31
Materials ?
Costs Materials Conversion Costs Total
Conversion costs ? ?
Total costs $ ?
(a) Prepare a schedule that shows how the equivalent units were calculated so that you can complete the “Quantities: Units accounted for” equivalent units section of the production cost report, and calculate October unit costs.
Determine assignment of costs.
P4-44A Alberta Instrument Company uses a process costing system. A unit of product passes through three departments—moulding, assembly and finishing—before it is completed.The following activity took place in the finishing department during May:
Units
Work in process inventory, May 1 1,900
Transferred in from the assembly department 14,000
Transferred out to finished goods inventory 11,900
Raw material is added at the beginning of processing in the finishing department. The work in process inventory was 70% complete in terms of conversion costs on May 1 and 40% complete in terms of conversion costs on May 31. Alberta Instrument Company uses the weighted-average method of process costing. The equivalent units and current period costs per equivalent unit of production for each cost factor are as follows for the finishing department:
Equivalent Units Current Period Costs per Equivalent Unit
Transferred-in costs 15,400 $ 6.00
Raw materials 15,400 2.00
Conversion costs 13,300 4.00
Total $12.00
InstructionsCalculate the following amounts:(a) The cost of units transferred to finished goods inventory during May(b) The cost of the finishing department's work in process inventory on May 31
(adapted from CMA Canada)
Determine equivalent units using FIFO.
*P4-45A Below is information about ABC Ltd., a chemical producer, for the month of June:
Work in process, beginning inventory 25,000 units
Transferred-in units—100% complete
Direct materials—0% complete
Conversion costs—80% complete
Transferred in during June 175,000 units
Completed and transferred out during June 170,000 units
Work in process, ending inventory ? units
Transferred-in units—100% complete
Direct materials—0% complete
Conversion costs—40% complete
Instructions(a) How many units are in ending work in process inventory?(b) Under FIFO, what are the equivalent units of production for the month of June for
materials?(c) Under FIFO, what are the equivalent units of production for the month of June for
conversion costs?Determine assignment of costs using FIFO.
*P4-46A The Allbright BrickWorks, in Winnipeg, manufactures high-quality bricks used in residential and commercial construction. The firm is small but highly automated and typically produces about 300,000 bricks per month. A brick is created in a continuous production operation. In the initial step, the raw material, a mixture of soils and water, is forced into a brick mould moving along a conveyer belt. No other materials are actually required in the manufacture of a brick. Each brick takes about three days to complete. They spend the last 36 hours or so on the conveyer belt in an oven that removes moisture from the product. The conveyer belt speed is monitored and controlled by computer. The firm uses a process costing system based on actual costs in three cost pools—direct materials, direct labour, and factory overhead—to assign production costs to output. Cost and production data for October 2012 follow:
Production Data
Beginning work in process inventory (100% complete in terms of direct materials; 60% complete in terms of direct labour; 36% complete in terms of factory overhead)
35,000 bricks
Started this period 295,000 bricks
Ending work in process inventory (100% complete in terms of direct materials; 50% complete in terms of direct labour; 40% complete in terms of factory overhead)
30,000 bricks
Cost Data
Materials Direct Labour Overhead
Beginning inventory $ 1,330 $ 435 $ 852
Cost in October 12,200 15,000 18,180
InstructionsDetermine the cost of bricks transferred to finished goods inventory and the cost of bricks in ending work in process inventory for October 2012. Assume the company uses the FIFO method.
(adapted from CGA-Canada)
Determine equivalent units and unit cost, and prepare a production cost report using FIFO.
*P4-47A Jessica Company manufactures hockey pucks and soccer balls. For both products, materials are added at the beginning of the production process and conversion costs are incurred evenly. Jessica uses the FIFO method to calculate equivalent units. Production and cost data for the month of August are as follows:
Production Data—Hockey pucks Units Percent Complete
Work in process units, August 1 500 70%
Units started into production 1,600
Work in process units, August 31 600 30%
Cost Data—Hockey pucks
Work in process, August 1 $1,125
Direct materials 1,600
Direct labour 1,160
Manufacturing overhead 1,000
Production Data—Soccer balls
Work in process units, August 1 200 90%
Units started into production 2,000
Work in process units, August 31 150 60%
Cost Data—Soccer balls
Work in process, August 1 $ 450
Direct materials 2,500
Direct labour 1,000
Manufacturing overhead 995
Instructions(a) Calculate the following for both the hockey pucks and the soccer balls:
1. The equivalent units of production for materials and conversion costs2. The unit costs of production for materials and conversion costs3. The assignment of costs to units transferred out and to work in process at the
end of the accounting period
(b) Prepare a production cost report for the month of August for the hockey pucks only.
SOLUTIONS TO PROBLEMS—SET A
PROBLEM 4-36A
(a) Unit cost for beginning work in process inventory:Direct material cost per unit:Total material cost $382,500
÷ Equivalent units (850 × 100%) 850
$450.00
Conversion cost per unit:Total conversion cost $255,000
÷Equivalent units (850 × 60%) 510
$500.00
Total unit cost for beginning inventory $950.00
(b) Beginning work in process 850Started during the month 1,300Total units in production 2,150Less: ending work in process 450Units completed and transferred out 1,700
PROBLEM 4-37A
(a) Physical units
Units to be accounted forWork in process, June 1Started into production
Total units
Units accounted forTransferred outWork in process, June 30
Total units
030,00030,000
26,000 4,00030,000
(b) Equivalent unitsMaterials Conversion
Costs
Units transferred outWork in process, June 30
4,000 × 100%4,000 × 80%
Total equivalent units
26,000
4,000
26,000
3,20030,000 29,200
(c) Unit Costs
MaterialsConversion costsTotal unit cost
$9.9333 ($298,000 ÷ 30,000) $7.2329 (($60,400 + $150,800) ÷ 29,200) $17.1662 ($9.9333 + $7.2329) rounded
(d) Costs accounted forTransferred out (26,000 × $17.1662)
$446,321Work in process, June 30
Materials (4,000 × $9.9333) $39,733Conversion costs (3,200 × $7.2329) 23,146 62,879
Total costs$509,200
PROBLEM 4-37A (Continued)
(e) KASTEN COMPANYMolding Department
Production Cost ReportFor the Month Ended June 30, 2012
Equivalent Units
QuantitiesPhysical
Units MaterialsConversion
Costs
(Step 1) (Step 2)Units to be accounted for
Work in process, June 1Started into production
Total unitsUnits accounted for
Transferred out
030,00030,000
26,000 26,000 26,000Work in process, June 30 4,000 4,000 3,200 (4,000 × 80%)
Total units 30,000 30,000 29,200
Costs MaterialsConversion
Costs Total
Unit costs (Step 3)Costs in JuneEquivalent unitsUnit costs (a) ÷ (b)
Costs to be accounted forWork in process, June 1Started into production
Total costs
(a)(b)
$298,000 30,000 $9.9333
$211,200 29,200 $7.2329
$509,200
$17.1662
$ 0 509,200$509,200
Cost Reconciliation Schedule (Step 4)
Costs accounted forTransferred out (26,000 × $17.1662)Work in process, June 30
Materials (4,000 × $9.9333)Conversion costs (3,200 × $7.2329)
Total costs
$39,733 23,146
$446,321
62,879$509,200
(a) Calculation of equivalent units—Dept AEquivalent Units
Physical Trans Con-Units In Material Version
Beginning WIP 1,000 Started into production 2,600
3,600
Equivalent UnitsCompleted and transferred out 3,000 3,000 3,000 Ending work in process 600
Materials (100%) 600 Conversion (30%) 180
3,600 3,600 3,180
Calculation of equivalent units—Dept BEquivalent Units
Physical Trans Con-Units In Material Version
Beginning WIP in Dept B 200 Transferred in from Dept A 3,000
3,200
Department B Completed and transferred out 2,900 2,900 2,900 Ending work in process 300
Transferred in (100%) 300 Conversion (40%) 120
3,200 3,200 3,020
PROBLEM 4-38A
PROBLEM 4-38A (Continued)
Trans Con-Per Unit Costs: Dept A Total In Material Version
Beginning WIP $24,000 $ 30,000 Costs added in the month 64,000 132,000
$88,000 162,000 Equivalent units 3,600 3,180 Cost per equiv. unit $75.3878 $24.4444 $50.9434
Trans Con-Per Unit Costs: Dept B Total In Material Version
Beginning WIP $ 15,000 $ 40,000 Costs added in the month 218,625 1 600,000
$233,625 $640,000 Equivalent units 3,200 3,020
Cost per equiv. unit $284.9283 $73.0078 $211.9205
12,900 transferred in × $75.3878/unit = $218,625
Work in Process—Department B.................................... 218,625Work in Process—Department A............................. 218,625
PROBLEM 4-38A (Continued)
(b) SWEET CORPORATIONDepartment B
Production Cost ReportFor the Month Ended October 31, 2012
Equivalent Units
QuantitiesPhysical
UnitsTransferr
ed inConversion
Costs
(Step 1) (Step 2)Units to be accounted for
Work in process, beginningTransferred in
Total unitsUnits accounted for
Transferred out
200
3,0003,200
2,900 2,900 2,900Work in process, ending 300 300 120 (300 × 40%)
Total units 3,200 3,200 3,020
CostsTransferr
ed inConversion
Costs Total
Unit costs (Step 3)Total costsEquivalent unitsUnit costs (a) ÷ (b)
Costs to be accounted forWork in process, beginning
Transferred inStarted into production
Total costs
(a)(b)
$233,625 3,200
$73.0078
$640,000 3,020
$211.9205
$873,625
$284.9283
$ 55,000 218,625 600,000$873,625
Cost Reconciliation Schedule (Step 4)
Costs accounted forTransferred out (2,900 × $304.6158)Work in process, ending
Transferred in (300 × $92.6953)Conversion costs (120 × $211.9205)
Total costs
$21,902.3
4 25,430.4
6
$826,292
47,333$873,625
1. Raw Materials Inventory................................... 300,000Accounts Payable.....................................
