ManAcc 6e Solutions Ch031
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SOLUTIONS TO BRIEF EXERCISES BRIEF EXERCISE 3-1 Mar. Mar. 31 31
Raw Raw Mate Materi rials als Inven Invento tory ry.......................................... Accounts Pa Payable ...........................................
45,0 45,000 00
Factor Factory y Labor Labor ..... ...... .... .... .... ........ ...... .... .... .... .... .... .... .... ........ ...... .... .... .... .... .... .... .... ........ .... Wages Payable.. e.................................................
60,000 60,000
45,000 60,000
BRIEF EXERCISE 3-2 Mar. 31
31
Work in Process—Assembly Department.. t........ Work Wo rk in Proc Proces ess— s—Fi Fini nish shin ing g Dep Depar artm tmen ent.. t.......... Raw Materials Inventory................................
24,000 21,0 21,000 00
Work in Process—Assembly Department.. t........ Work Wo rk in Proc Proces ess— s—Fi Fini nish shin ing g Dep Depar artm tmen ent.. t.......... Factory La Labor ...................................................
35,000 25,0 25,000 00
45,000
60,000
BRIEF EXERCISE 3-3 Mar Mar. 31
Work ork in Proc Proces ess— s—As Asse semb mbly ly Dep Depar artm tmen entt ($35,000 ($35,000 X 200%).. 200%) .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .. Work in Process—Finishing Department ($25,000 ($25,000 X 200%).. 200%) .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .. Manufacturing Overhead ..............................
70,000 50,000 120,000
BRIEF EXERCISE 3-4
January March July
Materials
Conversion Costs
45,000 (35,000 + 10,000) 48,000 (40,000 + 8,000) 61,000 (45,000 + 16,000)
39,000 (35,000 + 4,000a) 46,000 (40,000 + 6,000b) 49,000 (45,000 + 4,000c)
a. 10,0 10,000 00 X 40% 40% b. 8,00 8,000 0 X 75% 75% c. 16,0 16,000 00 X 25% 25%
BRIEF EXERCISE 3-5 Total materials costs $36,000 Total conversion costs $54,000 Unit materials cost $3.60
÷
Equivalent units of materials 10,000
÷
Equivalent units of conversion costs 12,000
+
Unit conversion cost $4.50
=
Unit materials cost $3.60
=
Unit conversion cost $4.50
=
Total manufacturing cost per unit $8.10
BRIEF EXERCISE 3-6 Assignment of Costs Transferred out Transferred out Work in process, 4/30 Materials Conversion costs Total costs
Equivalent Units
Unit Cost
40,000
$11
5,000 2,000
$ 4 $ 7
$440,000
$20,000 14,000
34,000 $474,000
BRIEF EXERCISE 3-7 Total materials costs $16,000 Total conversion *costs* $47,500 *$29,500 + $18,000
÷
÷
Equivalent units of materials 20,000 Equivalent units of conversion costs 19,000
=
=
Unit materials cost $.80 Unit conversion cost $2.50
BRIEF EXERCISE 3-5 Total materials costs $36,000 Total conversion costs $54,000 Unit materials cost $3.60
÷
Equivalent units of materials 10,000
÷
Equivalent units of conversion costs 12,000
+
Unit conversion cost $4.50
=
Unit materials cost $3.60
=
Unit conversion cost $4.50
=
Total manufacturing cost per unit $8.10
BRIEF EXERCISE 3-6 Assignment of Costs Transferred out Transferred out Work in process, 4/30 Materials Conversion costs Total costs
Equivalent Units
Unit Cost
40,000
$11
5,000 2,000
$ 4 $ 7
$440,000
$20,000 14,000
34,000 $474,000
BRIEF EXERCISE 3-7 Total materials costs $16,000 Total conversion *costs* $47,500 *$29,500 + $18,000
÷
÷
Equivalent units of materials 20,000 Equivalent units of conversion costs 19,000
=
=
Unit materials cost $.80 Unit conversion cost $2.50
BRIEF EXERCISE 3-8 Costs accounted for Transferred out Work in process Materials Conversion costs Total costs
(18,000 X $3.30) (2,000 X $.80) (1,000* X $2.50)
$59,400 $1,600 2,500
4,100 $63,500
*2,000 X 50% BRIEF EXERCISE 3-9 (a) Materials
(b) Conversion Costs
8,000
8,000
Units transferred out Work in process, November 30 Materials (7,000 X 100%) Conversion costs (7,000 X 40%) Total equivalent units
7,000 2,800 10,800
15,000
*BRIEF EXERCISE 3-10 Costs to Be Assi Assign gned ed Assi Assign gnme ment nt of Cost Costs s
Equivalent Units
Unit Cost
Transferred out Work in process, 3/1 Started and completed
0 30,000
$ 0 $18
Work in process, 3/31 Materials Conversion costs
5,000 2,000
$ 6 $12
Total Costs Assigned $
0 540,000 540,000
$594,000 $ 30,000 24,000
54,000 $594,000
*BRIEF EXERCISE 3-11 Equivalent Units Conversion Materials Costs Units accounted for Completed and transferred out Work in process, March 1 Started and completed Work in process, March 31 Total units
-030,000 5,000 35,000
-030,000 2,000 32,000
SANDERSON COMPANY (Partial) Production Cost Report For the Month Ended March 31 COSTS Materials Unit costs Total costs (a) Equivalent units (b) Unit costs (a) ÷ (b) Costs to be accounted for In process, March 1 Costs in March Total costs Costs accounted for Transferred out In process, March 1 Started and completed (30,000 units X $18) In process, March 31 Materials (5,000 X $6) Conversion costs (2,000 X $12) Total costs
$210,000 * 35,000 $ 6
*35,000 equivalent units X $6 per unit **32,000 equivalent units X $12 per unit
Conversion Costs
Total
$384,000 ** $594,000 32,000 $ 12 $ 18 $ 0 594,000 $594,000 $
0
540,000 $ 30,000 24,000
54,000 $594,000
*BRIEF EXERCISE 3-12 Total materials costs 1 $75,0001
Equivalent units of materials 20,000
÷
=
Unit materials cost $3.75
=
Unit conversion cost $2.00
1
$8,000 + $67,000 = $75,000
Total conversion costs 2 $38,0002
÷
Equivalent units of conversion costs 19,000
2
$20,000 + $18,000 SOLUTIONS FOR DO IT! REVIEW EXERCISES
DO IT! 3-1 1. 2. 3. 4.
