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$27,936
6,400
15,032
During this first month of operations, 4,000 units were started into production. During
November, 3,400 units were completed. The remaining units are 80% completed with
respect to materials and 60% complete with respect to conversion costs.
How much is the total cost of the units completed under the weighted average method
of process costing in the Mashing Department?
$43,860
First track the physical flow, then collect the costs to allocate separately for materials
($27,396) and for conversion costs ($6,400 + $15,032). Calculate the rate per
equivalent unit and then allocate the costs to units completed during the month. Note
that the entire production report is presented though not required.
Total
Equivalent units
Beginning inventory
Started during November
Units to account for
0
4,000
4,000
3,400 100%
600 80%
4,000
Materials
3,400 100%
480 60%
3,880
Conversion
Costs
3,400
360
3,760
Costs to be allocated
Beginning inventory
Costs incurred
Costs to account for
$0
$27,936
$27,936
$0
$21,432
$21,432
$27,936
3,880
$7.20
$21,432
3,760
$5.70
$24,480
$19,380
$7.20*3,400
$5.70*3,400
$3,456
$2,052
$7.20*480
$5.70*360
a.
Beginning work in process
Units started
Units to account for
Units completed
Ending work in process
Units accounted for
Physical Flow
7,500
50,000
57,500
55,500
2,000
57,500
100%
100%
Materials
55,500
2,000
A 57,500
100%
60%
Conversion
55,500
1,200
A 56,700
b. Costs
Beginning work in process
Cost incurred during period
Costs to account for
Materials
$20,200
79,800
$100,000
Conversion
$25,000
151,800
$176,800
$100,000
57,500
B $1.7391
$176,800
56,700
B $3.1182
$96,520
$173.060
55,500*$1.7391
55,500*$3.1182
Total
$276,800
C
$269,580
$3,478
2,000*$1.7391
3,742
1,200*$3.1182
$276,800
Problem 3 - Foretold Corporation has three departments in which it produces widgets-cutting, molding, and packaging. On November 1, Foretold Corporations packaging
department had Work in Process inventory of 6,000 units that were 75% complete with
respect to materials and 30% complete with respect to conversion costs. The cost of
these units was $93,525 ($60,000 transferred in from previous departments, $26,775 in
materials, and $6,750 in labor and overhead). During November, 125,000 units were
transferred into packaging from molding. These units had accumulated costs in previous
departments of $1,218,560. The packaging department incurred costs of $756,225 for
materials and $488,010 for conversion costs in November, and transferred 130,000
units out of the department during the period. The units remaining in ending inventory
are 20% complete with respect to conversion costs. One-half of the materials have been
added during November. Foretold uses the weighted average method of process
costing.
a. How much is the cost per equivalent unit for transferred-in costs, material, and
conversion costs in the packaging department in November?
b. How much is the cost of the units transferred out of the packaging department in
November?
c. How much is reported on the balance sheet for WIP at November 30 for the
packaging department?
Transferred in
DM
Beginning WIP
Units started
6,000
125,000
131,000
130,000
100%
130,000
100%
1,000
100%
1,000
50%
Ending WIP
Units accounted for
Costs to be accounted
for
Beginning WIP
Added during period
7,220
131,000
130,00
0
50
0
131,000
130,500
60,000
$ 26,775
756,22
5
1,218,560
CC
100%
130,000
20%
200
130,200
6,750
488,010
$1,278,560
$783,000
$1,278,560
$783,000
130,50
0
$494,760
$2,556,320
131,000
9.76
6.00
$494,76
0
130,200
$
3.80
130,000
$9.76
130,000
$6.00
130,000
$3.80
$ 1,268,800
$780,000
$494,000
1,000
$ 9.76
500
$ 6.00
200
$ 3.80
$9,760
$ 3,000
B $2,542,80
0
760
13,520
C
$2,556,320
d. List the amounts that would be posted on the debit side of the WIP t-account for the
packaging department during November.
$1,218,560 + $756,225 + $488,010
Problem 4 Jones, Inc. uses a weighted average process costing system. The company
has three departments--washing, mixing, and chopping. During May, 4,200 units were
transferred into the mixing department from the washing department at a cost of
$31,790. Direct materials are added when the process is 40% complete. Additional
information follows for the mixing department:
On May 1:
Physical
Flow
Units in beg.work in
process
Units started
Units to account for
1,000
4,200
5,200
Units completed
4,250
950
5,200
100
%
100
%
Transf. in
4,250
Materials
100
%
950 0%
5,200
Conversion
4,250 100%
4,250
0
4,250
238
4,488
25%
*Transferred in units are treated as a separate DM as if the materials are added at the
beginning of the process.
B. In good form, calculate costs to account for and compute costs per equivalent unit
for the mixing department for May.