300,000
2. Work in Process—Mixing................................. 210,000Work in Process—Packaging.......................... 45,000
Raw Materials Inventory...........................255,000
3. Factory Labour.................................................. 248,900Wages Payable..........................................
248,900
4. Work in Process—Mixing................................. 182,500Work in Process—Packaging.......................... 66,400
Factory Labour..........................................248,900
5. Manufacturing Overhead.................................. 790,000Accounts Payable.....................................
790,000
6. Work in Process—Mixing (28,000 × $22)......... 616,000Work in Process—Packaging.......................... 132,000 (6,000 × $22)
Manufacturing Overhead..........................748,000
7. Work in Process—Packaging.......................... 979,000Work in Process—Mixing.........................
979,000
8. Finished Goods Inventory................................ 1,315,000Work in Process—Packaging...................
1,315,000
9. Accounts Receivable........................................ 2,500,000
PROBLEM 4-39A
Sales...........................................................2,500,000
Cost of Goods Sold........................................... 1,604,000Finished Goods Inventory........................
1,604,000
PROBLEM 4-40A
Calculation of cost per equivalent unitEquivalent Units
Physical Trans Con-Units In Material version
Beginning WIP in Dept B 15,000 Transferred in from Dept A 46,000
61,000
Department B Completed and transferred out 45,000 45,000 45,000 45,000 Ending work in process 16,000
Transferred in (100%) 16,000 Materials (0%)1 –0– Conversion (37.5%) 6,000
61,000 61,000 45,000 51,000 1Additional Material is added at the end in Department B.
Trans Con-Per Unit Costs: Total In Material version
Beginning WIP $ 9,500 $11,200 Costs added in March $43,700 1 $ 13,000 $63,000
$53,200 $ 13,000 $74,200 Equivalent units 61,000 45,000 51,000 Cost per equiv. unit $2.616 $0.872 $0.289 $1.455
146,000 transferred in × $0.95/unit = $43,700
PROBLEM 4-40A (Continued)
(a) Trans Con-
Total In Material versionCost of units transferred out:Units transferred out2 45,000Cost per unit $2.616
$117,720
2Transferred to Finished Goods
Trans Con-Total In Material version
(b) Cost of ending WIP Transferred in (100%) 16,000 Material (0%) –0– Conversion (37.5%) 6,000 Cost per unit $0.872 $0.289 $1.455
$22,682 $13,952 $ –0– $8,730
PROBLEM 4-41A
(a) Equivalent UnitsPhysical
Units MaterialsConversion
Costs
Units to be accounted forWork in process, November 1Started into production
Total units
Units accounted forTransferred outWork in process, November 30
Total units
35,000700,000
710,000 25,000
710,000 10,000
735,000
710,000 25,000735,000 735,000 720,000
Total MaterialsConversion
Costs
Cost per unitBeginning work in processAdded during month
Equivalent units
Per unit cost $3.05
$ 69,000 1,548,000
$ 48,150 563,8501
$1,617,000 612,000
735,000
$2.20
720,000
$0.85
1 $225,920 + $337,930 = $563,850
(b) Costs accounted forTransferred out (710,000 × $3.05)Work in process, November 30
Materials (25,000 × $2.20)Conversion costs (10,000 × $0.85)
Total costs
$55,000 8,500
$2,165,500
63,500$2,229,000
PROBLEM 4-41A (Continued)
(c) CAVALIER COMPANYAssembly Department
Production Cost ReportFor the Month Ended November 30, 2012
Equivalent Units
QuantitiesPhysical
Units MaterialsConversion
Costs
(Step 1) (Step 2)Units to be accounted for
Work in process, November 1Started into production
Total unitsUnits accounted for
Transferred out
35,000700,000735,000
710,000 710,000 710,000Work in process, November 30 25,000 25,000 10,000 (25,000 × 40%)
Total units 735,000 735,000 720,000
Costs MaterialsConversion
Costs Total
Unit costs (Step 3)Costs in NovemberEquivalent unitsUnit costs (a) ÷ (b)
Costs to be accounted forWork in process, November 1Started into production
Total costs
(a)(b)
$1,617,000 735,000 $2.20
$612,000 720,000 $0.85
$2,229,000
$3.05
$ 117,150 2,111,850$2,229,000
Cost Reconciliation Schedule (Step 4)
Costs accounted forTransferred out (710,000 × $3.05)Work in process, November 30
Materials (25,000 × $2.20)Conversion costs
(10,000 × $0.85)Total costs
$55,000
8,500
$2,165,500
63,500$2,229,000
PROBLEM 4-42A
(a) (1) Equivalent UnitsPhysical
Units MaterialsConversion
Costs
Units to be accounted forWork in process, July 1Started into production
Total units
Units accounted forTransferred outWork in process, July 31
Total units
5001,000
900 600 900 180
1,500
900 600 1,500 1,500 1,080
(2)Materials
ConversionCosts
Cost per unitBeginning work in processAdded during month
Equivalent units
Per unit cost
$ 750 2,400
$ 600 2,6401
$3,150 $3,240
1,500
$2.10
1,080
$3.00
1$1,580 (Direct Labour) + $1,060 (Manufacturing Overhead)
(3) Costs accounted forTransferred out (900 × ($2.10+3.00)Work in process, July 31
Materials (600 × $2.10)Conversion costs (180 × $3.00)
Total costs
$1,260 540
$4,590
1,800$6,390
PROBLEM 4-42A (Continued)
(b) CHEN COMPANYBasketball DepartmentProduction Cost Report
For the Month Ended July 31, 2012
Equivalent Units
QuantitiesPhysical
Units MaterialsConversion
Costs
(Step 1) (Step 2)Units to be accounted for
Work in process, July 1Started into production
Total unitsUnits accounted for
Transferred out
5001,0001,500
900 900 900Work in process, July 31 600 600 180
Total units 1,500 1,500 1,080
Costs MaterialsConversion
Costs Total
Unit costs (Step 3)Costs in JulyEquivalent unitsUnit costs (a) ÷ (b)
Costs to be accounted forWork in process, July 1Started into production
Total costs
(a)(b)
$3,150 1,500 $2.10
$3,240 1,080 $3.00
$6,390
$5.10
$1,350 5,040$6,390
Cost Reconciliation Schedule (Step 4)
Costs accounted forTransferred out (900 × $5.10)Work in process, July 31
Materials (600 × $2.10)Conversion costs (180 × $3.00)
Total costs
$1,260 540
$4,590
1,800$6,390
PROBLEM 4-43A
(a) Computation of equivalent units:
Equivalent UnitsPhysical
Units MaterialsConversion
Costs
Units accounted forTransferred outWork in process, October 31Materials (50,000 × 60%)Conversion costs
(50,000 × 40%) Total units
130,000 50,000
130,000
30,000
130,000
20,000
180,000 160,000 150,000
Computation of October unit costs
Materials: $240,000 ÷ 160,000 equivalent units = $1.50Conversion cost: $105,000 ÷ 150,000 equivalent units = .70Total unit cost, October $2.20
(b) Cost Reconciliation Schedule
Transferred out (130,000 × $2.20) $286,000Work in process, October 31
Materials (30,000 × $1.50) $45,000Conversion costs (20,000 × $0.70) 14,000 59,000
Total costs $345,000
PROBLEM 4-44A
(a) Cost of units transferred to finished goods:
Units transferred out 11,90
