Chapter 4 Solutions Comm 305

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%


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%)


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



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



Costs incurred during November include

Materials $550,000



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


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.


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.


*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.


*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.


*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


$ 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%


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


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)


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


Units transferred outWork in process 3,000 × 100% 3,000 × 10%

11,500

3,000 14,500

11,500

30011,800

(b)


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 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


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


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


(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


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:


UnitsMaterials Added


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:


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


Costs


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


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.


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


Ending work in process Ending work in process



% complete for transferred-in

100%


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.


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%


Work in process units, July 31

600 30%

Cost Data—Basketballs

Work in process, July 1

Materials $ 750

Conversion costs 600 $1,350


Direct labour 1,580


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


Costs


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 $ ? $ ? $ ?


Work in process, October 1 $ 30,000


Total costs $345,000


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.


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%



Cost Data—Hockey pucks

Work in process, August 1 $1,125


Direct labour 1,160


Production Data—Soccer balls




Cost Data—Soccer balls

Work in process, August 1 $ 450


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%


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


Costs


Work in process, June 1Started into production


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 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


Costs accounted forTransferred out (26,000 × $17.1662)Work in process, June 30


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


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


(b) SWEET CORPORATIONDepartment B

Production Cost ReportFor the Month Ended October 31, 2012

Equivalent Units

QuantitiesPhysical

UnitsTransferr

ed inConversion

Costs


Work in process, beginningTransferred in


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


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


(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


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


Total costs

$55,000 8,500

$2,165,500

63,500$2,229,000


(c) CAVALIER COMPANYAssembly Department

Production Cost ReportFor the Month Ended November 30, 2012

Equivalent Units

QuantitiesPhysical


Costs


Work in process, November 1Started into production


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 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


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


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


(b) CHEN COMPANYBasketball DepartmentProduction Cost Report

For the Month Ended July 31, 2012

Equivalent Units

QuantitiesPhysical


Costs


Work in process, July 1Started into production


Transferred out

5001,0001,500

900 900 900Work in process, July 31 600 600 180

Total units 1,500 1,500 1,080


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


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


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


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


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)


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


beginningStarted and completedWork In process, ending

5001,000 600

Total units 2,100

(1) Equivalent units—Materials Physical

Units

MaterialsAdded


Units


5001,000 600

0%1

100%100%

01,000 600

Total 2,100 1,600

Equivalent units—Conversion Physical

Units

ConversionAdded


Units


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


B. SOCCER BALLS

Quantities

Physical Units


Total units

200 2,000

2,200



2001,850 150

Total units 2,200

(1) Equivalent units—Materials Physical

Units

MaterialsAdded


Units


2001,850 150

0%4

100%100%

01,850 150

Total 2,200 2,000

Equivalent units—Conversion Physical

Units

ConversionAdded


Units


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


(2) Unit costs

Materials Conversion


$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


(b) JESSICA COMPANYProduction Cost Report—Hockey pucks

For the Month Ended August 31 Equivalent Units

QuantitiesPhysical


Costs

Units to be accounted forWork in process, August 1Started into productionTotal units


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


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.



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.


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:


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


Current period:

Materials 252,000



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.)


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%



Cost Data—Bicycles

Work in process, May 1 $17,400




Production Data—Tricycles Units Percent Complete


Units started into production 900


Cost Data—Tricycles

Work in process, May 1 $ 8,000




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.


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


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.


*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.


Beginning work in

processBeginning work in

process




100%


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




100%


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.


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




Cost Data—Bicycles

Work in process, May 1

Materials $15,000

Conversion costs 18,000 $33,000




Instructions(a) Calculate the following:



(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


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 $ ? $ ? $ ?


Work in process, March 1 $ 8,700




Costs accounted for

Transferred out $ ?