False False True False
DO IT! 3-2 Work in Process—Mixing ............................................................ Work in Process—Packaging..................................................... Raw Materials Inventory...................................................... (To record materials used)
10,000 28,000
Work in Process—Mixing ............................................................ Work in Process—Packaging..................................................... Factory Labor.......................................................................... (To assign factory labor to production)
8,000 36,000
Work in Process—Mixing ............................................................ Work in Process—Packaging..................................................... Manufacturing Overhead .................................................... (To assign overhead to production)
12,000 54,000
38,000
44,000
66,000
DO IT! 3-2 (Continued) Work in Process—Packaging .................................................... Work in Process—Mixing ................................................... (To record transfer of units to the Packaging Department)
21,000 21,000
Finished Goods Inventory........................................................... 106,000 Work in Process—Packaging............................................ 106,000 (To record transfer of units to finished goods) DO IT! 3-3 (a) Since materials are entered at the beginning of the process, the equivalent units of ending work in process are 12,000. 20,000 units + 12,000 units = 32,000 equivalent units of production for materials. (b) Since ending work in process is only 70% complete as to conversion costs, the equivalent units of ending work in process for conversion costs are 8,400 (70% X 12,000 units). 20,000 units + 8,400 units = 28,400 equivalent units of production for conversion costs. DO IT! 3-4 (a) 0 (Work in process, March 1) + 26,000* (Started into production) = 26,000 *22,000 + 4,000 (b) Equivalent units of production: Units transferred out..................... Work in process, March 31 ......... Total....................................................
Materials 22,000 4,000 26,000
Conversion 22,000 1,600 (4,000 X 40%) 23,600
DO IT! 3-4 (Continued) (c) Cost reconciliation schedule Costs accounted for Transferred out (22,000 X $18) .............. Work in process, March 31 Materials (4,000 X $10) .................... Conversion costs (1,600 X $8)...... Total costs ..........................................................
$396,000 $40,000 12,800
52,800 $448,800
SOLUTIONS TO EXERCISES EXERCISE 3-1 1. True. 2. True. 3. False. Companies that produce soft drinks and computer chips would use process cost accounting. 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 are used. 9. False. In a process cost system, costs are summarized in a production cost report for each department . 10. True. EXERCISE 3-2 April 30
30
30
30
Work in Process—Cooking..................................... Work in Process—Canning..................................... Raw Materials Inventory.................................
21,000 9,000
Work in Process—Cooking..................................... Work in Process—Canning..................................... Factory Labor.....................................................
8,500 7,000
Work in Process—Cooking..................................... Work in Process—Canning..................................... Manufacturing Overhead ...............................
31,500 25,800
Work in Process—Canning..................................... Work in Process—Cooking...........................
53,000
30,000
15,500
57,300 53,000
EXERCISE 3-3 (a) Work in process, May 1 Started into production Total units to be accounted for Less: Transferred out Work in process, May 31
400 1,400 1,800 1,500 300
(b) and (c) Units transferred out Work in process, May 31 300 X 100% 300 X 40%
Work in process, May 1 Costs added Total costs Equivalent units Unit costs
Equivalent Units Materials
Conversion Costs
1,500
1,500
300 1,800
120 1,620
Direct Materials
Conversion Costs
$2,040 5,160 $7,200 1,800 $4.00
$1,550 4,120* $5,670 1,620 $3.50
*$2,740 + $1,380 (d) Transferred out (1,500 X $7.50) (e) Work in process Materials (300 X $4.00) Conversion costs (120 X $3.50)
$11,250 $ 1,200 420 $ 1,620
EXERCISE 3-4 1. 2. 3.
