Problems Process Costing SOLUTION

SOLUTION: 1. ANS: Landers Company Schedule of Equivalent Units for Fifo and Weighted Average May 31, 20X5 FIFO Beginning Work In Process

10,000

Units Started Units to Acct. For Beginning Work In Process Started & Completed

120,000 130,000 10,000 90,000

Ending Work in Process Units Accounted For

30,000 130,000

(a) BWIP S&C EWIP EUP

FIFO Mat. 0 90,000 30,000 120,000

DIF: Moderate

CC 7,500 90,000 9,000 106,500

Weighted Average Beginning Work In Process Units Started Units to Acct. For Transferred Out Ending Work in Process Units Accounted For

(b) Weighted Average Mat. TO EI EUP

100,000 30,000 130,000

10,000 120,000 130,000 100,000 30,000 130,000

CC 100,000 9,000 109,000

OBJ: 6-3,6-4

2. ANS: Landers Company Schedule of Average Cost Per Unit FIFO and Weighted Average May 31, 20X5 (a) FIFO Mat. Costs $33,000 Eq Units 120,000 $.275/eq unit Total cost/eq. unit

DIF: Moderate

CC $109,695 106,500 $ 1.03/eq unit $ 1.305/eq unit

(b) Weighted Average Mat. CC $ 35,100 $111,725 130,000 109,000 $ .27/eq $ 1.025/eq unit unit $ 1.295/eq unit

OBJ: 6-3,6-4

Cost Accounting Foundations and Evolutions

Kinney, Raiborn

3. ANS: Landers Company Schedule of Assigned Costs FIFO and Weighted Average May 31, 20X5 (a) FIFO Beginning Work in Process To complete (7,500 x $1.03) =

$

Started and Completed 90,000 x $1.305 = Total costs transferred out

117,450 $129,305

Ending Work in Process 30,000 x $ .275 = 9,000 x $1.03 =

$

Total costs accounted for (b) Weighted Average Completed 100,000 x $1.295 = Ending Work in Process 30,000 x $ .27 = 9,000 x $1.025 = Total costs accounted for DIF: Difficult

4,130 7,725 $ 11,855

8,250 9,270 $ 17,520 $146,825

$129,500 $

8,100 9,225 $ 17,325 $146,825

OBJ: 6-3,6-4

Cost Accounting Foundations and Evolutions

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4. ANS: a. Cooking Department Materials Transferred Out Ending Work in Process TOTAL EUP

17,100 2,400 19,500

Conversion Costs 17,100 1,440 18,540

Packaging Department Transferred In Transferred Out Ending Work in Process TOTAL EUP b.

17,600 500 18,100

Materials. 17,600 400 18,000

Conversion Costs 17,600 400 18,000

Cooking Department Materials Beginning Work in Process Transferred from Cooking Ending Work in Process TOTAL EUP

0 12,600 2,400 15,000

Conversion Costs 3,150 12,600 1,440 17,190

Packaging Department Transferred In Beginning Work in Process Transferred from Cooking Ending Work in Process TOTAL EUP DIF: Difficult

0 16,600 500 17,100

Materials 100 16,600 400 17,100

Conversion Costs 200 16,600 400 17,200

OBJ: 6-3,6-4

Cost Accounting Foundations and Evolutions

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5. ANS: a.

Weighted average inventory assumption Dept 1 20,000 Complete 5,000 Eq-End WIP 25,000 EP-WA

Unit Cost

$201,050 = $8.042 25,000

End WIP

MAT

CC

20,000 0 20,000

20,000 2,000 22,000

$34,000 = $1.70 20,000

$109,450 = $4.975 22,000

= $14.717

= $40,210 = 9,950 $50,160

Dept 1 = 5,000 x $8.042 CC = 2,000 units x $4.975

COGM = $344,500 - $50,160 = $294,340 b.

FIFO inventory assumption

Dept 1

MAT

Complete Eq-End WIP - Eq-Begin

20,000 5,000 (2,000)

20,000 0 0

EP-WA

23,000

20,000

Unit Cost

$184,000 = $8.00 23,000

$34,000 = $1.70 20,000

End WIP

Dept 1 = 5,000 units x $8.00 CC = 2,000 units x $5.00

CC 20,000 2,000 (1,200) 20,800

$104,000 = $5.00 20,800

= $14.70

= $40,000 = 10,000 $50,000

COGM = $344,500 - $50,000 = $294,500 DIF: Moderate

OBJ: 6-3,6-4

Cost Accounting Foundations and Evolutions

Kinney, Raiborn

6. ANS: a.

c. Materials 46,500 9,000 (8,000) 47,500

b.

