Chapter 10

1

CHAPTER 10 Answers to Multiple Choice – Theoretical 1. 2. 3. 4. 5.

b c b b b

6. 7. 8. 9. 10.

c c c c a

11.

d

Solutions to Multiple Choice – Computational 1.

(d) Units started in process Units in process, end - Dept. 1 Units in process, end - Dept. 2 Units transferred out to finished goods

2.

(a) Units in process, beginning Units placed in process Units in process, end Units transferred out to Dept. 2

3.

P6.00

(a) Units transferred to finished goods (100%) Ending work in process (400 x 25%) Equivalent units of production

6.

(a) P14,080 / 4,400 =

7.

29,000 2,400 31,400

(a) P188,400 / 31,400 =

5.

6,000 14,000 (4,200) 15,800

(a) Units completed and transferred out (100%) Units in process, end (3,000 x 80%) Equivalent units of production – Materials

4.

95,000 ( 21,000) ( 12,000) 62,000

P3.20

(a) 100 x P3.20

=

P320

4,300 100 4,400

2 8.

(a) Units placed in production Units transferred out to next department Units in ending work in process

9.

(a) Units transferred out to next department (100%) Units in ending work in process (6,000 x 1/3) Equivalent units of production – overhead

10.

73,000 (67,000) 6,000

67,000 2,000 69,000

(b) P282,900 / 69,000 = P4.10 x 67,000 = P274,700.

11.

(a) 2,000 EUP x P4.10

12.

13.

P8,200

(a) Units completed and transferred out (100%) Units completed and on hand (100%) Units in ending work in process (200 x 65%) Equivalent units of production

3,620 80 130 3,830

Unit cost = (P27,193 / 3,830)

P7.10

Labor ost of units transferred out: (3,620 x P7.10)

P25,702

(a) 80 x P7.10

14.

=

=

P568

(a) Units started into production Units completed Units in process, end

15.

3,900 3,700 200

(a) 130 x P7.10

16.

(a) Materials are added in Department 1.

17.

(c) Units transferred out to finished goods (100%) Units in process, end (18,600 x 72%) Equivalent units of production – conversion cost

61,400 13,392 74,792

3 18.

(b) Equivalent units of production: Units finished and transferred to finished goods Units in process, end (9,000 x 35%) EUP

28,000 3,150 31,250

Unit cost: Transferred in cost: (P24,050 / 37,000) This department: (P18,690 / 31,150) Units in process, end: Transferred in cost: (9,000 x P0.65) Cost this department: (3,150 x P0.60) Cost of units in process, end 19.

21.

P5,850 1,890 P7,740

(b) Equivalent units of production: Materials: Units finished and transferred out Ending work in process EUP

48,000 12,000 60,000

Conversion cost: Units finished and transferred out Ending work in process (12,000 x 70%) EUP

48,000 8,400 56,400

Unit costs: Transferred in cost: (P24,750 / 55,000) This department: Materials; (P7,200 / 60,000) CC: (P53,580 / 56,400) Total unit cost 20.

P0.65 0.60

P0.45 P0.12 0.95

0.95 P1,52

(b) Equivalent units of production: Materials: Units transferred out (15,000 – 3,000) Units in process, end EUP

12,000 -012,000

Conversion cost: Units transferred out Units in process, end (3,000 x 2/3) EUP

12,000 2,000 14,000

Cost of units transferred out: Transferred in; (P13,500 / 15,000) Materials: (12,000 x 4 x P.02) = P960 / 12,000 Conversion cost: (P14,210 / 14,000) Total unit cost Cost of units transferred out: (12,000 x P1.995)

P0.90 0.08 1.015 P1,995 P23,940

(d)

4

Equivalent units of production: Materials: Units transferred out to finished goods Ending units in process: 10% x 70,000 = 7,000 40% x 70,000 = 28,000 15% x 70,000 = 10,500 35% x 70,000 = 24,500 EUP Conversion cost: Units transferred out to finished goods Ending units process: 7,000 x 30% 28,000 x 60% 10,500 x 75% 24,500 x 85% EUP

22.

530,000 -0– -0– 10,500 24,500

35,000 565,000 530,000

2,100 16,800 7,875 20,825

47,600 577,600

Unit cost: Transferred in: (P300,000 / 500,000) Materials: (P559,350 / 565,000) Conversion cost: (P606,480 / 577,600) Total unit cost

P . 60 .99 1.05 P2.64

Cost of ending work in process: Transferred in: (70,000 x P0.60) Materials: (35,000 x P0.99) Conversion cost: (47,600 x P1.05) Total

P 42,000 34,650 49,980 P126,630

(a) Transferred in cost: (32,000 x P8.39( Cost added: Direct labor: (20,000 x P3.19) Overhead: (20,000 x P1.20) Cost to account for

P268,480 P63,800 24,000

87,800 P356,280

5 23.