4.
5.
6.
7. 8. 9.
Raw Materials Inventory ................................................. Accounts Payable ....................................................
62,500
Factory Labor ..................................................................... Wages Payable..........................................................
60,000
Manufacturing Overhead ................................................ Cash.............................................................................. Accounts Payable ....................................................
70,000
Work in Process—Cutting.............................................. Work in Process—Assembly......................................... Raw Materials Inventory ........................................
15,700 8,900
Work in Process—Cutting.............................................. Work in Process—Assembly......................................... Factory Labor ............................................................
33,000 27,000
Work in Process—Cutting (1,680 X $18).................... Work in Process—Assembly (1,720 X $18) .............. Manufacturing Overhead .......................................
30,240 30,960
Work in Process—Assembly......................................... Work in Process—Cutting.....................................
67,600
Finished Goods Inventory.............................................. Work in Process—Assembly................................
134,900
Cost of Goods Sold .......................................................... Finished Goods Inventory.....................................
150,000
Accounts Receivable ....................................................... Sales Revenue...........................................................
200,000
62,500 60,000 40,000 30,000
24,600
60,000
61,200 67,600 134,900 150,000 200,000
EXERCISE 3-5 (a)
January
May
Units to be accounted for Beginning work in process Started into production Total units
0 11,000 11,000
0 23,000 23,000
Units accounted for Transferred out Ending work in process Total units
9,000 2,000 11,000
16,000 7,000 23,000
(b)
(1) January March May July
Materials
(2)
11,000 ( 9,000 + 2,000) 15,000 (12,000 + 3,000) 23,000 (16,000 + 7,000) 11,500 (10,000 + 1,500)
Conversion Costs 10,200 ( 9,000 + 1,200) 12,900 (12,000 + 900) 21,600 (16,000 + 5,600) 10,600 (10,000 + 600)
EXERCISE 3-6 (a)
(1) Materials
(2) Conversion Costs
12,000
12,000
Units transferred out Work in process, July 31 3,000 X 100% 3,000 X 60% Total equivalent units
3,000 15,000
1,800 13,800
(b) Materials: $45,000 ÷ 15,000 = $3.00 Conversion costs: ($16,200 + $18,300) ÷ 13,800 = $2.50 Costs accounted for Transferred out (12,000 X $5.50) Work in process, July 31 Materials (3,000 X $3.00) Conversion costs (1,800 X $2.50) Total costs
$66,000 $9,000 4,500
13,500 $79,500
EXERCISE 3-7 RICHARDS FURNITURE COMPANY Sanding Department Production Cost Report For the Month Ended March 31, 2014
Quantities
Physical Units
Units to be accounted for Work in process, March 1 Started into production Total units
0 12,000 12,000
Units accounted for Transferred out Work in process, March 31 Total units
9,000 3,000 12,000
Equivalent Units Conversion Materials Costs
9,000 3,000 12,000
9,000 600 9,600
Costs
Materials
Conversion Costs
Unit costs Total cost Equivalent units Unit costs (a) ÷ (b)
$33,000 12,000 $2.75
$60,000* 9,600 $6.25
Costs to be accounted for Work in process, March 1 Started into production Total costs
(3,000 X 20%)
Total $93,000 $9.00
$ 0 93,000 $93,000
Cost Reconciliation Schedule Costs accounted for Transferred out (9,000 X $9.00) Work in process, March 31 Materials (3,000 X $2.75) Conversion costs (600 X $6.25) Total costs
*$24,000 + $36,000
$81,000 $8,250 3,750
12,000 $93,000
EXERCISE 3-8 (a)
(1)
Units transferred out Work in process, April 30 1,000 X 100% 1,000 X 40%
Materials
(2) Conversion Costs
17,000
17,000
1,000 400 17,400
18,000 (b) Total cost Equivalent units Unit costs
Materials
Conversion Costs
$900,000(1) 18,000 $ 50
$435,000(2) 17,400 $ 25
Total $1,335,000 $
75
(1)
$100,000 + $800,000
(2)
$ 70,000 + $365,000
(c) Transferred out (17,000 X $75) Work in process Materials (1,000 X $50) Conversion costs (400 X $25) Total costs
$1,275,000 $50,000 10,000
EXERCISE 3-9 (a) Materials: 34,000* + 6,000 = 40,000 Conversion costs: 34,000* + (6,000 X 40%) = 36,400 *40,000 – 6,000 (b) Materials: $72,000/40,000 = $1.80 Conversion costs: ($81,000 + $101,000)/36,400 = $5.00 (c) Transferred out: 34,000 X $6.80 = $231,200 Ending work in process: Materials (6,000 X $1.80) Conversion costs (2,400 X $5.00) Total
= =
$10,800 12,000 $22,800
60,000 $1,335,000
EXERCISE 3-10 (a) Beginning work in process Units started into production
Units transferred out Ending work in process
Physical Units 20,000 164,000 184,000
Equivalent Units
Materials 160,000 24,000 184,000
160,000 24,000 184,000
(b) Costs incurred Equivalent units Unit costs