0 Total cost per unit $12.00
$142,800
(b) Equivalent Units
PhysicalUnits
MaterialsConversio
nCosts
Units to be accounted forWork in process, May 1Started into production
Total units
Units accounted forTransferred outWork in process, May 31
Material (100%) Conversion (40%)
Total units
1,90014,00015,900
11,900 4,000
15,900
11,900
4,000
15,900
11,900
1,60013,500
Trans Con-Total In Material version
Cost of WIP May 31 4,000 Transferred in (100%) 4,000 Material (100%) 4,000 Conversion (40%) 1,600Cost per unit $6.00 $2.00 $4.00
$38,400 $24,000 $8,000 $6,400
*PROBLEM 4-45A
(a) Units in beginning work in process 25,000 Plus: transferred in 175,000 Total units in production 200,000 Less: completed and transferred out 170,000 Units in ending work in process 30,000
(b) and (c)
PhysicalUnits
Equivalent Units Quantities Trans
InMaterial
s
Conversion
CostsUnits to be accounted for
Work in process, beginningTransferred into production
25,000175,000
Total units 200,000
Units accounted forWork in process,
beginningTransferred in and completedWork In process, ending
25,000145,000 30,000
25,000145,000 30,000
25,000145,000
–0–
5,000
145,000 12,000
Total units 200,000 175,000 170,000 162,000(b) (c)
*PROBLEM 4-46A
PhysicalUnits
Equivalent Units
Quantities Material Labour Over-
head
Units to be accounted for
Work in process, beginning 35,000
Started this period 295,000
Total units 330,000
Units accounted for
Work in process, beginning 35,000
Materials (0%) –0–
Labour (40%1) 14,000
Overhead (64%2) 22,400
Started and completed 265,0003
265,000 265,000 265,000
Work In process, ending 30,000
Materials (100%) 30,000
Labour (50%) 15,000
Overhead (40%) 12,000
Total equivalent units (m) 330,000 295,000m 294,000m 299,400m
Current period costs (n) $45,380 $12,200n $15,000n $18,180n
Per equivalent unit cost $0.1531 $0.0414 $0.0510 $0.0607
[(n) ÷ (m)]
1 Labour 60% complete, 40% to be completed
2 Overhead 36% complete, 64% to be completed
3330, 000 – 35,000 (beginning WIP) – 30,000 (ending WIP)
PROBLEM 4-46A (Continued)
Costs for completed goods and ending work in process
TotalMaterial Labour Conver
sion
Beginning Inventory $2,617 $1,330 $435 $852
Complete beginning WIP 2,073 Materials (0 × $0.0414) –0– Labour (14,000 × $0.0510) 714 Overhead (22,400 × $0.0607) 1,359
Started and completed 40,572 Materials (265,000 × $0.0414) 10,971 Labour (265,000 × $0.0510) 13,515 Overhead (265,000 × $0.0607) 16,086Cost for units transferred out $45,262 $12,301 $14,664 $18,297
Ending work in process 2,735 Materials (30,000 × $0.0414) 1,242 Labour (15,000 × $0.0510) 765 Overhead (12,000 × $0.0607) 728
Total costs $47,997 $13,543 $15,429 $19,025
*PROBLEM 4-47A
(a) A. HOCKEY PUCKS Quantities
Physical Units
Units to be accounted forWork in process, beginningStarted into production
Total units
5001,6002,100
Units accounted forWork in process,
beginningStarted and completedWork In process, ending
5001,000 600
Total units 2,100
(1) Equivalent units—Materials Physical
Units
MaterialsAdded
This PeriodEquivalent
Units
Work in process, Aug 1Started and completedWork in process, Aug 31
5001,000 600
0%1
100%100%
01,000 600
Total 2,100 1,600
Equivalent units—Conversion Physical
Units
ConversionAdded
This PeriodEquivalent
Units
Work in process, Aug 1Started and completedWork in process, Aug 31
5001,000 600
30%2
100% 30%
150 1,000 180
Total 2,100 1,330
1100% Materials added, 0% to be added 2 70% completed, 30% to be added
*PROBLEM 4-47A (Continued)
(2) Unit costsMaterials Conversion
Costs in August (a)Equivalent units (b)
$1,600 1,600
$2,1603
1,330Unit costs [(a) ÷ (b)] $1.00 $1.624
3Direct Labour, $1,160 + Manufacturing Overhead, $1,000
(3) Costs for completed goods and ending work in process
TotalBeg WIP
Materials
Conversion
Beginning WIP $1,125 $1,125
Complete beginning WIP 244 Materials (0 × $1.00) Conversion (150 × $1.624) $244
Started and completed 2,624 Materials (1,000 × $1.00) $1,000 Conversion (1,000 × $1.624) 1,624
Ending WIP 892 Materials (600 × $1.00) 600 Conversion (180 × $1.624) 292
Total costs $4,885 $1,125 $1,600 $2,160
*PROBLEM 4-47A (Continued)
B. SOCCER BALLS
Quantities
Physical Units
Units to be accounted forWork in process, beginningStarted into production
Total units
200 2,000
2,200
Units accounted forWork in process,
beginningStarted and completedWork In process, ending
2001,850 150
Total units 2,200
(1) Equivalent units—Materials Physical
Units
MaterialsAdded
This PeriodEquivalent
Units
Work in process, Aug 1Started and completedWork in process, Aug 31
2001,850 150
0%4
100%100%
01,850 150
Total 2,200 2,000
Equivalent units—Conversion Physical
Units
ConversionAdded
This PeriodEquivalent
Units
Work in process, Aug 1Started and completedWork in process, Aug 31
2001,850 150
10%5
100% 60%
20 1,850 90
Total 2,200 1,960
4100% completed as to materials, 0% to be added 590% completed, 10% to be added
*PROBLEM 4-47A (Continued)
(2) Unit costs
Materials Conversion
Costs in August (a)Equivalent units (b)
$2,500 2,000 $1,9956 1,960
Unit costs [(a) ÷ (b)] $1.250 $1.018
6Direct Labour $1,000 + Manufacturing Overhead $995
(3) Costs for completed goods and ending work in process
TotalBeg WIP
Materials
Conversion
Beginning work in process $450 $450Complete beginning WIP 20 Materials (0 × $1.250) Conversion (20 × $1.018) $20Started and completed 4,195 Materials (1,850 × $1.250) $2,312 Conversion (1,850 × $1.018) 1,883Cost for units transferred out $4,665 $450 $2,312 $1,903
Ending work in process 280 Materials (150 × $1.250) 188 Conversion (90 × $1.018) 92
Total costs $4,945 $450 $2,500 $1,995
*PROBLEM 4-47A (Continued)
(b) JESSICA COMPANYProduction Cost Report—Hockey pucks
For the Month Ended August 31 Equivalent Units
QuantitiesPhysical
Units MaterialsConversion
Costs
Units to be accounted forWork in process, August 1Started into productionTotal units
Units accounted forCompleted and transferred out
Work in process, August 1Started and completedWork in process, August 31
Total units
5001,6002,100
5001,000 6002,100
0 1,000 600 1,600
150 1,000 180 1,330
Costs
Unit costsCosts in August (a)Equivalent units (b)Unit costs [(a) ÷ (b)]
Costs to be accounted forWork in process, August 1Added into productionTotal costs
Cost Reconciliation ScheduleCosts accounted for
Transferred outWork in process, August 1Conversion costs to complete beginning inventory (150 × $1.624)Started and completed (1,000 × $2.624)
Work in process, August 31Materials (600 × $1)Conversion costs (180 × $1.624)
Total costs
$1,600 1,600 $1.00
$1,125
244 2,624
$ 600 292
$2,160 1,330$1.624
$1,125 3,760*$4,885
$3,993
892$4,885
*($1,600 + $1,160 + $1,000)
Problems: Set BAnalyze a process costing system and calculate equivalent units and unit costs.
