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PAN CORPORATION

PAN CORPORATION produces toy chairs for young children. Plastic pieces are molded in the plastics department. These pieces are transferred to the assembly department, where additional work is done. Units completed in the Assembly Department are transferred to Finished Goods.

Plastics Department

The direct materials are added in the plastics department at the beginning of the process. In the month of February beginning inventory is 80% complete as to conversion costs and ending inventory is 25% complete as to conversion costs. Following are data for February:

Beginning inventory costs for the plastics department:

Direct materials $2,000

Conversion costs 1,600

Total $3,600

Costs incurred in the plastics department during February:

Direct materials $18,000

Conversion costs 16,000

Total $34,000

Physical units in the plastics department

Units in beginning inventory 2,000

Units transferred-in during August 18,000

Total units transferred out 15,000

Units in ending inventory ?

The company uses weighted average.

Required:

What is the difference between job order costing and process costing?

All questions below relate to the Plastics Department:

Compute the equivalent units and the cost per equivalent unit for February.

If materials are added at the end of the period, compute the equivalent units and costs per equivalent unit for February.

If materials are added at the 20% point, compute the equivalent units.

Why is that direct labor and overhead are combined into conversion costs in this problem?

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Nelly Stracke
Nelly StrackeLv2
28 Sep 2019

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USE FIRST-IN, FIRST-OUT COSTING

Sulu Company produces its finished product in two processing departments--Assembly and Packaging.

The following information is available for the month of July:

Assembly Department:

The beginning work-in-process inventory was $5,755 ($4,815 direct materials and $940 conversion costs) and consisted of 350 units that were 10% complete as to conversion costs.

During July, an additional 4,500 units were started into production.

A total of 4,650 units were completed and transferred out to the Packaging Department.

The ending work-in-process inventory consisted of 200 units which were 35% complete as to conversion costs.

The following costs were incurred during July: direct materials $73,800; direct labor $86,300; and overhead $40,195.

Direct materials are added at the beginning of the process in the Assembly Department and conversion costs are incurred evenly throughout the production process.

Packaging Department:

The beginning work in process inventory was $29,631 ($18,606 transferred-in costs and $11,025 conversion costs) and consisted of 450 units that were 70% complete as to conversion costs.

During July, a total of 4,800 units were completed and transferred out to Finished Goods Inventory.

The ending work in process inventory consisted of 300 units which were 60% complete as to conversion costs.

The following costs were incurred during July: direct materials $132,480; direct labor $60,000; and overhead costs $105,141.

Direct materials are added at the end of the process in the Packaging Department and conversion costs are incurred evenly throughout the production process.

REQUIRED:

A. Prepare a production report for July for the Assembly Department.

B. Give the general journal entry to record the transfer of the completed units from the Assembly Department to the Packaging Department for July.

C. Prepare a production report for July for the Packaging Department.

TAO CORPORATION

The TAO CORPORATION manufactures chairs that must go through one department.

Direct materials are added at the beginning of the process. Conversion costs are added evenly during the process. The accounting records for February provide the following information:

Conversion

Physical Units Materials Costs

Beginning inventory

Work in Process 20 $460,000 $120,000

Started during February 80

Completed in February 90

Ending inventory

Work in Process ?

February costs $2,000,000 $927,600

Note: The beginning inventory is 60% complete as to conversion costs, and the ending inventory is 70% complete as to conversion costs. TAO uses the weighted average method.

REQUIRED:

Determine the equivalent units for February.

Compute the costs per equivalent unit for February.

Determine the total cost of the units transferred out and the ending work in process inventory.

Prepare all regular journal entries for February.

The Fields Company has two manufacturing departments, forming and painting. The company uses the weighted-average method of process costing. At the beginning of the month, the forming department has 30,000 units in inventory, 65% complete as to materials and 35% complete as to conversion costs. The beginning inventory cost of $61,000 consisted of $45,000 of direct materials costs and $16,000 of conversion costs. During the month, the forming department started 300,000 units. At the end of the month, the forming department had 35,000 units in ending inventory, 90% complete as to materials and 20% complete as to conversion. Units completed in the forming department are transferred to the painting department. Cost information for the forming department is as follows: Beginning work in process inventory $ 61,100 Direct materials added during the month 1,261,000 Conversion added during the month 890,000 1. Calculate the equivalent units of production for the forming department. 2. Calculate the costs per equivalent unit of production for the forming department. 3. Using the weighted-average method, assign costs to the forming department’s output—specifically, its units transferred to painting and its ending work in process inventory.

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