Materials $101,200 184,000 $0.55
Conversion Costs $348,800 174,400 $2.00
(c) Assignment of costs: Transferred out (160,000 X $2.55) Ending work in process Materials (24,000 X $.55) Conversion costs (14,400 X $2.00) Total costs
Total $450,000 $2.55 $408,000
$13,200 28,800
EXERCISE 3-11 (a)
Conversion Costs 160,000 14,400 (60% X 24,000) 174,400
Physical Units Work in process, September 1 Units started into production
1,600 38,400 40,000
Units transferred out Work in process, September 30
35,000 5,000 40,000
42,000 $450,000
EXERCISE 3-11 (Continued) Equivalent Units Materials Conversion Costs Units transferred out Work in process 5,000 X 100% 5,000 X 10%
35,000
35,000
5,000 500 35,500
40,000 (b)
Materials Work in process, September 1 Direct materials
$ 20,000
Costs added to production during September Total materials cost
177,200 $197,200
$197,200 ÷ 40,000 = $4.93 (Materials cost per unit) Conversion Costs Work in process, September 1 Conversion costs
$ 43,180
Costs added to production during September Conversion costs ($125,680 + $257,140) Total conversion costs
382,820 $426,000
$426,000 ÷ 35,500 = $12.00 (Conversion cost per unit) (c) Costs accounted for Transferred out (35,000 X $16.93) Work in process, September 30 Materials (5,000 X $4.93) Conversion costs (500 X $12.00) Total costs
$592,550 $24,650 6,000
30,650 $623,200
EXERCISE 3-12 To:
David Skaros
From:
Student
Re:
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 3-13 THORPE COMPANY Welding Department Production Cost Report For the Month Ended February 28, 2014
Quantities
Physical Units
Equivalent Units Conversion Materials Costs
(Step 1)
(Step 2)
Units to be accounted for Work in process, February 1 Started into production Total units
15,000 45,000 60,000
Units accounted for Transferred out Work in process, February 28 Total units
49,000 11,000 60,000
Costs Unit costs (Step 3) Total cost Equivalent units Unit costs (a) ÷ (b)
49,000 11,000 60,000
Materials (a) $198,000(1) (b) 60,000 $3.30
49,000 2,200 51,200
(11,000 X 20%)
Conversion Costs $128,000(2) 51,200 $2.50
Costs to be accounted for Work in process, February 1 Started into production Total costs
Total $326,000
$5.80
$ 32,175 293,825 $326,000
Cost Reconciliation Schedule (Step 4) Costs accounted for Transferred out (49,000 X $5.80) Work in process, February 28 Materials (11,000 X $3.30) Conversion costs (2,200 X $2.50) Total costs (1)
$18,000 + $180,000 $14,175 + $52,380 + $61,445
(2)
$284,200 $36,300 5,500
41,800 $326,000
EXERCISE 3-14 (a)
Containers in transit, April 1 Containers loaded Total containers
0 1,200 1,200
Containers off-loaded Containers in transit, April 30 Total containers
850 350 1,200
(b) Containers off-loaded Containers in transit, April 30 Total equivalent units *350 x 40% = 140 **350 x 20% = 70
Equivalent Units Physical Direct Conversion Units Materials Costs 850 850 850 350 140* 70** 990 920
EXERCISE 3-15 (a) Applications transferred out Work in process, September 30 Equivalent units
Materials 800 200* 1,000
Conversion Costs 800 120** 920
*100 + 900 – 800 = 200 **200 X 60% = 120 (b) Materials: $5,500 ÷ 1,000 = $5.50 Conversion costs: $25,300* ÷ 920 = $27.50 Costs accounted for: Transferred out (800 X $33.00) Work in process, September 30 Materials (200 X $5.50) Conversion costs (120 X $27.50) Total costs *($3,960 + $12,000 + $9,340)
$26,400 $1,100 3,300
4,400 $30,800
*EXERCISE 3-16
(a) Applications completed: Work in process, September 1 Started and completed Work in process, September 30 Total units
Physical Units
Equivalent Units Conversion Materials Costs
100 700 200 1,000
0 700 200 900
60 700 120 880
(b) Materials: $4,500 ÷ 900 = $5.00 Conversion costs: $21,340* ÷ 880 = $24.25 *($12,000 + $9,340) Costs accounted for: Applications completed: Work in process, September 1 Conversion costs (60 x $24.25) Started and completed (700 x $29.25) Work in process, September 30: Materials (200 x $5.00) Conversion costs (120 x $24.25) Total costs
$4,960 1,455
$ 6,415 20,475 1,000 2,910
$26,890 3,910 $30,800*
*Total costs to be accounted for: $1,000 + $3,960 + $4,500 + $12,000 + $9,340 = $30,800
*EXERCISE 3-17 (a) (1) Materials: Production Data
Physical Units
Materials Added This Period
Equivalent Units
Work in process, August 1 Started and completed
0 8,000
0 100%
0 8,000
Work in process, August 31 Total
2,000 10,000
100%
2,000 10,000
(2) Conversion Costs: Production Data
Physical Units
Work Added This Period
Equivalent Units
Work in process, August 1 Started and completed Work in process, August 31
0 8,000 2,000
0 100% 40%
0 8,000 800
Total
10,000
(b) Unit costs are: Materials Conversion costs Total
8,800
$45,000 ÷ 10,000 = $4.50 $30,800* ÷ 8,800 = 3.50 $8.00
*$14,700 + $16,100 Costs to Be Assigned
Assignment of Costs
Total mfg. costs Transferred out Work in process, August 1 $75,800 (1) Started and completed Work in process, August 31 Materials Conversion costs (1) $45,000 + $14,700 + $16,100.
