Answers to Cost Accounting Chapter 10

CHAPTER 10 - AVERAGE AND FIFO COSTING TRUE OR FALSE 1. TRUE 2. TRUE 3. TRUE 4. FALSE 5. TRUE 6. TRUE 7. FALSE 8. TRUE 9. TRUE 10. TRUE

MULTIPLE CHOICE - THEORY 1. B 11. C 2. A 12. C 3. A 13. C 4. B 14. C 5. A 15. D 6. C 7. A 8. A 9. D 10. A

Problem 1 1) FIFO Units in process, beg. Units started

6,000 42,000 48,000 Units completed & transferred (40,000) IP beg. 6,000 Started & completed 34,000 Units in process, end 8,000 48,000 2) AVERAGE Units in process, beg. 6,000 Units started 42,000 48,000 Units completed Units IP end

40,000 8,000 48,000

80% 4,800 70% 4,200 100% 34,000 100% 34,000 10% 800 15% 1,200 39,600 39,400

100% 40,000 10% 800 40,800

100% 15%

40,000 1,200 41,200

Problem 2

1) FIFO Units in process, beg. Units started

5,000 35,000 40,000 Units completed & transferred (30,000) IP beg. 6,000 Started & completed 24,000 Units in process, end 10,000 40,000

85% 5,100 75% 4,500 100% 24,000 100% 24,000 20% 2,000 30% 3,000 31,100 31,500

PAGE 2 2) AVERAGE Units in process, beg. Units started

5,000 35,000 40,000

Units completed Units IP end

30,000 10,000 48,000

Problem 3 1) Units in process beg. Units started

100% 30,000 20% 2,000 32,000

100% 30%

300 2,000 2.300

Units comp. & transf. (1,700) IP beg. Started & completed Units in process, end

300 1,400 600 2,300

40% 100% 40%

120 1,400 240 1,760

70% 100% 20%

2) Unit cost -

540 Materials 3,714/1760 Conversion 2,258/1730 6,512

= =

2.110227 1.305202 3.415429

3) Cost of units transferred out From IP beg. Cost last month Cost added Mat. ( 120 x 2.110227) Conversion ( 210 x 1.305202) From units started & completed (1,400 x 3.415429)

540 253 274

4) Cost of ending inventory Materials (240 x 2.110227) Conversion ( 120 x 1.305202)

Problem 4 1) FIFO Units in process, beg Units started Units Completed ( 17,000) IP beg. Started & completed Units in process, end

30,000 3,000 33,000

1,067 4,782 5,849 507 156 663

8,000 14,000 22,000 8,000 9,000 5,000 22,000

70% 5,600 100% 9,000 80% 4,000 18,600

70% 100% 40%

5,600 9,000 2,000 16,600

210 1,400 120 1,730

Page 3 Unit cost

48,240 126,852/18,000 219,120/16,600 394,212

Materials Conversion

Completed & transf. IP beg. Cost labor month Cost added (5,600 x 20.02) Started & completed ( 9,000 x 20.02)

= 6.82 = 13.20 20.02

48,240 112,112

160,352 180,180

340,532

IP end Materials ( 4,000 x 6.82) Conversion ( 2,000 x 13.20) 2) AVERAGE Units completed Units IP end

Unit cost

27,280 26,400

17,000 5,000 22,000

53,680 394,212

100% 17,000 100% 17,000 80% 4,000 40% 2,000 21,000 19,000

Materials 16,440 + 126,852 = 6.823428 21,000 Conversion = 31800 + 219,120 = 13.206316 19,000 20.029744

Completed & transferred ( 17,000 x 20.029744) IP end Materials ( 4,000 x 6.823428) Conversion (2000 x 13.206316)

340,506 27,294 26,412

53,706 394,212

Problem 5 – Auto Novelties, Inc. a. Average 1) Units in process beg. 15,000 Units started 250,000 265,000 Units completed & transf. Units in process end

2) Unit cost

245,000 20,000 265,000

Materials

Converion

100% 100%

245,000 20,000 265,000

210,000 + 3,500,000 265,000

100% 245,000 40% 8,000 253,000

= 14.00

60,000 + 1,458,000 = 6.00 253,000 20,00

Page 4 3) 4)

Completed & transf. (245000 x 20) IP ined Materials ( ( 20,000 x 14) Conversion ( 8000 x 6)

b) FIFO 1) Units completed ( 245,000) IP beg Started & completed Units IP beg.