(b) Unit cost from preceding department: (P391,500 / 78,300) Unit cost this department: Direct materials P 1.23 Conversion costs 2.50 Total unit costs Total units to account for Units transferred in: (P508,959 / P8.73) Units in process, end Total cost to account for: Units transferred to finished goods Units in process, end: Transferred in cost (20,000 x P5.00) Cost added this department: DM: (20,000 x P1.23) CC: (20,000 x 45%) x P2.50 Total cost to account for

24.

5.00

P

3.73 8.73 78,300 58,300 20,000

P508,959 P100,000 24,600 22,500

147,100 P656,059

(a) P1,480,000 / 10,000 units =

25.

P

P148

(a) Equivalent units of production: Materials: Units completed Units in process, end EUP Conversion cost: Units completed Units in process, end (1,000 x50%) EUP Unit costs: Materials: (P720,000 / 10,000) Conversion cost: (760,000 / 9,500)

9,000 1,000 10,000 9,000 500 9,500 P72 80

6

26.

(a) Equivalent units of production: Materials: Completed and transferred out Ending work in process: Chemical P: (15,000 x 100%) Chemical Q: EUP

27.

Chemical P

Chemical Q

35,000

35,000

15,000 50,000

- 0 35,000

Conversion cost: Completed and transferred out Ending work and process; (15,000 x 2/3) EUP

35,000 10,000 45,000

Unit costs: Materials: Chemical P: (P250,000 / 50,000) Chemical Q: (P70,000 / 35,000) Conversion cost: (P135,000 / 45,000) Total unit cost

P 5.00 2.00 3.00 P10,00

Completed and transferred out: (35,000 x P10)

P350,000

(a) Ending work in process:: Materials: Chemical P (15,000 x P5) Conversion cost: (10,000 x P3) Cost of ending work in process

P 75,000 30,000 P105,000

7 Solutions to Problems Problem 10-1 D Units started in process Units transferred in Units to account for Transferred to next department Transferred to finished goods Ending work in process Units accounted for

E

P

A

R

1 10,000 10,000

2 (b) 4,000 4,000

(a) 4,000 6,000 10,000

3,000 (c) 1,000 4,000

T M

E

3

N

T

S

4

5

3,000 3,000

(c) 2,400 2,400

(g) 2,100 2,100

(d) 2,400 600 3,000

(f) 2,100 300 2,400

(h) 1,600 500 2,100

PROBLEM 10-2 Dept. A

Dept. B

Dept. C

Materials: Transferred out (100%) Ending work in process EUP

15,000 10,000 25,000

12,000

9,000

12,000

9,000

Conversion cost: Transferred out Ending work in process EUP

15,000 7,500 22,500

12,000 1,500 13,500

9,000 900 9,900

Problem 10-3 Materials: Units transferred out: (50,000 – 10,000) Units in process, end: 10,000 x 25% = 2,500 x 20% 10,000 x 30% = 3,000 x 50% 10,000 x 25% = 2,500 x 80% 10,000 x 20% = 2,000 x 100% EUP Conversion cost: Units transferred out Units in process, end: 2,500 x 35% 3,000 x 55% 2,500 x 80% 2,000 x 95% EUP

40,000 500 1,500 2,000 2,000

6,000 46,000 40,000

875 1,650 2,000 1,900

6,425 46,425

8 Problem 10-4 1.

2.

Equivalent units of production Materials: Units transferred out: (13,000 – 2,000) Units in process, end EUP

11,000 -0– 11,000

Conversion cost: Units transferred out Units in process, end (2,000 x 45%) EUP

11,000 900 11,900

Department 2 Cost of Production Report Month of July 31, 2010 Quantity Schedule: Transferred in

Units 13,000

Transferred out Work in process, end Total accounted for

11,000 2,000 13,000

Cost Schedule Cost transferred in Cost added in this dept. Materials CC Total cost to account for

Total Cost EUP P16,120 ÷ 13,000

Cost accounted for: Transferred out Work in process, end: Cost transferred in Cost added: CC Total cost accounted for

=

Unit Cost P1.24

2,860 9,996 P28,976

÷ ÷

11,000 = 11,900 =

0.26 0.84 P2.34

P25,740

=

11,000

x

P2.34

2,480

=

2,000

x

1.24

756 P28,976

=

900

x

0.84

9 Problem 10-5 1.

Equivalent Units of Production Materials: Units transferred out (100 %) Ending units in process EUP Conversion cost: Units transferred out Ending units in process EUP

2.