*P4-48B United Dominion Manufacturing Co. produces a wood refinishing kit that sells for $17.95. The final processing of the kits occurs in the packaging department. A quilted wrap is applied at the beginning of the packaging process. A compartmented outside box printed with instructions and the company's name and logo is added when units are 70% through the process. Conversion costs, consisting of direct labour and applied overhead, occur evenly throughout the packaging process. Conversion activities after the completion of the box include package sealing, testing for leakage, and final inspection. The following data are for the packaging department's activities during the month of October:
1. Beginning work in process inventory was 10,000 units, 60% complete in terms of conversion costs.
2. During the month, 40,000 units were transferred to packaging.3. There were 10,000 units in ending work in process, 70% complete in terms of
conversion costs.
The packaging department's October costs were as follows:
Quilted wrap $80,000
Outside boxes 50,000
Direct labour 22,000
Applied overhead ($3.00/per direct-labour dollar)
66,000
The costs transferred in from prior processing were $3.00 per unit. The cost of goods sold for the month was $240,000, and the ending finished goods inventory was $84,000. United Dominion Manufacturing Co. uses the FIFO method for process costing.Instructions(a) Prepare a schedule of equivalent units for the October activity in the packaging
department.(b) Determine the cost per equivalent unit for the October production.
(adapted from CMA Canada)
Calculate equivalent units, unit costs, and costs assigned.
P4-49B Montreal Leather Company manufactures high-quality leather goods. One of the company's main products is a fine leather belt. The belts are produced in a single, continuous process in its Quebec plant. During the process, leather strips are sewn, punched, and dyed. The belts then enter a final finishing stage to conclude the process. Labour and overhead are applied continuously during the manufacturing process. All materials, leather strips, and buckles are introduced at the beginning of the process. The firm uses the weighted-average method to calculate its unit costs.The leather belts produced at the Quebec plant are sold wholesale for $9.85 each. Management wants to compare the current manufacturing cost per unit with the market prices for leather belts. Top management has asked the Quebec plant controller to submit data on the cost of manufacturing the leather belts for the month of October. These cost data will be used to determine whether modifications in the production process should be initiated or whether an increase in the belts' selling price is justified. The cost per belt used for planning and control is $4.85.The work in process inventory consisted of 12,200 partially completed units on October 1. The belts were 45% complete in terms of conversion costs. The costs included in the inventory on October 1 were as follows:
Leather strips $3,000
Buckles 750
Conversion costs
900
Total $4,650
During October, 22,800 leather strips were placed into production. A total of 21,000 leather belts were completed. The work in process inventory on October 31 consisted of 14,000 belts, which were 50% complete in terms of conversion costs.The costs charged to production during October were as follows:
Leather strips $ 61,800
Buckles 13,650
Conversion costs
62,100
Total $137,550
InstructionsIn order to provide cost data on the manufacture of leather belts in the Quebec plant to the top management of Montreal Leather Company, calculate the following amounts for the month of October:(a) The equivalent units for materials and conversion costs(b) The assignment of production costs to the October 31 work in process inventory and
to goods transferred out(c) The weighted-average unit cost of the leather belts completed and transferred to
finished goods. Comment on the cost per belt that the company uses for planning and control.
(adapted from CMA Canada)
Calculate equivalent units, unit costs, and costs assigned with FIFO.
*P4-50B The following information is for production activities in the refining department of Petro Pure Corporation. All units in work in process (WIP) were costed using the FIFO cost system.
Refining Department UnitsPercentage of Completion
Conversion Costs
WIP, February 1 25,000
70% $ 22,000
Units started and costs incurred during February
135,000
143,000
Units completed and transferred to the mixing department
100,000
WIP, February 28 ? 60% ?
Instructions(a) Calculate the conversion costs per equivalent unit of production during the last period
and this period.(b) Calculate the conversion cost in the work in process inventory account at February 28.(c) Calculate the per-unit conversion cost of the units started last period and completed
this period.
Prepare a production cost report using FIFO.
*P4-51B Petro Pure Corporation manufactures chemical additives for industrial applications. As the new cost accountant, you have been assigned the task of completing the production cost report for the most recent period. The company uses the FIFO method of process costing. The following information is for the most recent period:
Production Data—Units
Beginning WIP inventory (75% complete in terms of materials; 70% complete in terms of conversion costs)
18,000
Units started into production this period 27,000
Units completed and transferred out 33,000
Ending WIP inventory (60% complete in terms of materials; 50% complete in terms of conversion costs)
12,000
Cost Data
Beginning inventory:
Materials $ 32,000
Conversion costs 64,000
Current period:
Materials 252,000
Production Data—Units
Conversion costs 440,000
InstructionsPrepare a complete production report for the period using the FIFO method. (Round the cost per equivalent unit to three decimal places; round the costs in the cost report to the nearest dollar.)
(adapted from CGA-Canada)
Determine equivalent units and unit costs and assign costs for processes; prepare a production cost report.
*P4-52B National Company manufactures bicycles and tricycles. For both products, materials are added at the beginning of the production process, and conversion costs are incurred uniformly. National Company uses the FIFO method to calculate equivalent units. Production and cost data for the month of May are as follows:
Production Data—Bicycles Units Percent Complete
Work in process units, May 1 300 70%
Units started into production 1,200
Work in process units, May 31 500 30%
Cost Data—Bicycles
Work in process, May 1 $17,400
Direct materials 48,000
Direct labour 19,400
Manufacturing overhead 30,420
Production Data—Tricycles Units Percent Complete
Work in process units, May 1 100 75%
Units started into production 900
Work in process units, May 31 200 40%
Cost Data—Tricycles
Work in process, May 1 $ 8,000
Direct materials 63,000
Direct labour 31,060
Manufacturing overhead 45,415
Instructions(a) Calculate the following for both the bicycles and the tricycles:
1. The equivalent units of production for materials and conversion costs2. The unit costs of production for materials and conversion costs3. The assignment of costs to units transferred out and in process at the end of
the accounting period
(b) Prepare a production cost report for the month of May for the bicycles only.
Complete the four steps necessary to prepare a production cost report.
P4-53B Bicnell Corporation manufactures water skis through two processes: moulding and packaging. In the moulding department, fibreglass is heated and shaped into the form of a ski. In the packaging department, the skis are placed in cartons and sent to the finished goods warehouse. Materials are entered at the beginning of both processes. Labour and manufacturing overhead are incurred uniformly throughout each process. Production and cost data for the moulding department for January 2012 are presented below:
Production Data January
Beginning work in process units 0
Units started into production 42,500
Ending work in process units 2,500
Percent complete—ending inventory 40%
Cost Data
Materials $510,000
Labour 96,000
Overhead 150,000
Total $756,000
Instructions(a) Calculate the physical units of production.(b) Determine the equivalent units of production for materials and conversion costs.(c) Calculate the unit costs of production.(d) Determine the costs to be assigned to the units transferred out and in process.(e) Prepare a production cost report for the moulding department for the month of
January.
Complete the four steps necessary to prepare a production cost report.
*P4-54B Meetha Corporation is in the candy manufacturing business. Products go through two production departments (A first, then B). Data from those departments for September 2012 are presented below.
Department A Department B
Beginning work in
processBeginning work in
process
Number of units 1000 200
% complete for materials 100%
% complete for transferred-in
100%
% complete for conversion 60% 30%
Total materials cost $24,000
Total conversion cost $30,000 $40,000
Total transferred-in costs $15,000
Ending work in process Ending work in process
Number of units 600 300
% complete for materials 100%
% complete for transferred-in
100%
% complete for conversion 30% 40%
Meetha Corporation started 2,600 units of product during the month in department A. Costs incurred in department A for September 2012 totalled $64,000 for material and $132,000 for conversion. Additionally, department B incurred conversion costs in September 2012 of $600,000. Department B adds no materials to the product.Instructions(a) Journalize the transfer of goods from department A to department B during
September 2012. Meetha Corporation accounts for its costs using the FIFO method.(b) Prepare a production cost report for department B for September 2012.