2)Unit cost:

15,000 230,000 20,000 265,000

Materials 3,500,000/250,000 Conversion 1,458000/243,000

4,900,000 280,000 48,000

328,000 5,228,000

1/3 5,000 100% 230,000 100% 230,000 100% 20,000 40% 8,000 250,000 243,000 = =

14.00 6.00 20.00

3) Completed& transferred From IP beg. Cost last month 270,000 Cost added ( 5,000 x 6) 30,000 From started & completed ( 230,000 x 20)

300,000 4,600,000 4,900,000

4) IP end Materials ( 20,000 x 14) Conversion (8,000 x 6)

Problem 6 - Ellery Company A) AVERAGE 1) Units IP beg. Units started

15,500 36,000 51,500 48,000 3,500 51,500

Units completed Units IP ed

2)

Unit cost

280,000 48,000

100% 100%

48,000 3,500 51,500

Materials 7,800 + 54,000 51,500 Conversion 20,150 + 79,000 49,575

3)

Completed & transferred ( 48,000 x 3.20)

4)

IP end Materials ( 3,500 x 1.20) Conversion ( 1,575) x 2.00)

100% 45%

=

1.20

=

2.00 3,20

328,000 5,228,000

48,000 1,575 49,575

153,600

4,200 3,150

7,350 160,950

Page 5 B) FIFO 1) Units IP beg Units started

15,500 36,000 51,500

Units completed (48,000) IP beg. Started & completed Units IP end

2)

Unit cost

15,500 32,500 3,500 51,500

IP beg. 27,950 Materials 54,000/36000 Conversion 79,000/39,500 160,950

3) Completed & transferred IP beg. Cost last month Cost added ( 5,425 x 2) Started & completed ( 32,500 x 3.50)

= =

Units completed Units IP end Units lost – normal

Unit cost Cost from preceding dept.

35% 5,425 100% 32,500 45% 1,575 39,500

1.50 2.00 3.50

27,950 10,850 113,750

4) IP end Materials ( 3,500 x 1.50) Conversion ( 1,575 x 2)

Problem 7 - GDL Company A) AVERAGE Units IP beg Units received

32,500 3,500 36,000

100% 100%

5,250 3,150

152,550

8,400 160,950

10,000 40,000 50,000 35,000 10,000 5,000 50,000

100% 100%

35,000 10,000 ______ 45,000

100% 50%

40,000 + 140,000 50,000 – 5,000

=

4.00

Materials

20,000 + 70,000 45,000

=

2.00

Labor

39,000 + 162,500 40,000

= 5.0375

Overhead

42,000 + 130,000 40,000

= 4.30 _____ 15.3375

35,000 5,000 ______ 40,000

Page 6 Problem 7 – continuation Completed & transferred ( 35,000 x 15.3375)

536,812.50

IP end Cost from prec. Dept ( 10,000 x 4) Materials ( 10,000 x 2) Labor ( 5,000 x 5.0375) Overhead ( 5,000 x 4.30)

B)FIFO Units IP beg. Units received

40,000.00 20,000.00 25,187.50 21,500.00 106,687.50

10,000 40,000 50,000

Units completed ( 35,000) IP beg. 10,000 Started & completed 25,000 100% Units IP end 10,000 100% Units lost 5,000 50,000 Unit cost IP beg. From preceding dept. Materials Labor Overhead

1/4 2.500 100% 25,000 1/2 5,000 ______ 32,500

141,000 140,000/40,000 – 5,000 70,000/35,000 162,500/32,500 130,000/32,500 643,500

Completed & transferred *35000) IP beg Cost last month Cost added ( 2.500 x 9) Received & completed ( 25,000 x 15)

IP end Cost from preceding dept. Materials Labor Overhead

25,000 10,000 ______ 35,000

( 10,000 x 4) (10,000 x 2) ( 5,000 x 5) ( 5,000 x 4)

= = = =

4.00 2.00 5.00 4.00 15.00

141,000 22,500 375,000 538,500

40,000 20,000 25,000 20,000 105,000

Page 8 - Janice Manufacturing Co. Units in process, beg. Units received from preceding dept.