Dept. 1

Dept. 2

60,000 15,000 75,000

55,000 -055,000

60,000 9,000 69,000

55,000 4,000 59,000

Department 1 Cost of Production Report Month of January, 2010 Quantity Schedule Units started in process

Units 75,000

Units transferred out Units in process, end Total accounted for

60,000 15,000 75,000

Cost Schedule Direct materials Conversion costs Total cost to account for

Total Cost P300,000 258,750 P558,750

EUP ÷ 75,000 ÷ 69,000

= =

Unit Cost P4.00 3.75 P7.75

Transferred out Units in process, end: Materials CC Total accounted for

P465,000

= 60,000

x

P7.75

60,000 33,750 P558,750

= 15,000 x = 9,000 x

4.00 3.75

Department 2 Cost of Production Report Month of January, 2010 Quantity Schedule Units transferred in

Units 60,000

Units transferred out Units in process, end Total accounted for

55,000 5,000 60,000

Cost Schedule Transferred in cost Cost added this department: CC Total cost to account for

Total Cost P465,000 243,375 P708,375

÷ ÷

EUP Unit Cost 60,000 = P 7.75 59,000 = 4.125 P11.875

Transferred out Units in process, end: Transferred in Cost added: CC Total accounted for

P653,125

=

55,000 x

P11.875

38,750 16,500 P708,375

= =

5,000 x 4,000 x

7.75 4.125

10 Problem 10-6 (1)

Equivalent Units of Production Materials: Units transferred out Units in process, end EUP Conversion Costs Units transferred out Units in process, end EUP

(2)

Dept. 1

Dept. 2

Dept. 3

125,000 25,000 150,000

115,000 - 0 115,000

112,000 - 0 112,000

125,000 10,000 135,000

115,000 1,000 116,000

112,000 2,700 114,700

Cost of Production Reports: Department 1: Quantity Schedule Started in process

Units 150,000

Transferred out Ending work in process Total accounted for

125,000 25,000 150,000

Cost Schedule Materials Conversion costs Total cost to account for

Total Cost P21,000 24,300 P45,300

EUP ÷ 150,000 = ÷ 135,000 =

Unit Cost P0.14 0.18 P0.32

Transferred out Ending work in process: Materials Conversion cost Total accounted for

P40,000

=

x

P0.32

3,500 1,800 P45,300

= =

25,000 x 10,000 x

0.14 0.18

÷

EUP Unit Cost 125,000 = P0.32

125,000

Department 2 Quantity Schedule Transferred in

Units 125,000

Transferred out Ending work in process Total accounted for

115,000 10,000 125,000

Cost Schedule Transferred in cost Cost added this department: Conversion cost Total cost to account for

Total Cost P40,000 34,800 P74,800

÷

116,000 =

0.30 P0.62

Transferred out Ending work in process: Transferred in cost Cost added this dept. – CC Total accounted for

P71,300

=

115,000 =

P0.62

3,200 300 P74,800

= =

10,000 = 1,000 =

0.32 0.30

11

Problem 10-6 (continued): Department 3 Quantity Schedule Transferred in

Units 115,000

Transferred out Ending work in process Total accounted for

112,000 3,000 115,000

Cost Schedule Transferred in cost Cost added this department: CC Total cost to account for

Total cost P71,300 ÷ 24,087 ÷ P95,387

EUP 115,000 = 114,700 =

Unit Cost P0.62 0.21 P0.83

Transferred out to finished goods Ending work in process: Transferred in cost Cost added this dept.: CC Total accounted for

P92,960

=

112,000 x

P0.83

1,860 567 P95,387

= =

3,000 x 2,700 x

0.62 0.21

Problem 10-7 1.

Equivalent Units of Production Materials: Transferred out Completed and on hand Ending work in process EUP Conversion cost: Transferred out Completed and on hand Ending work in process EUP

2.