Journalize transactions.
P4-55B McNally Company manufactures a nutrient, Everlife, through two manufacturing processes: blending and packaging. All materials are entered at the beginning of each process. On August 1, 2012, inventories consisted of $5,000 in Raw Materials, $0 in Work in Process—Blending, $3,945 in Work in Process—Packaging, and $7,500 in Finished Goods. The beginning inventory for packaging consisted of 500 units, two-fifths complete in terms of conversion costs and fully complete in terms of materials. During August, 9,000 units were started into production in blending, and the following transactions were completed:
1. Purchased $25,000 of raw materials on account.2. Issued raw materials for production: blending $18,930 and packaging $9,140.3. Incurred labour costs of $23,770.4. Used factory labour: blending $13,320 and packaging $10,450.5. Incurred $41,500 of manufacturing overhead on account.6. Applied manufacturing overhead at the rate of $25 per machine hour. Machine
hours were 900 for blending and 300 for packaging.7. Transferred 8,200 units from blending to packaging at a cost of $44,940.8. Transferred 8,600 units from packaging to Finished Goods at a cost of $67,490.9. Sold goods costing $62,000 for $90,000 on account.
InstructionsJournalize the August transactions.
Assign costs and prepare a production cost report.
P4-56B Crosby Company has several processing departments. Costs charged to the assembly department for October 2012 totalled $1,249,500, as follows:
Work in process, October 1
Materials $29,000
Conversion costs 16,500 $ 45,500
Materials added 1,006,000
Labour 90,000
Overhead 108,000
Production records show that 25,000 units were in beginning work in process, 40% complete in terms of conversion costs; 425,000 units were started into production; and 35,000 units were in ending work in process, 40% complete in terms of conversion costs.
Materials are entered at the beginning of each process.Instructions(a) Determine the equivalent units of production and the unit production costs for the
assembly department.(b) Determine the assignment of costs to goods transferred out and in process.(c) Prepare a production cost report for the assembly department.
Determine equivalent units and unit costs, and assign costs.
P4-57B Sarku Company manufactures bicycles and tricycles. For both products, materials are added at the beginning of the production process, and conversion costs are incurred uniformly. Production and cost data for the month of May are as follows:
Production Data—Bicycles Units Percent Complete
Work in process units, May 1 500 80%
Units started into production 1,500
Work in process units, May 31 800 25%
Cost Data—Bicycles
Work in process, May 1
Materials $15,000
Conversion costs 18,000 $33,000
Direct materials 50,000
Direct labour 18,320
Manufacturing overhead 33,680
Instructions(a) Calculate the following:
1. The equivalent units of production for materials and conversion costs2. The unit costs of production for materials and conversion costs3. The assignment of costs to units transferred out and in process at the end of
the accounting period
(b) Prepare a production cost report for the month of May for the bicycles.
Calculate equivalent units and complete a production cost report.
P4-58B Windsor Cleaner Company uses a weighted-average process costing system and manufactures a single product—an all-purpose liquid cleaner. The company has just completed the manufacturing activity for the month of March. A partially completed production cost report for the month of March for the mixing and blending department is shown below.
WINDSOR CLEANER COMPANYMixing and Blending Department
Production Cost ReportFor the Month Ended March 31
Equivalent Units
QuantitiesPhysical Units
Materials
Conversion Costs
Units to be accounted for Work in process, March 1 (40% materials, 20% conversion costs)
10,000
Started into production 100,000
Total units 110,000
Units accounted for Transferred out
95,000 ? ?
Work in process, March 31 (
materials, conversion costs)
15,000 ? ?
Total units accounted for 110,000
? ?
Costs Materials
Conversion Costs
Total
Unit costs
Costs in March $156,000
$98,000 $254,000
Equivalent units ? ?
WINDSOR CLEANER COMPANYMixing and Blending Department
Production Cost ReportFor the Month Ended March 31
Equivalent Units
QuantitiesPhysical Units
Materials
Conversion Costs
Unit costs $ ? $ ? $ ?
Costs to be accounted for
Work in process, March 1 $ 8,700
Started into production 245,300
Total costs $254,000
Cost Reconciliation Schedule
Costs accounted for
Transferred out $ ?
Work in process, March 31
Materials ?
Conversion costs ? ?
Total costs $ ?
Instructions(a) Prepare a schedule that shows how the equivalent units were calculated so that you
can complete the “Quantities: Units accounted for” equivalent units section in the production cost report above, and calculate March unit costs.
(b) Complete the “Cost Reconciliation Schedule” part of the production cost report above.
Determine equivalent units and unit costs and assign costs for processes using FIFO; prepare a production cost report.
*P4-59B Maloney Company manufactures hockey pucks and soccer balls. For both products, materials are added at the beginning of the production process and conversion costs are incurred uniformly. Maloney uses the FIFO method to calculate equivalent units. Production and cost data for the month of August are as shown below.
Production Data—Hockey pucks Units Percent Complete
Work in process units, August 1 500 60%
Units started into production 1,600
Work in process units, August 31 600 50%
Cost Data—Hockey pucks
Work in process, August 1 $1,125
Direct materials 1,600
Direct labour 1,175
Manufacturing overhead 1,000
Production Data—Soccer balls Units Percent Complete
Work in process units, August 1 200 80%
Units started into production 2,000
Work in process units, August 31 150 70%
Cost Data—Soccer balls
Work in process, August 1 $ 450
Direct materials 2,600
Direct labour 1,000
Manufacturing overhead 995
Instructions
(a) Calculate the following for both the hockey pucks and the soccer balls:
1. The equivalent units of production for materials and conversion costs2. The unit costs of production for materials and conversion costs3. The assignment of costs to units transferred out and in process at the end of
the accounting period
(b) Prepare a production cost report for the month of August for the hockey pucks only.
SOLUTIONS TO PROBLEMS—SET B
*PROBLEM 4-48B
(a)
PhysicalUnits
Equivalent Units Quantities
Materials
(1)
Materials
(2)
Conversion
Costs
Units to be accounted forWork in process, beginning 10,000
Started this period 40,000Total units 50,000
Units accounted for Work in process, beginning 10,000 Materials-1 (0%) Materials-2 (100%) 10,000 Conversion (40%1) 4,000 Started and completed 30,000 30,000 30,000 30,000 Work In process, ending 10,000
Materials-1 (100%) 10,000 Materials-2 (100%)* 10,000 Conversion (70%) 7,000
Total equivalent units 50,000 40,000 50,000 41,000
Current period costs $80,000 $50,000 $88,000
(b) Per equivalent unit cost 1($2.00 + $1.00 + $2.15)
*material is added at 70%
$5.151 $2.00 $1.00 $2.15
1
PROBLEM 4-49B
(a) Physical
Units
Equivalent Units
Quantities Strips Buckles
Conversion
Costs
Units to be accounted forWork in process, beginning 12,200
Started this period 22,800Total units 35,000
Units accounted for Completed 21,000 21,000 21,000 21,000 Work In process, ending 14,000 Strips (100%) 14,000 Buckles (100%) 14,000 Conversion (50%) 7,000
Total equivalent units (m) 35,000 35,000m 35,000m 28,000m
TOTAL (b)
CostsStrips Buckles
Conversion
Costs
Costs to be accounted for: Work in process, beginning $4,650 $3,000 $750 $900
Added during the month $137,550 61,800 13,650 62,100
Total costs (n) $142,200 $64,800n $14,400n $63,000n
Per equivalent unit cost [(n) ÷ (m)]
$4.51281 $1.8514 $0.4114 $2.25
1($1.8514 + $0.4114 + $2.25)
PROBLEM 4-49B (Continued)
TOTAL Cost accounted for as follows: Strips Buckles
Conversion
Costs
Completed and transferred out (21,000 × $4.5128) $94,769
Ending work in process $47,430 Strips (14,000 × $1.8514) $25,920 Buckles (14,000 × $0.4114) $5,760 Conversion (7,000 × $2.25) $15,750Total costs $142,199
(c) The weighted-average cost of a completed belt is $4.5128 each. This is less than the planning and control cost for a belt, which might indicate that no modifications in the production process are required. However, companies should practice continuous improvement, and still look for ways that could reduce their manufacturing costs, and increase their gross margin.