Equivalent Unit Units Cost
Total Costs Assigned
0 8,000
$0 $8
$ 0 64,000
2,000 800
$4.50 $3.50
$ 9,000 2,800
$64,000
11,800 $75,800
*EXERCISE 3-18 (a) (1) Materials Work in process, September 1 Started and completed Work in process, September 30 Total (2) Conversion Costs Work in process, September 1 Started and completed Work in process, September 30 Total (b) Materials Conversion costs
(c)
Costs to Be Assigned Total mfg. costs
*$207,200*
Physical Units
Materials Added This Period
Equivalent Units
2,000 9,000
Q 0% 100%
0 9,000
1,000 12,000
100%
1,000 10,000
Physical Units
Work Added This Period
Equivalent Units
2,000 9,000
80% 100%
1,600 9,000
1,000 12,000
40%
400 11,000
Unit Cost
Total Costs Assigned
$ 60,000 ÷ 10,000 = $ 6 $132,000 ÷ 11,000 = 12 $18
Assignment of Costs
Equivalent Units
Transferred out Work in process, 9/1 0 Conversion costs 1,600 Started and completed 9,000 Total costs transferred out Work in process, 9/30 Materials 1,000 Conversion costs 400 Total costs
$ 0 $12 $18
$15,200 19,200
$ 6 $12
$6,000 4,800
$ 34,400 162,000 196,400
10,800 $207,200
*Work in process, September 1, $15,200 + materials costs $60,000 + labor and overhead costs $132,000.
*EXERCISE 3-19 (a) Work in process, March 1 Started into production Total units to be accounted for Less: Transferred out Work in process, March 31
800 1,200 2,000 1,500 500
(b) Materials: Production Data Work in process, March 1 Started and completed Work in process, March 31 Total
Physical Materials Added Equivalent Units This Period Units 800 700 500 2,000
%100 100% 100%
0 700 500 1,200
Unit cost = $6,600 ÷ 1,200 = $5.50. (c) Conversion costs: Production Data Work in process, March 1 Started and completed Work in process, March 31 Total
Physical Units
Work Added This Period
Equivalent Units
800 700 500 2,000
70% 100% 40%
560 700 200 1,460
Unit cost = $2,500 + $1,150 = $3,650 ÷ 1,460 = $2.50. (d) In process, March 1 .................................................................... Conversion costs (560 X $2.50).............................................. Total cost .......................................................................................
$3,680 1,400 $5,080
(e) 700 X ($5.50 + $2.50) = $5,600. (f)
Materials (500 X $5.50)............................................................... Conversion costs (200 X $2.50).............................................. Total cost of work in process, March 31 .............................
$2,750 500 $3,250
*EXERCISE 3-20 MAJESTIC COMPANY Welding Department Production Cost Report For the Month Ended February 28, 2014
Quantities
Physical Units
Equivalent Units Conversion Materials Costs
(Step 1)
(Step 2)
Units to be accounted for Work in process, February 1 Started into production Total units
15,000 64,000 79,000
Units accounted for Completed and transferred out Work in process, February 1 Started and completed Total Work in process, February 28 Total units
15,000 39,000* 54,000 25,000 79,000
0 39,000 39,000 25,000 64,000
13,500 (15,000 X 90%) 39,000 52,500 5,000 (25,000 X 20%) 57,500
*(64,000 – 25,000)
Costs Unit costs (Step 3) Costs in February Equivalent units Unit costs (a) ÷ (b) Costs to be accounted for Work in process, February 1 Started into production Total costs
Materials (a) (b)
$192,000 (1) 64,000 $3.00
Conversion Costs
Total
$103,500 (2) $295,500 57,500 $1.80 $4.80
$ 32,175 295,500 $327,675
*EXERCISE 3-20 (Continued) Cost Reconciliation Schedule Costs accounted for (Step 4) Transferred out Work in process, February 1 Costs to complete beginning work in process Conversion costs (13,500 X $1.80) Total costs Units started and completed (39,000 X $4.80) Total costs transferred out Work in process, February 28 Materials (25,000 X $3.00) Conversion costs (5,000 X $1.80) Total costs
$32,175
24,300
(1) Cost of materials added $57,000 plus costs transferred in $135,000. (2) Labor $35,100 plus overhead $68,400.