Dept. 1

Dept. 2

15,000 8,000 23,000

7,000 1,000 - 08,000

15,000 6,500 21,500

7,000 1,000 5,250 13,250

Cost of Production Report Department 1 Quantity Schedule Started in process

Units 25,000

Transferred out Ending work in process Total accounted for

15,000 10,000 25,000

Cost Schedule Direct materials Conversion cost Total cost to account for

Total Cost EUP P12,650 ÷ 23,000 18,705 ÷ 21,500 P31,355

= =

Unit Cost P0.55 0.87 P1.42

Transferred out Ending work in process: DM CC

P21,300 4,400 5,655

x x x

P1.42 0.55 0.87

= = =

15,000 8,000 6,500

12 Total accounted for Problem 10-7 (Continued)

P31,355

Department 2 Quantity Schedule Transferred in

Units 15,000

Transferred out to finished goods Completed and on hand Ending work in process Total accounted for

7,000 1,000 7,000 15,000

Cost Schedule Transferred in cost Cost added this department: CC Total cost to account for

Total Cost P21,300 16,430 P37,730

÷ ÷

EUP 15,000 13,250

= =

Unit Cost P 1.42 1.24 P 2.66

Transferred out to finished goods Completed and on hand Ending work in process: Transferred in cost Cost added this dept.: CC Total accounted for

P18,620 2,660

= =

7,000 1,000

x x

P 2.66 2.66

9,940 6,510 P37,730

= =

7,000 5,250

x x

1.42 1.24

Problem 10-8 1.

Equivalent Units of Production: Materials: Transferred out Ending units in process: 50,000 x 30% = 15,000 50,000 x 35% = 17,500 50,000 x 15% = 7,500 50,000 x 20% = 10,000 EUP Conversion Cost: Transferred out Ending units in process: 15,000 x 45% 17,500 x 50% 7,500 x 65% 10,000 x 98% EUP

2.

101 250,000

102 250,000

103 250,000

104 250,000

15,000 17,500 7,500 10,000 300,000

15,000 17,500 7,500 10,000 300,000

7,500 10,000 17,500

10,000 10,000

250,000 6,750 8,750 4,875 9,800 280,175

Unit costs: Materials: 101: (P6,000 / 300,000) P0.02 102: (P3,000 / 300,000) 0.01 103: (P9,362.50 / 267,500) 0.035 104: (P13,000 / 260,000) 0.05 Conversion cost: (P117,763.50 / 280,175) Total unit costs

P0.115 0.42 P0.535

13

Problem 10-8 (Continued): Cost of ending work in process inventory: Materials: 101: (50,000 x P0.02) 102: (50,000 x P0.01) 103: (17,500 x P0.035) 104: (10,000 x P0.05) Total Conversion cost: (30,175 x P0.42) Total cost

P 1,000.00 500.00 612.50 500.00 P 2,612.50 12,673.50 P15,286.00

Problem 10-9 1.

Equivalent Units of Production: Assembly Department: Materials: Transferred out to next department Ending work in process (100%) EUP

1,860 140 2,000

Conversion cost: Transferred out Ending work in process: (140 x 75%) EUP

1,860 105 1,965

Finishing Department: Materials and overhead: Transferred out to finished goods Ending work in process (60 x 40%) EUP

1,800 24 1,824

Labor: Transferred out to finished goods Ending work in process (60 x 10%) EUP

1,800 6 1,806

14

2.

Peninsula Company – Assembly Department Cost of Production Report Month of August Quantity Schedule Started in process

Units 2,000

Transferred out to next department Work in process, end Total accounted for

1,860 140 2,000

Cost Schedule Materials Labor Overhead Total cost to account for

Total Cost P30,000.00 ÷ 29,670.00 ÷ 18,830.00 ÷ P78,500.00

EUP 2,000 1,965 1,965

= = =

Unit Cost P15.00 15.10 9.58 P39.68

Transferred out to next department Work in process, end: Materials Labor Overhead Total work in process Total cost accounted for *P3 adjustment for rounding.

P73,808.00* =

1.860

x

P39.68

2,100.00 = 1,586.00 = 1,006.00 = 4,692.00 P78,500.00

140 105 105

x x x

15.00 15.10 9.58

EUP 1,860

=

824 1,806 1,824

= = =

37.28 7.57 4.29 P88.82

x

P88.82

Peninsula Company – Finishing Department Cost of Production Report Month of August Quantity Schedule Transferred in from prior department

Units 1,860

Transferred out to finished goods Work in process, end Total accounted for

1,800 60 1,860

Cost Schedule Transferred in cost from prior dept. Cost added this department: Materials Labor Overhead Total cost to account for

Total Cost P 73,808.00

Transferred out to finished goods Work in process, end: Transferred in cost Cost added this dept.: Materials Labor Overhead Total cost of work in process Total costs accounted for

P159,874.00* =

÷

68,000.00 ÷ 13,660.00 ÷ 7,825.00 ÷ P163,298.00

2,381.00

1,800

Unit Cost P39.68

=

60

x

39.68

895.00 = 45.00 = 103.00 = 3,424.00 P163,298.00

24 6 24

x x x

37.28 7.57 4.29

15

3.