Management should also investigate the accuracy of their control cost of $4.85, as it may be out of date, and does not reflect actual experience.
*PROBLEM 4-50B
(a) (1) Per unit conversion cost for last period:
Number of units transferred 25,000 × Percentage completed 70% = Equivalent units 17,500 Cost assigned $22,000 Per unit conversion cost last period $1.257
(2) Per unit conversion cost for this period:Equivalent units this period:Complete beginning inventory (30%1 × 25,000) 7,500 Started and completed (100,000 – 25,000) 75,000 Started ending inventory (60% × 60,000*) 36,000 Total equivalent units for the current period 118,500 170% completed, 30% to be added
Per unit conversion cost this period: $143,000 ÷ 118,500 = $1.2067
*Calculation of units in ending inventory: 25,000 + 135,000 – 100,000
(b) Equivalent units, ending inventory(60,000* × 60%) 36,000
Conversion per unit cost $1.2067Total conversion cost in ending inventory $43,441
(c) Per unit cost of units in beginning inventory:70% completed last month at a rate of $1.257 $0.88 30% completed this month at a rate of $1.2067 $0.36
Weighted-average unit cost $1.24
*PROBLEM 4-51B
PETRO-PURE CORPORATIONProduction Cost ReportFor the current period
PhysicalUnits
Equivalent Units Quantities Materials
ConversionCosts
Units to be accounted forWork in process, beginning 18,000
Started this period 27,000Total units 45,000
Units accounted for Work in process, beginning 18,000 Materials (25%) 4,500 Conversion (30%) 5,400 Started and completed 15,000 15,000 15,000 Work In process, ending 12,000 Materials (60%) 7,200 Conversion (50%) 6,000
Total equivalent units (m) 45,000 26,700 26,400
Costs added this period $252,000 $440,000
Cost per equivalent unit [(s) ÷ (t)] $26.105 $9.438 $16.667
*PROBLEM 4-51B (Continued)
Costs TOTAL MaterialsConversion
Costs
Costs to be accounted for:Work in process, beginning $96,000 $32,000 $64,000
Added this period 692,000 252,000 440,000Total costs $788,000 $284,000 $504,000
Cost accounted for as follows:Work in process, beginning $96,000 $32,000 $64,000
Complete beginning WIP 132,471 Material (4,500 × $9.438) 42,471 Conversion (5,400 × $16.667) 90,000 Started and Completed (15,000 × $26.105) 391,575 141,575 250,000 Work in process, ending 167,954 Material (7,200 × $9.438) 67,954 Conversion (6,000 × $16.667) 100,000
Total costs $788,000 $284,000 $504,000
*PROBLEM 4-52B
(a)A. BICYCLES
QuantitiesPhysical
Units
Units to be accounted forWork in process, beginningStarted into production
Total units
300 1,200
1,500
Units accounted forWork in process,
beginningStarted and completedWork In process, ending
300 700 500
Total units 1,500
(1) Equivalent units—Materials
PhysicalUnits
MaterialsAdded
This PeriodEquivalent
Units
Work in process, begStarted and completedWork in process, end
300 700 500
0%100%100%
0 700 500
Total 1,500 1,200
Equivalent units—Conversion
PhysicalUnits
ConversionAdded
This PeriodEquivalent
Units
Work in process, begStarted and completedWork in process, end
300 700 500
30%100% 30%
90 700 150
Total 1,500 940
*PROBLEM 4-52B (Continued)
(2) Unit costs
Materials Conversion
Costs in the month (a)Equivalent units (b)
$48,000 1,200 $49,8201 940
Unit costs [(a) ÷ (b)] $40.00 $53.00
1Direct Labour $19,400 + Manufacturing Overhead $30,420
(3)Costs TOTAL Materials
ConversionCosts
Costs to be accounted for:Work in process, beginning $17,400
Added this period 97,820Total costs $115,220
Cost accounted for as follows:Work in process, beginning $17,400
Complete beginning WIP 4,770 Material (0 × $40.00) Conversion (90 × $53.00) $4,770 Started and Completed (700 × $93.00) 65,100 $28,000 37,100Total cost of units completed 87,270
Work in process, ending 27,950 Material (500 × $40.00) 20,000 Conversion (150 × $53.00) 7,950
Total costs $115,220
*PROBLEM 4-52B (Continued)
B. TRICYCLES
QuantitiesPhysical
Units
Units to be accounted forWork in process, beginningStarted into production
Total units
100 900
1,000
Units accounted forWork in process,
beginningStarted and completedWork In process, ending
100 700 200
Total units 1,000
(1) Equivalent units—Materials
PhysicalUnits
MaterialsAdded
This PeriodEquivalent
Units
Work in process, begStarted and completedWork in process, end
100 700 200
0%100%100%
0 700 200
Total 1,000 900
Equivalent units—Conversion
PhysicalUnits
ConversionAdded
This PeriodEquivalent
Units
Work in process, begStarted and completedWork in process, end
100 700 200
25%100% 40%
25 700 80
Total 1,000 805
*PROBLEM 4-52B (Continued)
(2) Unit costs
Materials Conversion
Costs in the month (a)Equivalent units (b)
$63,000 900 $76,4751 805
Unit costs [(a) ÷ (b)] $70.00 $95.00
1Direct Labour $31,060 + Manufacturing Overhead $45,415 (3)
Costs TOTAL MaterialsConversion
Costs
Costs to be accounted for:Work in process, beginning $ 8,000
Added this period 139,475Total costs $147,475
Cost accounted for as follows:Work in process, beginning $8,000
Complete beginning WIP 2,375 Material (0 × $70.00) Conversion (25 × $95.00) $2,375 Started and Completed (700 × $165.00) 115,500 $49,000 66,500Total cost of units completed 125,875
Work in process, ending 21,600 Material (200 × $70.00) 14,000 Conversion (80 × $95.00) 7,600
Total costs $147,475
*PROBLEM 4-52B (Continued)
(b) NATIONAL COMPANYProduction Cost Report—Bicycles
For the Month Ended May31
Equivalent Units
QuantitiesPhysical
Units MaterialsConversion
Costs
Units to be accounted forWork in process, beginningStarted into productionTotal units
Units accounted forCompleted and transferred out
Work in process, beginningStarted and completedWork In process, ending
Total units
3001,2001,500
300 700 5001,500
0 700 500 1,200
90 700 150 940
Costs Materials Conversion
Unit costs (Step 3)Costs in the month (a)Equivalent units (b)Unit costs [(a) ÷ (b)]
Costs to be accounted forWork in process, beginningStarted into productionTotal costs
Cost Reconciliation Schedule (Step 4)Costs accounted for
Transferred outWork in process, beginningConversion costs to complete beginning inventory (90 × $53.00)Started and completed (700 × $93.00)
Work in process, endingMaterials (500 × $40)Conversion costs (150 × $53.00)
$48,000 1,200
$40.00
$17,400
4,770 65,100
$20,000 7,950
$49,820 940 $53.00
$ 17,400 97,820*$115,220
$87,270
27,950$115,220
*($50,000 + $25,200 + $30,000)
PROBLEM 4-53B
(a)Physical
Units
Equivalent Units Quantities Materials
ConversionCosts
Units to be accounted forWork in process, beginning 0
Started this period 42,500Total units 42,500
Units accounted for Started and completed 40,000 40,000 40,000 Work In process, ending 2,500 Materials (100%) 2,500 Conversion (40%) 1,000Total equivalent units (m) 42,500 42,500 (b) 41,000
Costs added this period $510,000 $246,000Cost per equivalent unit [(s) ÷ (t)] $18.00 $12.00 (c) $6.00
(d)Costs TOTAL Materials
ConversionCosts
Costs to be accounted for:Work in process, beginning $ 0