Conversion Costs 46,500 3,000 (6,000) 43,500

PD

Mat

44,500 12,000 (10,000) 46,500

CC

44,500 0 0 44,500

44,500 2,400 (3,000) 43,900

Since the material in the second department goes in at the 50 percent point and the ending WIP inventory is only at the 20 percent point, units complete is the same as the equivalents of material 44,500, given that units started plus units in beginning WIP are equal to units complete plus ending WIP 10,000 + 46,500 - 44,500 = 12,000 units in ending WIP.

DIF: Moderate

OBJ: 6-3,6-4

7. ANS: Equivalent production Units complete + Equiv. ending WIP = Equiv. prod. average - Equiv. begin. WIP = Equiv. prod. FIFO

16,000 6,000 22,000 (4,000) 18,000

Unit Cost Average

Unit Cost FIFO

TI = $620 + 1,800 22,000

Mat =

$4,800 16,000

TI

= $0.11

Conv. cost

16,000 0 16,000 0 16,000

TI = $1,800 18,000

16,000 4,000 20,000 (3,000) 17,000

= $0.10

Mat = $4,800 = $0.30

CC = $2,000 + 10,200 20,000

End. WIP-WA PD CC

Material

16,000

= $0.30

CC = $10,200 = $0.61

17,000

= $0.60

End. WIP-FIFO 6,000 x $0.11 = 4,000 x $0.61 =

$

660.00 2,440.00 $3,100.00

6,000 x $0.10 = 4,000 x $0.60 =

$

600.00 2,400.00 $3,000.00

Cost of Goods Complete WA $19,420 - 3,100 =

FIFO $16,320.00

$19,420 - 3,000 =

Cost Accounting Foundations and Evolutions

$16,420.00

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DIF: Moderate

OBJ: 6-3,6-4

MSC: 15-20 min

8. ANS: a. TI Complete + Equiv WIP + Normal Sp + Abnor Sp

33,600 10,500 1,680 420 46,200

b. 33,600 x $9 1,680 x $9

$302,400 15,120 $317,520

c. 10,500 x $5 10,500 x $1 4,200 x $3

$52,500 10,500 12,600 $75,600

Mat 33,600 10,500 1,680 420 46,200

CC 33,600 4,200 1,680 420 39,900

TC = 46,200 x $5 46,200 x $1 39,900 x $3

$231,000 46,200 119,700 $396,900

COGM = $396,900 - 75,600 - 3,780 = $317,520 d. $5 = $18,900 + X 46,200 X = $231,000 - 18,900 = $212,100 e. ABN = 420 x $9 = $3,780 420 x $9 = $3,780 DIF: Moderate

OBJ: 6-3,6-8

Cost Accounting Foundations and Evolutions

Kinney, Raiborn

9. ANS: TI

MAT

6,650 1,500 100 200 8,450

Complete + end + normal + abnormal

DL

6,650 0 100 0 6,750

MOH

6,650 600 100 60 7,410

6,650 300 100 30 7,080

Unit Cost

End WIP DL MOH TI

600 x $3.40 300 x $8.80 1,500 x $9.00

= = =

Abnormal Loss DL MOH TI

60 x $3.40 30 x $8.80 200 x $9.00

= = =

$ 2,040 2,640 13,500 $18,180

$

204 264 1,800 $ 2,268

COGM = $171,513 - 18,180 - 2,268 = $151,065 DIF: Moderate

OBJ: 6-3,6-8

10. ANS: Normal Sp = 11% x 61,000 = 6,710 units Abnormal Sp = 8,000 - 6,710 = 1,290 units Mat CC Complete + End + Ab Sp - Ave - Beg FIFO

61,000 16,000 1,290 78,290 (11,000) 67,290

FIFO

61,000 12,000 1,290 74,290 (2,750) 71,540

Mat =

CC =

WIP Material CC

$1,480,000 67,290

$942,000 71,540

=

16,000 x $22.00 12,000 x $13.17

$352,000

Loss = 1,290 x $35.17

Cost Accounting Foundations and Evolutions

= $22.00

13.17 $35.17

158,040 $510,040 45,369

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COGM = $2,672,000 - 510,040 - 45,369 = $2,116,591 DIF: Moderate

OBJ: 6-3,6-8

11. ANS: a. 1

Complete

Mat

CC

22,000

22,000

2,800

+ End WIP

24,800

- Beg WIP

(1,000) 23,800

1,120 23,120

(650)

(2,800 x 4)

Mat =

$38,080 23,800

=

$

1.60

CC =

$78,645

=

$

3.50

=

$

4,480

22,470

(1,000 x .65)