Units comp. & transf. 8,000 IP beg. Received & completed Units in process, end

2,000 9,000 11,000

2,000 6,000 3,000 11,000

Cost – IP beg. Cost from precedig dept. Cost added in the dept Materials Labor Overhead

50% 100% 1/3

10,250 36,000 4,000 8,000 6,000 18,000 64,250

Total costs to be accounted from Costs accounted for as follows: Cost of units completed & transf. IP beg. Cost added ( 1,000 x 2.25) Cost & transf. (6,000 x 6.25)

10,250 2,250

1,000 6,000 1,000 8,000

P 4.00 .50 1.00 .75 . 2,25 6.25

12,500 37,500

50,000

IP end Cost from preceding (3,000 x 4.00) M, L, O ( 1,000 x 2.25) Total costs as accounted for

12,000 2,250

14,250 64,250

Problem 9 – Norman Corporation AVERAGE METHOD Units IP beg. Units started

1,000 9,000 10,000

Units completed & transferred Units IP end Units lost – abnormal

8,000 100% 8,000 1,500 100% 1,500 500 100% 500 10,000 10,000

100% 8,000 75% 1,125 100% 500 9,625

Cost to be accounted for Materials Labor Overhead

Cost IP beg 2,520 1,540 2,800 6,860

Cost added 72,480 21,560 43,450 137,490

Unit cost 7.50 2.40 5.00 14.90

100% 8,000 50% 750 100% 500 9,250

Page 3 Cost accounted for as following Completed & transferred ( 8,000 x 14.90) Factory Overhead ( 500 x 14.90) In process, end Materials (1,500 x 7.50) Labor ( 1,125 x 2.40) Overhead ( 750 x 5.00) Total costs as accounted for

119,200 7,450 11,250 2,700 3,750

17,700 144,350

Problem 9 - Norman Corporation FIFO METHOD Units completed & transferred IP beg. Started & completed Units IP end Units lost – abnormal

Cost to be accounted for Cost IP beg. Cost added Materials Labor Overhead

1,000 40% 400 65% 650 75% 750 7,000 100% 7,000 100% 7,000 100% 7,000 1,500 100% 1,500 75% 1,125 50% 750 500 100% 500 100% 500 100% 500 10,000 9,400 9,275 9,000

6,860 72,480 21,560 43,450 137,490 144,350

Total costs to be accounted Costs accounted for as follows: Completed & transferred IP beg. Cost – last month 6,860 Cost added M ( 400 x 7.710638) 3,084 L ( 650 x 2.324528) 1,511 O ( 750 x 4.827778) 3,621 Started & comp.(7,000 x 14.862944) 104,041___ Factory overhead control ( 500 x 14.862944) In Process, end Materuaks ( 1,500 x 7.710638) 11,566 Labor ( 1,125 x 2.324528) 2,615 Overhead ( 750 x 4.827778) 3,620

7.710638 2.324528 4.827778 14,862944 14,862944

119,117 7,432

17,801 144,350

Problem 10 1) Units IP beg Units received Units completed Units IP end 2)

Unit cost Transferred in

5,000 20,000 25,000 21,000 4,000 25,000

100% 21,000 ______ 21,000

17,750 + 104,000 25,000

100% 30%

=

4.87

21,000 1,200 22,200

Materials

0

+ 23,100 21,000

=

1.10

Conversion

7,250 + 38,400 22,200

=

2.056306 8.026306

3) Completed ( 21,000 x 8.026306 ) 4) IP end Prec. Dept. cost (4,000 x 4.87) Materials Conversion ( 1,200 x 2.056306)

168,552 19,480 2,468 21,948

Problem 11 – Nofat Company 1) Units IP beg. 600 Units received 3,900 4,500 Units completed 4,100 Units IP end 400 4,500 2) Units cost From preceding department

Material A

100% 4,100 100% 400 4,500

Material B

100%

9,090 + 67,410 = 4,500

Conversion

4,100 190% _____ 30% 4,100 17,00

Material A

4,000 + 21,200 4,500

=

5.60

Material B

0 + 16,400 4,100

=

4.00

Conversion

1,340 + 17,650 = 4,220

3) Completed ( 4,500 x31.10) 4) IP end Cost from precede dept. ( 400 x 17.00) Material A ( 4.00 x 5.60) Conversion ( 120 x 4.50)

4,100 120 4,220

4.50 ______ 31.10 139,950 6,800 2,240 540 9,580

Page 10 Problem 12 – Cross Company Units started

10,500

Units completed Units IP end Lost units - normal

7,000 3,000 500 10,500

Unit cost:

Materials Labor Overhead

100% 100% 100%

7,000 3,000 500 10,500

52,500/10,500 = 39,770/10,100 = 31,525/10,100 =

1. Completed and transferred Share in cost of lost units

100% 90% 80%

5.00 3.9376237 3.1212871 12.0589108

7,000 x 12.0589108

2, In process, end Materials 3,000 x 5 Labor 2,700 x 3.93762 47 Overhead 2,700 x 3.12129871 Share in cost of lost units

Cost of lost Materials Labor Overhead Total

500 x 5.00 = 400 x 3.93762 = 400 x 3.12129 =

7,000 2,700 400 10,100

2,500 1,575 1,249 5,324

=

84,412 3,788 88,200

= = = =

15,000 10,632 8,427 1,536 35,595

Allocation to C&T IP end 7/10 1,750 3/10 750 70/97 1,137 27/97 438 70/97 901 27/97 348 3,788 1,536

Problem 13 - Alonzo Manufacturing Cost – IP beg. Current cost Total costs Divided by equivalent prod. Unit cost 1.

Completed & transferred

2.

Total costs to be accounted for Less: Cost of units IP end Costs of units completed

Materials P 6,544 281,656 P288,200 262,000 P 1.10 ( 255,200 x 2.50)

Conversion P 16,803 344,817 P 361,620 258,300 P 1,40

Total P 23,347 626,473 P649,820 P

2.50

P 638,000 P 649,820 11,597 P 638,223

Problem 14 - Nicole Mfg. Co. 1) Units IP beg. 12,000 Units received 80,000 Increase in units 4,000 96,000 Units completed Units IP end

Costs – IP beg. Current cost Total costs Divided by EP Unit cost

86,000 10,000 06,000 Transf. In P 11,800 86,120 P 97,920 96,000 P 1.02

100% 100%

86,000 10,000 96,000

Materials P 3,125 21,835 P 24,960 96,000 P 0.26

2)

Completed & transferred ( 86,000 x 2.18)

3)

IP end

100% 2/5

Labor P 1,490 43,510 P45,000 90,000 P 0.50

Overhead P 1,320 34,680 P 36,000 90,000 P 0.40

Total P 17,735 186,145 P203,880 P

2.18

P 187,480

Cost from prec. Dept (10,000 x 1.02) Materials ( 10,000 x 0.26) Labor ( 4,000 x 0.50) Overhead ( 4,00 x 0.40)

Problem 15 1) Units received.

86,000 4,000 90,000

P 10,200 2,600 2,000 1,600 P 16,400

60,000

Units completed 50,000 100% Units IP beg. 9,000 100% Units lost – abnormal 1,000 60,000 Cost from prec. Dept. 212,400 Materials 84,370 Coversion 129,710 426,480 2)

Factory OH

3)

Completed & transf. (50,000 x 7.35)

4)

IP end

50,000 9,000 ______ 59,000 3.54 1.43 2.38 7.35

( 1,000 x 3.54)

Cost from prec. Dept ( 9,000 x 3.54) Materials ( 9,000 x 1.43) Conversion ( 4,500 x 2.38)

100% 50%

50,000 4,500 ______ 54,500

P

3,540 367,500

31,860 12,870 10,710 55.440

Problem 16 – Bewitched Co. 1)

Cost per unit = 122,360/19000 = 6.44 Completed & transferred From IP beg. Cost last month Cost added ( 1,000 x 1.45) Received & completed ( 14,000 x 6.45)

Unit cost Cost from preceding dept. M,L,O Units completed ( 19,000) From IP beg. From units received Units IP end

2)

30,610 1,450 90,300 122.360

110,000/22,000 30,450 /21,000

5,000 1/5 1,000 14,000 100% 14,000 8,000 ¾ 6,000 27,000 21,000

IP end Cost from preceding ( 8,000 x 5) M, L, O ( 6,000 x 1.45)

Problem 17 – Nicole Company Units IP beg. Units received

= 5.00 = 1.45 6,45

40,000 8,700 48,700

1,400 14,000 15,400

Units Completed & transf. Units IP end Units lost – normal Units lost – abnormal

11,200 3,500 560 140 15,400

100% 100% 100% 100%

1)

Completed & transf. ( 11,200 x 9) + (560 x 9)

2)

FOC

3)