Costs
Beginning work in process
Cost incurred during period
Costs to account for
Cost per unit
Total costs
Total EUP
Cost per equivalent unit
Transf. in
Materials
Conversion
Total
$11,370
31,790
$ 43,160
$ 4,800
22,825
$27,625
$ 4,780
31,500
$36,280
$107,065
$43,160
5,200
$8.30
$27,625
4,250
$6.50
$36,280
4,488
$8.0838
$22.8838
Units
Conver
sion
15,0
Beginning WIP
00
Units started
Units to be
accounted for
00
75,0
90,0
00
15,0
Beginning WIP
Started and
completed
00
0%
65,0
00
10,0
Ending WIP
00
Units accounted
90,0
for
00
Costs to account
for
Beginning
WIP
Added during
period
Costs to account
for
70
% 00
100
% 00
65,0 100
100
% 00
10,0 80
EUP
Cost per
EUP
65,0
% 00
8,0
% 00
75,0
00
$ 24,00
0
168,0
00
$192,0
00
Costs
added
10,5
$168,0
00
75,0
00
$ 2.240
0
83,5
00
$ 35,0
$
00 59,000
278,0
00
$313,0 $505,00
00
0
$278,
000
83,5
00
$
3.32934
Costs transferred
out:
Beginning inventory
EUP
Cost per
unit
65,0
00
$2.240
00
$59,000
75,5
00
$3.329
34
DM
CC
$145,6
00
$251,3
65
10,0
00
$2.240
00
$ 22,4
00
8,0
00
$3.329
34
$ 26,6
35
396,
965
455,
965
Costs transferred
out
Cost in ending
WIP
EUP
Cost per
unit
Costs accounted
for
49,
035
$505,00
0
What were the equivalent units for conversion costs during February?
(15,000 0.7) + 65,000 + (10,000 0.8) = 83,500
process was 50% complete as to conversion costs for the assembly department. Costs
for the assembly department for the month of October follow:
Beginning inventory:
Direct materials costs
$39,200
Conversion costs
$30,800
Manufacturing costs added during October:
Direct materials costs
$90,000
Conversion costs
$280,000
Calculate the following for the month of October for the assembly department:
A. How many of the units that were started during October were completed during
October?
60,000 - 22,000 = 38,000
B. What were the equivalent units for conversion costs during October?
70,000
C. What is the cost of the goods transferred out during October? $363,000
A partial production cost report is prepared to show the calculations of the solutions:
DM
Beginning WIP
Units started
Units to be accounted for
28,000
60,000
88,000
Beginning WIP
Started and completed
Ending WIP
Units accounted for
28,000
38,000
22,000
88,000
0%
100%
100%
Costs added
EUP
Cost per unit
Beg inventory
38,000
22,000
60,000
CC
75%
100%
50%
21,000
38,000
11,000
70,000
$ 39,200
90,000
$129,200
$ 30,800
280,000
$310,800
$90,000
60,000
$1.50
$280,000
70,000
$4.00
$70,000
$440,000
70,000
Layer:
$1.50*38000 =
57,000
$4.00*(21,000+38000)
+
236,000
293,000
$ 363,000
Problem 7 Pet Products Company uses an automated process to manufacture its pet
products. For June, the company had the following activities in department 2:
Beginning work in process inventory
Units transferred in from dept. 1
Units completed
Ending work in process inventory
17,500 units
2,000 items, 3/4 complete
$5,250
$16,500
$23,945
Direct materials are placed into production at the beginning of the process and
conversion costs are incurred evenly throughout the process. Prepare the physical and
equivalent units section of the production cost report using the FIFO method for
Department 2 for June.
Transferred in
Beginning WIP
Units started
Units to account for
4,500
15,000
19,500
Beginning WIP
Started and completed
Ending WIP
Units accounted for
4,500 0%
13,000
13,000
100%
2,000
2,000
100%
19,500
15,000
Materials
0%
100%
100%
13,000
2,000
15,000
Conversion Cos
75%
100%
75%
Under FIFO, the ending WIP units have begun, so 100% of the effort is assumed to be
performed during June. The beginning units were started during a previous month, so
no additional materials have been added during June. The EUP are 0% for DM because
100% of the materials are assumed to be added for the units in the previous period
(May)--the period during which they were started.
Problem 8 Taco Ranch uses a process cost system. Production begins in the Crafting
Department where materials are added at the beginning of the process and conversion
3,375
13,000
1,500
17,875
costs are incurred uniformly throughout the process. On November 1, the beginning
work in process inventory consisted of 5,000 units which were 60% complete and had a
cost of $190,000, $100,000 of which were materials costs. During November, the
following occurred in the crafting department:
Materials added in November
Conversion costs incurred in November
Units completed and transferred out in November
Units in ending work in process November 30 (20% complete)
$225,000
$45,000
20,000
12,500
A. Prepare a production cost report using weighted average cost flow for the crafting
department for November. Answer the following questions.