End WIP =

22,470

2,800 x $1.60 1,120 x $3.50

3.920 $ 8,400 $112,175

COGM = $120,575 - 8,400

b. 2 TI

Mat

CC

Mat =

$ 77,775 25,500

=

$

$3.05

Complete + End WIP + Normal

24,000 4,500 1,100

24,000 0 1,120

24,000 900 880

CC =

$ 15,399 26,100

=

$

$0.59

+ Abnormal

400 30,000

400 25,500

320 26,100

TI =

$154,500

=

$

5.15

30,000

End WIP 4,500 x $5.15 900 x $0.59

$23,175 531 $23,706

Abn Loss 400 x $3.05 320 x $0.59 400 x $5.15

$1,220 189 2,060 $3,469

COGM = $247,674 - 23,706 - 3,469 = $220,499 DIF: Moderate

OBJ: 6-3, 6-8

Cost Accounting Foundations and Evolutions

Kinney, Raiborn

12. ANS: Mat Units Complete + Equivalents Ending WIP + Abnormal Loss = Equivalent Production-WA = Equivalent Begin WIP = Equivalent Production-FIFO Unit Costs: WA Mat $915,120 = $5.05 181,200 CC

$338,688 = $1.97 171,520

Ending WIP Material CC Abnormal Spoilage Material CC

20,000 x $5.05 14,000 x $1.97

9,200 x $5.05 5,520 x $1.97

152,000 20,000 9,200 181,200 (6,000) 175,200

FIFO Mat

CC

CC 152,000 14,000 5,520 171,520 (1,800) 169,720

(9,200 x .6)

$885,120 175,200

= $5.05

$335,088 169,720

= $1.97

$101,000 27,580 $128,580

$ 46,460 10,874 $ 57,334

Cost of Good Transferred 1,253,808 - 128,580 - 57,334 = $1,067,894 DIF: Moderate

OBJ: 6-3,6-8

Cost Accounting Foundations and Evolutions

Kinney, Raiborn

13. ANS: Delightful Yogurt Company Cost Report October 31, 20X5 5,000 5,500 1,200 11,700

BWIP Trans. In Fruit Acctble. For

TI 9,000 1,700 1,000 11,700

Transferred Out EWIP Abnormal Spoilage

Fruit 9,000 1,700 1,000 11,700

Container 9,000 0 0 9,000

CC 9,000 1,020 980 11,000

Costs: TI $ 9,700 12,400 $22,100 11,700 $1.89

BWIP Current EUP Per unit

Fruit

Container

$10,500 54,000 $64,500 11,700 $5.51

$ 0 11,000 $11,000 9,000 $1.22

$ 3,213 9,367 10,475

$ 23,055

$ 1,890 5,510 10,065

17,465

CC $ 15,000 98,000 $113,000 11,000 $10.27

Cost Assignment: EWIP 1,700 x $1.89 = 1,700 x $5.51 = 1,020 x $10.27 = Spoilage 1,000 x $1.89 = 1,000 x $5.51 = 980 x $10.27 = Transferred Out $210,600 - 23,055 - 17,465 =

$210,600

Total accounted for DIF: Moderate

170,080

OBJ: 6-3,6-8

Cost Accounting Foundations and Evolutions

Kinney, Raiborn

14. ANS: BI 8,000 + Started 35,000 = Accountable for 43,000 Hocking Company Cost Report March 31, 20X8 Material 8,000 11,500 15,000 6,000 2,500 43,000

BWIP S&C EWIP Norm Abnorm. Acctd. For

0 11,500 15,000 0 2,500 29,000

CC 1,600 11,500 8,250 0 23,850

Material: $50,000/29,000 = $1.72 Conversion Costs: $175,000/23,850 = $7.34 Cost Assignment: Ending Work in Process 15,000 x $1.72 = 8,250 x $7.34 = Abnormal Spoilage 2,500 x $9.06 = Cost Transferred Out $284,000 - 86,355 - 22,650 = Total costs accounted for DIF: Moderate

$ 25,800 60,555

$ 86,355 22,650 174,995 $ 284,000

OBJ: 6-4,6-8

Cost Accounting Foundations and Evolutions

Kinney, Raiborn

15. ANS: BI 8,000 + Started 35,000 = Accountable for 43,000 Hocking Company Cost Report March 31, 20X8 Material Transferred Out Ending Work In Process Normal Spoilage Abnormal Spoilage 2,500 Accounted For

19,500 15,000 6,000 2,500 43,000

19,500 15,000 0 2,500 37,000

CC 19,500 8,250 0 30,250

Material: $64,000/37,000 = $1.73 Conversion Costs: $220,000/30,250 = $ 7.27 Cost Assignment: Ending Work in Process 15,000 x $1.73 = 8,250 x $7.27 = Abnormal Spoilage 2,500 x $9.00 = Transferred Out $284,000 - 85,928 - 22,500 = Total costs accounted for DIF: Moderate

$25,950 59,978

$ 85,928 22,500 175,572 $ 284,000

OBJ: 6-3,6-8

Cost Accounting Foundations and Evolutions

Kinney, Raiborn