4.

5.

*P2 Rounding adjustment Work in process – Assembly Department Work in process – Finishing Department Materials Factory payroll Factory overhead control To record allocation of production cost. Work in process – Finishing Department Work in process – Assembly Department To record transfer of goods from Assembly to Finishing Department. Finished goods Work in process – Finishing Department To record completion of goods transferred to finished Goods inventory.

78,500 89,490 98,000 43,330 26,660 73,808 73,808

159,874 159,874

Problem 10-10 1.

Equivalent Units of Production Trimming Department

Assembly Department

Finishing Department

Materials: Transferred out Work in process, end EUP

5,400 600 6,000

5,000 380 5,380

4,800 160 4,960

Labor: Transferred out Work in process, end EUP

5,400 360 5,760

5,000 300 5,300

4,800 180 4,980

Overhead: Transferred out Work in process, end EUP

5,400 360 5,760

5,000 340 5,340

4,800 160 4,960

16

2.

Trimming Department Cost of Production Report Month of June, 2010 Quantity Schedule Started in process

Units 6,000

Transferred out to next department Work in process, end Total accounted for

5,400 600 6,000

Cost Schedule Materials Labor Overhead Total costs to account for

Total Cost P33,600 18,500 9,217 P61,317

÷ ÷ ÷

EUP 6,000 5,760 5,760

Unit Cost = P 5.60 = 3.21180 = 1.60017 P10.41197

Transferred out to next department Work in process, end: Materials Labor Overhead Total work in process Total costs accounted for

P56,225

=

5,400

x

P10.41197

3,360 1,156 576 5,092 P61,317

= = =

600 360 360

x x x

5.60 3.21180 1.60017

÷

EUP 5,400

=

Unit Cost P10.41203

÷ ÷ ÷

5,380 5,300 5,340

= = =

Assembly Department Cost of Production Report Month of June, 2010 Quantity Schedule Transferred in from prior department

Units 5,400

Transferred out to next department Work in process, end Total accounted for

5,000 400 5,400

Cost Schedule Transferred in cost Cost added this department: Materials Labor Overhead Total costs to account for

Total Cost P56,225

Transferred out to next department Work in process, end: Transferred in cost Cost added this department: Materials Labor Overhead Total work in process Total costs accounted for

P88,328*

16,786 14,840 7,120 P94,971

=

3.12007 2.80 1.33333 P17.66543

5,000

x P17.66543

4,164

=

400

x

10.41203

1,186 840 453 6,643 P94,971

= = =

380 350 340

x x x

3.12007 2.80 1.33333

17 P1 difference due to rounding

Finishing Department Cost of Production Report Month of June, 2010 Quantity Schedule Transferred in from prior department

Units 5,000

Transferred out to finished goods Work in process, end Total accounted for

4,800 200 5,000

Cost Schedule Transferred in cost from prior dept. Cost added this department: Materials Labor Overhead Total costs to be accounted for

Total Cost P 88,328

Transferred out to finished goods Work in process, end: Transferred in cost Cost added this department: Materials Labor Overhead Total work in process Total costs accounted for 3a.

3b.

3c.

3c.

÷

EUP 5,000

=

6,400 10,320 4,960 P110,008

÷ ÷ ÷

4,960 4,980 4,960

= = =

1.29032 2.07228 1.00 P22.02820

P105,735

=

4,800

x

P22.02920

3,533

=

200

x

17.66560

207 373 160 4,273 P110,008

= = =

160 180 160

x x z

1.29032 2.07228 1.00

Work in process – Trimming Department Work in process – Assembly Department Work in process – Finishing Department Materials Factory payroll Factory overhead control To record manufacturing costs.

Unit Cost P17.66560

61,317 38,746 21,680

Work in process – Assembly Department 56,225 Work in process – Trimming Department To record transfer of goods from Trimming to Assembly Department. Work in process – Finishing Department 88,328 Work in process – Assembly Department To record transfer of goods from Assembly To Finishing Department. Finished goods I 105,735 Work in process – Finishing Department To record completion of finished goods.

56,786 43,660 21,297

56,225

88,328

105,735