Added this period $756,000 $510,000 $246,000Total costs $756,000 $510,000 $246,000Cost accounted for as follows: Started and Completed (40,000 × $18.00) $720,000 $480,000 $240,000 Work in process, ending 36,000 Material (2,500 × $12.00) 30,000 Conversion (1,000 × $6.00) 6,000Total costs $756,000 $510,000 $246,000
PROBLEM 4-53B (Continued) (e) BICNELL CORPORATION
Molding DepartmentProduction Cost Report
For the Month Ended January 31, 2012
Equivalent Units
QuantitiesPhysical
Units MaterialsConversion
Costs
(Step 1) (Step 2)Units to be accounted for
Work in process, January 1Started into production
Total units
Units accounted forTransferred out
042,50042,500
40,000 40,000 40,000Work in process, January 31 2,500 2,500 1,000 (2,500 × 40%)
Total units 35,000 35,000 41,000
Costs MaterialsConversion
Costs Total
Unit costs (Step 3)Costs in JanuaryEquivalent unitsUnit costs (a) ÷ (b)
Costs to be accounted forWork in process, January 1Started into production
Total costs
(a)(b)
$510,000 42,500 $12
$246,000 41,000 $6
$756,000
$18
$ 0 756,000$756,000
Cost Reconciliation Schedule (Step 4)
Costs accounted forTransferred out (40,000 × $18)Work in process, January 31
Materials (2,500 × $12)Conversion costs (1,000 × $6)
Total costs
$30,000 6,000
$720,000
36,000$756,000
*PROBLEM 4-54B
Department A
QuantitiesPhysical
Units
Units to be accounted forWork in process, beginningStarted into production
Total units
1,0002,6003,600
Units accounted forWork in process,
beginningStarted and completedWork In process, ending
1,000 2,000 600
Total units 3,600
(1) Equivalent units—Materials
PhysicalUnits
MaterialsAdded
This PeriodEquivalent
Units
Work in process, begStarted and completedWork in process, end
1,0002,000 600
0%100%100%
02,000 600
Total 3,600 2,600
Equivalent units—Conversion
PhysicalUnits
ConversionAdded
This PeriodEquivalent
Units
Work in process, begStarted and completedWork in process, end
1,0002,000 600
40%100% 30%
400 2,000
180Total 3,600 2,580
PROBLEM 4-54B (Continued)
Unit costsMaterials Conversion
Costs in the month (a)Equivalent units (b)
$64,000 2,600 $132,000 2,580
Unit costs [(a) ÷ (b)] $24.6154 $51.1628
Costs TOTAL MaterialsConversion
Costs
Costs to be accounted for:Work in process, beginning $ 54,000Added this period 196,000 Total costs $250,000
Cost accounted for as follows:Work in process, beginning $54,000Complete beginning WIP 20,465 Material (0 × $24.6154) –0– Conversion (400 × $51.1628) $20,465Started and Completed (2,000 × $75.7782) 151,557 $49,231 102,326Total cost of units completed 226,022
Work in process, ending 23,978 Material (600 × $24.6154) 14,769 Conversion (180 × $51.1628) 9,209
Total costs $250,000
(a) Work in Process—Department B................................. 226,022Work in Process—Department A........................
226,022
PROBLEM 4-54B (Continued)
Department B
QuantitiesPhysical
Units
Units to be accounted forWork in process, beginningTransferred into production
Total units
2003,0003,200
Units accounted forWork in process,
beginningTransferred in and completedWork In process, ending
200 2,700 300
Total units 3,200
(1) Equivalent units—Transferred in
PhysicalUnits
MaterialsAdded
This PeriodEquivalent
Units
Work in process, begTransferred in & completedWork in process, end
2002,700 300
0%100%100%
02,700 300
Total 3,200 3,200
Equivalent units—Conversion
PhysicalUnits
ConversionAdded
This PeriodEquivalent
Units
Work in process, begTransferred in & completedWork in process, end
2002,700 300
70%100% 40%
140 2,700
120Total 3,200 2,960
PROBLEM 4-54B (Continued)
Unit costsTransferred
-inConversion
Costs in the month (a)Equivalent units (b)
$226,0223,000
$600,000 2,960
Unit costs [(a) ÷ (b)] $75.3407 $202.7027
Costs TOTALTransferre
d-inConversion
Costs
Costs to be accounted for:Work in process, beginning $ 55,000Transferred-in costs 226,022 Added in the month 600,000 Total costs $881,022
Cost accounted for as follows:Work in process, beginning $55,000Complete beginning WIP 28,379 Conversion (140 × $202.7027) $28,379Transferred-in & completed 750,717 Trans-in (2,700 × $75.3407) 203,420 Conver. (2,700 × $202.7027) 547,297Total cost of units completed 834,096
Work in process, ending 46,926 Trans-in (300 × $75.3407) 22,602 Conversion (120 × $202.7027) 24,324
Total costs $881,022
PROBLEM 4-54B (Continued)
(b) METHA CORPORATIONDepartment B
Production Cost ReportFor the Month Ended September 30, 2012
Equivalent Units
QuantitiesPhysical
UnitsTransferr
ed inConversion
Costs
Units to be accounted forWork in process, beginning
Transferred in Total units
Units accounted forWork in process, beginning
Transferred in & completed
200
3,0003,200
2002.700
02,700
1402,700
Work in process, ending 300 300 120 (300 × 40%)Total units 3,200 3,000 2,960
Costs Total
Unit costsTotal costs for the monthEquivalent unitsUnit costs (a) ÷ (b)
Costs to be accounted forWork in process, beginning
Transferred inStarted into production
Total costs
(a)(b)
$226,022 3,000
$75.3407
$600,000 2,960
$202.7027
$826,022
$278.0434
$ 55,000 226,022 600,000$881,022
Cost Reconciliation Schedule
Costs accounted for:Transferred out: Work in process, beginning Complete beginning WIP (140 × $202.7027) Transferred in & completed (2,700 × $278.0434) Work in process, ending Transferred in (300 × $75.3407) Conversion costs (120 × $202.7027)
Total costs
$55,000 28,379750,717
$22,602 24,324
$834,096
46,926$881,022
PROBLEM 4-55B
1. Raw Materials Inventory.............................................. 25,000Accounts Payable................................................
25,000
2. Work in Process—Blending........................................ 18,930Work in Process—Packaging..................................... 9,140
Raw Materials Inventory......................................28,070
3. Factory Labour............................................................. 23,770Wages Payable.....................................................
23,770
4. Work in Process—Blending........................................ 13,320Work in Process—Packaging..................................... 10,450
Factory Labour.....................................................23,770
5. Manufacturing Overhead............................................ 41,500Accounts Payable................................................
41,500
6. Work in Process—Blending (900 × $25).................... 22,500Work in Process—Packaging (300 × $25).................. 7,500
Manufacturing Overhead.....................................30,000
7. Work in Process—Packaging..................................... 44,940Work in Process—Blending................................
44,940
8. Finished Goods Inventory.......................................... 67,490Work in Process—Packaging.............................
67,490
9. Accounts Receivable................................................... 90,000Sales......................................................................
90,000
Cost of Goods Sold..................................................... 62,000Finished Goods Inventory...................................