$ 56,475 187,200 $243,675 75,000 9,000
84,000 $327,675
SOLUTIONS TO PROBLEMS PROBLEM 3-1A
1. 2.
3. 4.
5. 6.
7. 8. 9.
Raw Materials Inventory......................................... Accounts Payable............................................
300,000
Work in Process—Mixing....................................... Work in Process—Packaging............................... Raw Materials Inventory ................................
210,000 45,000
Factory Labor............................................................. Wages Payable .................................................
258,900
Work in Process—Mixing....................................... Work in Process—Packaging............................... Factory Labor....................................................
182,500 76,400
Manufacturing Overhead ....................................... Accounts Payable............................................
810,000
Work in Process—Mixing (28,000 X $24).......... Work in Process—Packaging (6,000 X $24)........................................................... Manufacturing Overhead...............................
672,000
Work in Process—Packaging............................... Work in Process—Mixing..............................
979,000
Finished Goods Inventory ..................................... Work in Process—Packaging ......................
1,315,000
Accounts Receivable............................................... Sales Revenue..................................................
2,500,000
Cost of Goods Sold.................................................. Finished Goods Inventory ............................
1,604,000
300,000
255,000 258,900
258,900 810,000
144,000 816,000 979,000 1,315,000 2,500,000 1,604,000
PROBLEM 3-2A
(a) Physical units Units to be accounted for Work in process, June 1 Started into production Total units
0 22,000 22,000
Units accounted for Transferred out Work in process, June 30 Total units
20,000 2,000 22,000
(b) Equivalent units Units transferred out Work in process, June 30 2,000 X 100% 2,000 X 40% Total equivalent units (c)
Materials
Conversion Costs
20,000
20,000
2,000 800 20,800
22,000 Unit Costs
Materials Conversion costs Total unit cost
$9.00 ($198,000 ÷ 22,000) $8.00 ($166,400* ÷ 20,800) $17.00 ($9.00 + $8.00)
*$53,600 + $112,800 (d) Costs accounted for Transferred out (20,000 X $17.00) Work in process, June 30 Materials (2,000 X $9.00) Conversion costs (800 X $8.00) Total costs
$340,000 $18,000 6,400
24,400 $364,400
PROBLEM 3-2A (Continued) (e)
ROSENTHAL COMPANY Molding Department Production Cost Report For the Month Ended June 30, 2014
Quantities
Physical Units
Equivalent Units Conversion Materials Costs
(Step 1)
(Step 2)
Units to be accounted for Work in process, June 1 Started into production Total units
0 22,000 22,000
Units accounted for Transferred out Work in process, June 30 Total units
20,000 2,000 22,000
Costs Unit costs (Step 3) Total cost Equivalent units Unit costs (a) ÷ (b)
20,000 2,000 22,000
Materials (a) $198,000 (b) 22,000 $9.00
20,000 800 20,800 Conversion Costs $166,400 20,800 $8.00
Costs to be accounted for Work in process, June 1 Started into production Total costs
(2,000 X 40%)
Total $364,400 $17.00
$ 0 364,400 $364,400
Cost Reconciliation Schedule (Step 4) Costs accounted for Transferred out (20,000 X $17.00) Work in process, June 30 Materials (2,000 X $9.00) Conversion costs (800 X $8.00) Total costs
$340,000 $18,000 6,400
24,400 $364,400
PROBLEM 3-3A
(a) (1) Physical units T12 Tables
C10 Chairs
Units to be accounted for Work in process, July 1 Started into production Total units
0 19,000 19,000
0 16,000 16,000
Units accounted for Transferred out Work in process, July 31 Total units
16,000 3,000 19,000
15,500 500 16,000
(2) Equivalent units T12 Tables Conversion Materials Costs Units transferred out Work in process, July 31 (3,000 X 100%) (3,000 X 60%) Total equivalent units
16,000
16,000
3,000 19,000
1,800 17,800
C10 Chairs Conversion Materials Costs Units transferred out Work in process, July 31 (500 X 100%) (500 X 80%) Total equivalent units
15,500
15,500
500 16,000
400 15,900
PROBLEM 3-3A (Continued) (3) Unit costs
Materials ($380,000 ÷ 19,000) ($288,000 ÷ 16,000) Conversion costs ($338,200(a) ÷ 17,800) ($206,700(b) ÷ 15,900) Total
T12 Tables $20
C10 Chairs $18
19 $39
13 $31
(a)
$234,200 + $104,000
(b)
$110,000 + $96,700
(4)
T12 Tables Costs accounted for Transferred out (16,000 X $39) Work in process Materials (3,000 X $20) Conversion costs (1,800 X $19) Total costs
$624,000 $60,000 34,200