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




Cost Data—Hockey pucks

Work in process, August 1 $1,125


Direct labour 1,175


Production Data—Soccer balls Units Percent Complete




Cost Data—Soccer balls

Work in process, August 1 $ 450


Direct labour 1,000

Manufacturing overhead 995

Instructions

(a) Calculate the following for both the hockey pucks and the soccer balls:



(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 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 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 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


Total units

300 1,200

1,500



300 700 500

Total units 1,500

(1) Equivalent units—Materials

PhysicalUnits

MaterialsAdded


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


Units


300 700 500

30%100% 30%

90 700 150

Total 1,500 940


(2) Unit costs


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



B. TRICYCLES

QuantitiesPhysical

Units


Total units

100 900

1,000



100 700 200

Total units 1,000


PhysicalUnits

MaterialsAdded


Units


100 700 200

0%100%100%

0 700 200

Total 1,000 900


PhysicalUnits

ConversionAdded


Units


100 700 200

25%100% 40%

25 700 80

Total 1,000 805


(2) Unit costs



$63,000 900 $76,4751 805

Unit costs [(a) ÷ (b)] $70.00 $95.00

1Direct Labour $31,060 + Manufacturing Overhead $45,415 (3)


Costs

Costs to be accounted for:Work in process, beginning $ 8,000

Added this period 139,475Total costs $147,475


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




(b) NATIONAL COMPANYProduction Cost Report—Bicycles

For the Month Ended May31

Equivalent Units

QuantitiesPhysical


Costs

Units to be accounted forWork in process, beginningStarted into productionTotal units


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


ConversionCosts

Units to be accounted forWork in process, beginning 0


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


Costs


Work in process, January 1Started into production

Total units


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 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


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


Total units

1,0002,6003,600



1,000 2,000 600

Total units 3,600


PhysicalUnits

MaterialsAdded


Units


1,0002,000 600

0%100%100%

02,000 600

Total 3,600 2,600


PhysicalUnits

ConversionAdded


Units


1,0002,000 600

40%100% 30%

400 2,000

180Total 3,600 2,580


Unit costsMaterials Conversion


$64,000 2,600 $132,000 2,580

Unit costs [(a) ÷ (b)] $24.6154 $51.1628


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



(a) Work in Process—Department B................................. 226,022Work in Process—Department A........................

226,022


Department B

QuantitiesPhysical

Units

Units to be accounted forWork in process, beginningTransferred into production

Total units

2003,0003,200


beginningTransferred in and completedWork In process, ending

200 2,700 300

Total units 3,200

(1) Equivalent units—Transferred in

PhysicalUnits

MaterialsAdded


Units

Work in process, begTransferred in & completedWork in process, end

2002,700 300

0%100%100%

02,700 300

Total 3,200 3,200


PhysicalUnits

ConversionAdded


Units

Work in process, begTransferred in & completedWork in process, end

2002,700 300

70%100% 40%

140 2,700

120Total 3,200 2,960


Unit costsTransferred

-inConversion


$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



(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


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


ConversionCosts



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


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


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


Costs


Work in process, October 1Started into production

Total units


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


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


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


ConversionCosts

Units to be accounted forWork in process, beginning 500


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


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


(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


Costs


Work in process, May 1Started into production

Total units


5001,5002,000

1,200 1,200 1,200Work in process, May 31 800 800 200

Total units 2.000 2,000 1,400



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


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


ConversionCosts



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


Total units

500 1,600

2,100



500 1,000 600

Total units 2,100


PhysicalUnits

MaterialsAdded


Units


500 1,000 600

0%100%100%

0 1,000 600

Total 2,100 1,600


PhysicalUnits

ConversionAdded


Units


500 1,000 600

40%100% 50%

200 1,000 300

Total 2,100 1,500


(2) Unit costs



$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


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


B. SOCCER BALLS

QuantitiesPhysical

Units


Total units

200 2,000

2,200



200 1,850 150

Total units 2,200


PhysicalUnits

MaterialsAdded


Units


200 1,850 150

0%100%100%

0 1,850 150

Total 2,200 2,000


PhysicalUnits

ConversionAdded


Units


200 1,850 150

20%100% 70%

40 1,850 105

Total 2,200 1,995


(2) Unit costs



$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


Costs


Work in process, August 1Started into productionTotal units


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

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)

Documents

Chapter 4 Solutions Comm 305