IP end Cost from prec dept. ( 3,500 x 5) Materials ( 3,500 x 1) Conversion ( 1,400 x 3)

( 140 x 9)

11,200 3,500 560 140 15,430

100% 11,200 40% 1,400 100% 560 100% 140 13,300 P 105,840 1,250

17,500 3,500 4,200 26,200

Problem 18 - Samahan Inc. 1) Units IP end ( 500 x 50% x 1.32)

P

33,000

2)

Finished goods, end ( 700 x 132)

P

92,400

3)

From FG beg. From units completed – IP beg. From units received and completed Cost of goods sold

600 uittz 1,250 “ 800 “ 2,650

P 76,800 161,000 105600 P 343,400

Or Total available for sale FG beg. 600 units Completed from IP beg. 1,250 Completed from started 1,500 x 132 Total goods available for sale Less: FG Inventory Cost of goods sold Computation of equivalent production Units IP beg. 1,250 Units started 2,000 3,250 Units completed (2,750) IP beg. 1,250 20% Started & completed 1,500 100% Units IP end 500 50% 3,250 Unit cost ( 264000/2000 =

P

76,800 161,000 198,000 435,800 92,400 P 343,400

250 1,500 250 2,000

132.00

Completed & transferred IP beg. Cost last month Cost added ( 250 x 132) Cost of IP beg. upon completion

P 128,000 33.000 P 161,000

Units started & completed ( 1,500 x 132) Problem 19 - Michelle Company Department 1 Actual Materials Conversion Started or received 60,000 Comp. & transf. IP end

45,000 15,000 60,000

45,000 15,000 60,000

45,000 9,000 54,000

P 198,000

Department 2 Actual Materials Conversion 45,000 40,000 5,000 45,000

40,000 5,000 45,000

40,000 4,000 44,000

Costs charged to the dept. Cost from preceding dept. Cost added in the dept. Materials 90,000 Labor 64,800 Overhead 59400 Total added 214,200 Total costs 214,200 Costs accounted for as follows Comp. & transf. ( 45,000 x 3.80) IP beg Cost from prec dept Mat. ( 15,000 x 1.50) 22,500 Labor ( 9,000 x 1.20) 10,800 OH ( 9,000 x 1.10) 9,900 Total costs as accounted for

1,50 1.20 1.10 3.80 3.80 171,000

43,200 214,200

Journal entries 1. Materials Accounts payable

180,000

Work in process – Dept. 1 Work in process – Dept. 2 Materials

90,000 112,500

Payroll

125,600

2.

3.

4.

5.

6.

7.

8.

125,600 64,800 61,600 2,200

Work in process – Dept. 1 Work in process – Dept. 2 Factory OH Applied

59,400 50,600

128,600

110,000

Work in process – Dept. 2 Work in process – Dept. 1

171,000

Finished goods Work in process – Dept. 2

354,000

Accounts receivable Sales

400,000

Cost of goods sold Finished goods 75,000 + (20,000 x 8.85)

252,000

112,500 61,600 50,600 224,700 395,700

2.50 1.40 1.15 5.05 8.85

(5,000 x 3.80) 19,000 (5,000 x 2.50) 12,500 (4,000 x 1.40) 5,600 (4,000 x 1.15) 4,600

202,500

Work in process – Dept. 1 Work in process – Dept. 2 Factory OH Payroll

3.80

(40,000 x 8.85)

180,000

Accrued payroll

171,000

171,000

354,000

400000

252,000

354,000

41,700 395,700

Michelle Company Cost of Goods sold Statement For the month of June, 2008 Direct materials used Materials, June 1 Purchases Total available for use Less: Materials, June 30 Direct labor Factory overhead Total manufacturing costs Less: Work in process, June 30 Cost of goods manufactured Finished goods, June 1 Total goods available for sale Less: Finished goods, June 30 Cost of goods sold

Multiple choice (problems) 1. A 11. B 2. A 12. C 3. D 13 A 4. C 14. C 5. A 15. C 6. A 16 A 7. A 17. A 8. C 18. A 9. D 19. A 10. C 20. A

21. A 22. D 23. C 24. D 25. B 26 A 27. B 28. B 29 C 30. B

P 50,000 180,000 230,000 27,500 P

202,500 126,400 110,000 438,900 84,900 354,000 75,000 429,000 177,000 P 2,52,000

31, C 32. 33. 34. C 35. A