62,000
PROBLEM 4-56B
PhysicalUnits
Equivalent Units Quantities Materials
ConversionCosts
Units to be accounted forWork in process, beginning 25,000
Started this period 425,000Total units 450,000
Units accounted for Started and completed 415,000 415,000 415,000 Work In process, ending 35,000 Materials (100%) 35,000 Conversion (40%) 14,000(a)(1) Total equivalent units 450,000 450,000 429,000
Costs for this period (see below) $1,035,000 $214,500
(2) Cost per equivalent unit $2.80 $2.30 $0.50
Costs TOTAL MaterialsConversion
CostsCosts to be accounted for:
Work in process, beginning $45,500 $29,000 $16,500 Added this period 1,204,000 1,006,000 198,000Total costs for this period $1,249,500 $1,035,000 $214,500
PROBLEM 4-56B (Continued)
TOTAL Materials
ConversionCosts
(b) Cost accounted for as follows: Completed and transferred out (415,000 × $2.80) $1,162,000 $954,500 $207,500 Work in process, ending 87,500 Material (35,000 × $2.30) 80,500 Conversion (14,000 × $0.50) 7,000Total costs $1,249,500 $1,035,000 $214,500
(c) CROSBY COMPANYAssembly Department
Production Cost ReportFor the Month Ended October 31, 2012
Equivalent Units
QuantitiesPhysical
Units MaterialsConversion
Costs
(Step 1) (Step 2)Units to be accounted for
Work in process, October 1Started into production
Total units
Units accounted forTransferred out
25,000425,000450,000
415,000 415,000 415,000Work in process, October 31 35,000 35,000 14,000 (40,000 × 40%)
Total units 450,000 450,000 429,000
PROBLEM 4-56B (Continued)
CostsMaterials
ConversionCosts Total
Unit costs (Step 3)Costs in OctoberEquivalent unitsUnit costs (a) ÷ (b)
Costs to be accounted forWork in process, October 1Started into production
Total costs
(a)(b)
$1,035,000 450,000 $2.30
$214,500 429,000 $0.50
$1,249,500
$2.80
$ 45,500 1,204,000$1,249,500
Cost Reconciliation Schedule (Step 4)
Costs accounted forTransferred out (415,000 × $2.80)Work in process, October 31
Materials (35,000 × $2.30)Conversion costs (14,000 × $.50)
Total costs
$80,500 7,000
$1,162,000
87,500$1,249,500
PROBLEM 4-57B
(a)Physical
Units
Equivalent Units Quantities Materials
ConversionCosts
Units to be accounted forWork in process, beginning 500
Started this period 1,500Total units 2,000
Units accounted for Started and completed 1,200 1,200 1,200 Work In process, ending 800 Materials (100%) 800 Conversion (25%) 200
(1) Total equivalent units 2,000 2,000 1,400
Costs for this period (see below) $65,000 $70,000
(2) Cost per equivalent unit $82.50 $32.50 $50.00
Costs TOTAL MaterialsConversion
CostsCosts to be accounted for:
Work in process, beginning $33,000 $15,000 $18,000 Added this period 102,000 50,000 52,000Total costs $135,000 $65,000 $70,000
PROBLEM 4-57B (Continued)
(3) Cost accounted for as follows: Started and Completed (1,200 × $82.50) $99,000 $39,000 $60,000 Work in process, ending 36,000 Material (800 × $32.50) 26,000 Conversion (200 × $50.00) 10,000Total costs $135,000 $65,000 $70,000
(b) SARKU COMPANYBicycle Department
Production Cost ReportFor the Month Ended May 31, 2012
Equivalent Units
QuantitiesPhysical
Units MaterialsConversion
Costs
(Step 1) (Step 2)Units to be accounted for
Work in process, May 1Started into production
Total units
Units accounted forTransferred out
5001,5002,000
1,200 1,200 1,200Work in process, May 31 800 800 200
Total units 2.000 2,000 1,400
PROBLEM 4-57B (Continued)
Costs MaterialsConversion
Costs Total
Unit costs (Step 3)Costs in MayEquivalent unitsUnit costs (a) ÷ (b)
Costs to be accounted forWork in process, May 1Started into production
Total costs
(a)(b)
$65,000 2,000 $32.50
$70,000 1,400 $50.00
$135,000
$82.50
$ 33,000 102,000
$135,000
Cost Reconciliation Schedule (Step 4)
Costs accounted forTransferred out (1,200 × $82.50)Work in process, May 31
Materials (800 × $32.50)Conversion costs (200 × $50)
Total costs
$26,000 10,000
$ 99,000
36,000$135,000
PROBLEM 4-58B
(a)Physical
Units
Equivalent Units Quantities Materials
ConversionCosts
Units to be accounted forWork in process, beginning 10,000
Started this period 100,000Total units 110,000
Units accounted for Started and completed 95,000 95,000 95,000 Work In process, ending 15,000 Materials (2/3) 10,000 Conversion (1/3) 5,000
Total equivalent units 110,000 105,000 100,000
Costs for this period (see below) $156,000 $98,000
Cost per equivalent unit $2.4657 $1.4857 $0.9800
(b) CostsCosts to be accounted for:Total costs $254,000 $156,000 $98,000
Cost accounted for as follows: Transferred out (95,000 × $2.4657) $234,242 $141,142 $93,100 Work in process, ending 19,757 Material (10,000 × $1.4857) 14,857 Conversion (5,000 × $0.98) 4,900Total costs $253,999 $155,999 $98,000
*PROBLEM 4-59B
(a)A. HOCKEY PUCKS
QuantitiesPhysical
Units
Units to be accounted forWork in process, beginningStarted into production
Total units
500 1,600
2,100
Units accounted forWork in process,
beginningStarted and completedWork In process, ending
500 1,000 600
Total units 2,100
(1) Equivalent units—Materials
PhysicalUnits
MaterialsAdded
This PeriodEquivalent
Units
Work in process, Aug 1Started and completedWork in process, Aug 31
500 1,000 600
0%100%100%
0 1,000 600
Total 2,100 1,600
Equivalent units—Conversion
PhysicalUnits
ConversionAdded
This PeriodEquivalent
Units
Work in process, Aug 1Started and completedWork in process, Aug 31
500 1,000 600
40%100% 50%
200 1,000 300
Total 2,100 1,500
*PROBLEM 4-59B (Continued)
(2) Unit costs
Materials Conversion
Costs in August (a)Equivalent units (b)
$1,600 1,600 $2,175 1,500
Unit costs [(a) ÷ (b)] $1.00 $1.45
(3) Costs TOTAL MaterialsConversion
Costs
Costs to be accounted for:Work in process, beginning $1,125
Added this period 3,775 $1,600 $2,175Total costs $4,900
Cost accounted for as follows:Work in process, beginning $1,125
Complete beginning WIP 290 Material (0 × $1.00) --- Conversion (200 × $1.45) 290 Started and Completed (1,000 × $2.45) 2,450 1,000 1,450Total cost of units completed 3,865
Work in process, ending 1,035 Material (600 × $1.00) 600 Conversion (300 × $1.45) 435
Total costs $4,900
*PROBLEM 4-59B (Continued)
B. SOCCER BALLS
QuantitiesPhysical
Units
Units to be accounted forWork in process, beginningStarted into production
Total units
200 2,000
2,200
Units accounted forWork in process,
beginningStarted and completedWork In process, ending
200 1,850 150
Total units 2,200
(1) Equivalent units—Materials
PhysicalUnits
MaterialsAdded
This PeriodEquivalent
Units
Work in process, Aug 1Started and completedWork in process, Aug 31
200 1,850 150
0%100%100%
0 1,850 150
Total 2,200 2,000
Equivalent units—Conversion
PhysicalUnits
ConversionAdded
This PeriodEquivalent
Units
Work in process, Aug 1Started and completedWork in process, Aug 31
200 1,850 150
20%100% 70%
40 1,850 105
Total 2,200 1,995
*PROBLEM 4-59B (Continued)
(2) Unit costs
Materials Conversion
Costs in August (a)Equivalent units (b)
$2,600 2,000 $1,995 1,995
Unit costs [(a) ÷ (b)] $1.30 $1.00
(3) Costs TOTAL MaterialsConversion
Costs
Costs to be accounted for:Work in process, beginning $450
Added this period 4,595 $2,600 $1,995Total costs $5,045
Cost accounted for as follows:Work in process, beginning $450
Complete beginning WIP 40 Material (0 × $1.30) –0– Conversion (40 × $1.00) 40 Started and Completed (1,850 × $2.30) 4,255 2,405 1,850Total cost of units completed 4,745
Work in process, ending 300 Material (150 × $1.30) 195 Conversion (105 × $1.00) 105
Total costs $5,045
*PROBLEM 4-59B (Continued)(b) MALONEY COMPANY
Production Cost Report—Hockey pucksFor the Month Ended August 31
Equivalent Units
QuantitiesPhysical
Units MaterialsConversion
Costs
(Step 1) (Step 2)Units to be accounted for
Work in process, August 1Started into productionTotal units
Units accounted forCompleted and transferred out
Work in process, August 1Started and completedWork in process, August 31
Total units
5001,6002,100
5001,000 6002,100
0 1,000 600 1,600
200 1,000 300 1,500
Costs MaterialsConversion
Costs
Unit costs (Step 3)Costs in August (a)Equivalent units (b)Unit costs [(a) ÷ (b)]
Costs to be accounted forWork in process, August 1Started into productionTotal costs
Cost Reconciliation ScheduleCosts accounted for
Transferred outWork in process, August 1Conversion costs to complete beginning inventory (200 × $1.45)Started and completed
(1,000 × $2.45)Work in process, August 31
Materials (600 × $1)Conversion costs (300 × $1.45)
$1,600 1,600 $1.00
$1,125
290 2,450
$ 600 435
$2,175 1,500 $1.45
$1,125 3,775*$4,900
$3,865
1,035$4,900
*($1,600 + $1,175 + $1,000)
Top Related