94,200 $718,200
C10 Chairs Costs accounted for Transferred out (15,500 X $31) Work in process Materials (500 X $18) Conversion costs (400 X $13) Total costs
$480,500 $9,000 5,200
14,200 $494,700
PROBLEM 3-3A (Continued) (b)
SEAGREN INDUSTRIES INC. Cutting Department—Plant 1 Production Cost Report For the Month Ended July 31, 2014
Quantities
Physical Units
Equivalent Units Conversion Materials Costs
(Step 1)
(Step 2)
Units to be accounted for Work in process, July 1 Started into production Total units
0 19,000 19,000
Units accounted for Transferred out Work in process, July 31 Total units
16,000 3,000 19,000
16,000 3,000 19,000
Costs Unit costs (Step 3) Total cost Equivalent units Unit costs (a) ÷ (b)
(a) (b)
16,000 1,800 (3,000 X 60%) 17,800
Materials
Conversion Costs
$380,000 19,000 $ 20
$338,200 17,800 $ 19
Costs to be accounted for Work in process, July 1 Started into production Total costs
Total $718,200 $
39
$ 0 718,200 $718,200
Cost Reconciliation Schedule (Step 4) Costs accounted for Transferred out (16,000 X $39) Work in process, July 31 Materials (3,000 X $20) Conversion costs (1,800 X $19) Total costs
$624,400 $60,000 34,200
94,200 $718,200
PROBLEM 3-4A
(a) Physical Units Units to be accounted for Work in process, November 1 Started into production Total units
35,000 660,000 695,000
Units accounted for Transferred out Work in process, November 30 Total units
670,000 25,000 695,000
Equivalent Units Conversion Materials Costs
670,000 25,000 695,000
670,000 10,000* 680,000
*25,000 X 40%
Beginning work in process Added during month Total Equivalent units Cost per unit
Materials cost
Conversion costs
$ 79,000 1,589,000 $1,668,000
$ 48,150 563,850 $612,000
695,000
680,000
$2.40
$.90
($225,920 + $337,930)
(b) Costs accounted for Transferred out (670,000 X $3.30) Work in process, November 30 Materials (25,000 X $2.40) Conversion costs (10,000 X $.90) Total costs
$2,211,000 $60,000 9,000
69,000 $2,280,000
PROBLEM 3-4A (Continued) (c)
RIVERA COMPANY Assembly Department Production Cost Report For the Month Ended November 30, 2014
Quantities
Physical Units
Equivalent Units Conversion Materials Costs
(Step 1)
(Step 2)
Units to be accounted for Work in process, November 1 Started into production Total units
35,000 660,000 695,000
Units accounted for Transferred out Work in process, November 30 Total units
670,000 25,000 695,000
Costs Unit costs (Step 3) Total cost Equivalent units Unit costs (a) ÷ (b)
670,000 25,000 695,000
Materials (a) $1,668,000 (b) 695,000 $2.40
670,000 10,000 (25,000 X 40%) 680,000 Conversion Costs $612,000 680,000 $.90
Costs to be accounted for Work in process, November 1 Started into production Total costs
Total $2,280,000
$3.30
$ 127,150 2,152,850 $2,280,000
Cost Reconciliation Schedule (Step 4) Costs accounted for Transferred out (670,000 X $3.30) Work in process, November 30 Materials (25,000 X $2.40) Conversion costs (10,000 X $.90) Total costs
$2,211,000 $60,000 9,000
69,000 $2,280,000
PROBLEM 3-5A
(a)
(1) Physical Units Units to be accounted for Work in process, July 1 Started into production Total units
500 1,250 1,750
Units accounted for Transferred out Work in process, July 31 Total units
1,150 600 1,750
Equivalent Units Conversion Materials Costs
1,150 600 1,750
1,150 240* 1,390
*600 X 40% (2)
Materials cost Beginning work in process Added during month Total
Conversion costs
$ 750 2,400 $3,150
$ 600 2,875 $3,475
Equivalent units
1,750
1,390
Cost per unit
$1.80
$2.50
($1,580 + $1,295)
(3) Costs accounted for Transferred out (1,150 X $4.30) Work in process, July 31 Materials (600 X $1.80) Conversion costs (240 X $2.50) Total costs
$4,945 $1,080 600
1,680 $6,625
PROBLEM 3-5A (Continued) (b)
MORSE COMPANY Basketball Department Production Cost Report For the Month Ended July 31, 2014
Quantities
Physical Units
Equivalent Units Conversion Materials Costs
(Step 1)
(Step 2)
Units to be accounted for Work in process, July 1 Started into production Total units
500 1,250 1,750
Units accounted for Transferred out Work in process, July 31 Total units
1,150 600 1,750
Costs Unit costs (Step 3) Costs in July Equivalent units Unit costs (a) ÷ (b)
(a) (b)
1,150 600 1,750
1,150 240 1,390
Materials
Conversion Costs
$3,150 1,750 $1.80
$3,475 1,390 $2.50
Costs to be accounted for Work in process, July 1 Started into production Total costs
Total $6,625 $4.30
$1,350 5,275 $6,625
Cost Reconciliation Schedule (Step 4) Costs accounted for Transferred out (1,150 X $4.30) Work in process, July 31 Materials (600 X $1.80) Conversion costs (240 X $2.50) Total costs