1. What are the equivalent units of production for materials and conversion costs in
the crafting department for the month of November?
2. What are the costs assigned to the ending work in process inventory on
November 30?
3. What are the costs assigned to units completed and transferred out during
November?
Direct materials
Weighted Average
Beginning WIP
Started
Units to account for
5,000
27,500
32,500
Comp. & TO
Ending WIP
Units accounted for
20,000
12,500
32,500
100%
100%
20,000
12,500
32,500
Conversion Costs
100%
20%
20,000
2,500
22,500
$100,000
225,000
$325,000
$90,000
45,000
$135,000
$325,000
32,500
$10.00
$135,000
22,500
$6.00
A1
A1
20,000*$10
20000*$6
$200,000
Ending work in process:
12500*$10
$120,000
2500*$6
$125,000
$15,000
B. Prepare a production cost report using a FIFO cost flow for the crafting department
for November.
FIFO
Beginning inventory
Started
Units to account for
Beginning WIP
Comp. & TO
Ending WIP
Units accounted for
Direct materials
5,000
15,000
12,500
32,500
15,000
12,500
27,500
0%
100%
100%
2,000
15,000
2,500
19,500
40%
100%
20%
$ 100,000
225,000
$325,000
$90,000
45,000
$135,000
$225,000
27,500
$8.181818
$ 45,000
19,500
$2.307692
Conversion Costs
5,000
27,500
32,500
15,000*$8.1818181
17000*$2.307892
$122,727
$39,231
12500*$8.1818181
2500*$2.307892
$102,273
Costs accounted for
*rounding
$5,769
C. Draw a Work in Process t-account for the Crafting Department and post the
respective amounts to it during November under the FIFO method.
WIP - Crafting
190,000
225,000
45,000
351,958
108,042
Problem 9. North Face makes 3 flavors of coffee-Macadamia nut, French vanilla, and
Columbian. All flavors go through the same assembly line but they differ as to the
materials used. All models utilize all processes. North Face uses operation costing and
allocates conversion costs using one cost pool based on the number of pounds
processed. The following information is provided:
Macadamia Nut
Materials
Pounds processed
$16,200
3,600
French
Vanilla
$10,500
2,800
Columbian
$17,920
5,600
Total
$44,620
12,000
$13,000
Overhead costs:
Cleaning
Roasting
Flavoring
Packaging
Total
11,000
14,000
13,400
12,800
$51,200
How much is the cost per unit of each pound of French Vanilla coffee?
The conversion costs MUST be allocated in one pool since this company is using
operation costing.
Direct materials
Conversion costs
$10,500/2,800 pds.
$3.75
5.35
$9.10
Problem 10. Surf Products manufactures two styles of board shorts. The standard style
is made of microfiber. The quick dry style is made of polyester/spandex. All other
components of both brands are identical. During July, a total of 3,600 standard style
shorts were manufactured with a materials cost of $7,920, and 1,600 pairs of quick dry
were manufactured with a materials cost of $11,520. Conversion costs are allocated
based on the number of pairs of board shorts produced. During July, $7,800 of factory
overhead and $8,320 of direct labor were incurred in manufacturing the board shorts.
Show the calculation of the cost of each pair of quick dry board shorts during the month
of July using operation costing.
Conversion cost rate = ($7,800 + $8,320) / (3,600 + 1,600) = $3.10 per pair
Unit cost = ($11,520/1,600) + $3.10 = $10.30 each
Note: Conversion costs must be in ONE cost pool for allocation purposes.
Problem 11. Chief Deli creates deli platters for catering services. The deli platter orders
require the same assembly operations but different ingredients. The company uses
operation costing and assigns conversion costs based on the pounds of meat used. The
following information was available for May orders:
Order
Order 328
Total
324
Pounds of deli meats
1,120
480
1,600
Cost per pound of deli meat
$4.80
$5.50
Direct labor hours
162
Labor cost per hour
$15.00
Total production overhead costs
$1,650
Show the calculation of the unit product cost of Order 328.
With operations costing, conversion costs are allocated to products and direct materials
are traced.
$2,430
1,650
$4,080
1,600
$2.55 per pound of deli meat
Order 328:
DM 480*$5.50
DL & Overhead: $2.55*480
Total cost of order 328
Note: Conversion costs must be in ONE cost pool for allocation purposes.
Multiple Choice
$2,640
1,224
$3,864
Examples of industries that would use process costing include the pet food
industry.
True.
3.
The principal difference between process costing and job costing is that in job
costing an averaging process is used to compute the unit costs of products or
services.
False.
4.
5.
In the weighted average costing method, the costs of direct materials in beginning
inventory are not included in the cost per unit calculation if direct materials are
added at the start of the production process.
False.