$4,945 $1,080 600
1,680 $6,625
PROBLEM 3-6A
(a) Computation of equivalent units: Physical Units Units accounted for Transferred out Work in process, October 31 (60% materials, (40% conversion costs) Total units
Equivalent Units Conversion Materials Costs
120,000
120,000
120,000
50,000 170,000
30,000 150,000
20,000 140,000
Computation of October unit costs Materials: $240,000 ÷ 150,000 equivalent units = $1.60 Conversion cost: $105,000 ÷ 140,000 equivalent units = .75 Total unit cost, October $2.35
(b) Cost Reconciliation Schedule Costs accounted for Transferred out (120,000 X $2.35) Work in process, October 31 Materials (30,000 X $1.60) Conversion costs (20,000 X $0.75) Total costs
$282,000 $48,000 15,000
63,000 $345,000
*PROBLEM 3-7A
(a) Bicycles (1) Equivalent units—Materials Materials Added This Period
Physical Units Work in process, March 1 Started and completed Work in process, March 31 Total
200 950 (1,250 – 300) 300 1,450
*
Equivalent Units
0%* 100% 100%
0 950 300 1,250
*All materials are added at the beginning of the production process
Equivalent units—Conversion Conversion Added This Period
Physical Units Work in process, March 1 Started and completed Work in process, March 31 Total
200 950 (1,250 – 300) 300 1,450
Equivalent Units
20% (1 – .8) 100% 40%
40 950 120 1,110
(2) Unit costs Costs in March (a) Equivalent units (b) Unit costs (a) ÷ (b)
Materials
Conversion
$50,000 1,250 $ 40
**$55,500** 1,110 $ 50
**Direct Labor $25,500 + Manufacturing Overhead $30,000
*PROBLEM 3-7A (Continued) (3) Assignment of costs to units transferred out and in process Costs to Be Assigned Total mfg. costs ***$124,780***
Assignment of Costs Transferred out Work in process, March 1 Conversion Started and completed Total costs transferred out Work in process, March 31 Materials Conversion costs Total costs
Equivalent Unit Units Cost
40 950
$50 $90
Total Costs Assigned $19,280 2,000 85,500 $106,780
300 120
$40 $50
12,000 6,000
18,000 $124,780
***Work in process, March 1, $19,280 + Materials $50,000 + Labor $25,500 + Overhead $30,000
Tricycles (1) Equivalent units—Materials Physical Units Work in process, March 1 Started and completed Work in process, March 31 Total
100 740 (800 – 60) 60 900
Materials Added This Period * 0%* 100% 100%
Equivalent Units 0 740 60 800
*All materials are added at the beginning of the production process
Equivalent units—Conversion Physical Units Work in process, March 1 Started and completed Work in process, March 31 Total
100 740 (800 – 60) 60 900
Conversion Added This Period 25% (1 – .75) 100% 25%
Equivalent Units 25 740 15 780
*PROBLEM 3-7A (Continued) (2) Unit costs Costs in March (a) Equivalent units (b) Unit costs (a) ÷ (b)
Materials
Conversion
$30,400 800 $ 38
$35,100** 780 $ 45
**Direct Labor $15,100 + Manufacturing Overhead $20,000 (3) Assignment of costs to units transferred out and in process Costs to Be Assigned
Assignment of Costs
Total mfg. costs Transferred out Work in process, March 1 ***$71,625*** Conversion Started and completed Total costs transferred out Work in process, March 31 Materials Conversion costs Total costs
Equivalent Units
25 740
Unit Cost
Total Costs Assigned
$ 6,125 $45 1,125 $83 61,420 $68,670
60 15
$38 2,280 $45 675
2,955 $71,625
***Work in process, March 1, $6,125 + Materials $30,400 + Labor $15,100 + Overhead $20,000
*PROBLEM 3-7A (Continued) (b)
RONDELI COMPANY Production Cost Report—Bicycles For the Month Ended March 31
Quantities
Physical Units
Equivalent Units Conversion Materials Costs
(Step 1)
(Step 2)
Units to be accounted for Work in process, March 1 Started into production Total units
200 1,250 1,450
Units accounted for Completed and transferred out Work in process, March 1 Started and completed Work In process, March 31 Total units
200 950 300 1,450
0 950 300 1,250
Materials
Conversion Costs
$50,000 1,250 $ 40
$ 55,500 1,110 $ 50
Costs Unit costs (Step 3) Costs in March (a) Equivalent units (b) Unit costs [(a) ÷ (b)] Costs to be accounted for Work in process, March 1 Started into production Total costs Cost Reconciliation Schedule (Step 4) Costs accounted for Transferred out Work in process, March 1 Conversion costs to complete beginning inventory (40 X $50) Started and completed (950 X $90) Work in process, March 31 Materials (300 X $40) Conversion costs (120 X $50) Total costs
*($50,000 + $25,500 + $30,000)
$ 19,280 105,500* $124,780
$19,280 2,000 85,500 12,000 6,000
$106,780 18,000 $124,780
40 950 120 1,110 Total
$105,500 $
90
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