ACCT-241 Chapter 3: Managerial Accounting Ch3
Document Summary
Get access
Related Documents
Related Questions
12. EX.17-12.ALGO
Cost of Units Completed and in Process
The charges to Work in ProcessâAssembly Department for a period,together with information concerning production, are as follows.All direct materials are placed in process at the beginning ofproduction.
| Work inProcessâAssembly Department | |||
|---|---|---|---|
| Bal., 3,000 units, 50%completed | 7,350 | To Finished Goods,69,000 units | ? |
| Direct materials,71,000 units @ $1.3 | 92,300 | ||
| Direct labor | 126,000 | ||
| Factory overhead | 49,000 | ||
| Bal. ? units, 50%completed | ? | ||
Cost per equivalent units of $1.30 for Direct Materials and$2.50 for Conversion Costs.
a. Based on the above data, determine thedifferent costs listed below.
If required, round your interim calculations to two decimalplaces.
| 1. Cost of beginning work in process inventory completed thisperiod. | $ |
| 2. Cost of units transferred to finished goods during theperiod. | $ |
| 3. Cost of ending work in process inventory. | $ |
| 4. Cost per unit of the completed beginning work in processinventory, rounded to the nearest cent. |
Passera Inc. manufactures a single product in a continuousprocessing environment. All materials are added at the beginning ofthe process, and conversion costs are applied evenly throughout theprocess. To assign costs to inventories, the company usesweighted-average process costing.
The following information was available for 2016:
| Sales (selling price per unit, $40) | $4,080,000 | |
| Actual manufacturing overhead | 660,000 | |
| Selling and administrative expenses | 328,000 |
| Unit costs of production: | ||
| Direct materials (1 kilogram) | $ 6.00 | |
| Direct labour (1/2 hour) | 8.00 | |
| Overhead | 9.00 | |
| Total | $23.00 |
| Units transferred to finished goods | 140,000 units | |
| Materials purchased | 125,000 kilograms | |
| Materials used in process | 136,000 kilograms |
An inventory count at year end (December 31, 2016) revealed thatthe inventories had the following balances:
| Raw materials | 8,000 kilograms | |
| Work in process (45% complete) | 22,000 units | |
| Finished goods | 45,000 units |
The January 1, 2016, work in process units are 70% complete. Theunit cost of production was the same in 2016 as it was in2015.
Calculate the following amounts for Passera Inc.:
1.The opening (January 1, 2016) balance in units and costs of(1) raw materials, (2) work in process, and (3) finished goods.
2.The equivalent units for 2016 for (1) materials and (2)conversion costs.
3.The total cost for 2016 for (1) materials used and (2)conversion applied.
4.Thecost of ending work in process for 2016.
5.The cost of units completed and transferred to finishedgoods.
Dover Chemical Company manufactures specialty chemicals by a series of three processes, all materials being introduced in the Distilling Department. From the Distilling Department, the materials pass through the Reaction and Filling departments, emerging as finished chemicals.
The balance in the account Work in ProcessâFilling was as follows on January 1:
| Work in ProcessâFilling Department | ||
| (4,200 units, 70% completed): | ||
| Direct materials (4,200 x $16.2) | $68,040 | |
| Conversion (4,200 x 70% x $10.6) | 31,164 | |
| $99,204 | ||
The following costs were charged to Work in ProcessâFilling during January:
| Direct materials transferred from Reaction | ||
| Department: 54,200 units at $16 a unit | $867,200 | |
| Direct labor | 295,310 | |
| Factory overhead | 283,730 | |
During January, 53,700 units of specialty chemicals were completed. Work in ProcessâFilling Department on January 31 was 4,700 units, 40% completed.
Required:
1. Prepare a cost of production report for the Filling Department for January. If an amount is zero, enter "0". If required, round your cost per equivalent unit answers to two decimal places.
| Dover Chemical Company | |||
| Cost of Production Report-Filling Department | |||
| For the Month Ended January 31 | |||
| Unit Information | |||
| Units charged to production: | |||
| Inventory in process, January 1 | |||
| Received from Reaction Department | |||
| Total units accounted for by the Filling Department | |||
| Units to be assigned costs: | |||
| Equivalent Units | |||
| Whole Units | Direct Materials | Conversion | |
| Inventory in process, January 1 | |||
| Started and completed in January | |||
| Transferred to finished goods in January | |||
| Inventory in process, January 31 | |||
| Total units to be assigned costs | |||
| Cost Information | |||
| Cost per equivalent unit: | |||
| Direct Materials | Conversion | ||
| Total costs for January in Filling Department | $ | $ | |
| Total equivalent units | |||
| Cost per equivalent unit | $ | $ | |
| Costs assigned to production: | |||
| Direct Materials | Conversion | Total | |
| Inventory in process, January 1 | $ | ||
| Costs incurred in January | |||
| Total costs accounted for by the Filling Department | $ | ||
| Costs allocated to completed and partially completed units: | |||
| Inventory in process, January 1 balance | $ | ||
| To complete inventory in process, January 1 | $ | ||
| Cost of completed January 1 work in process | $ | ||
| Started and completed in January | $ | ||
| Transferred to finished goods in January | $ | ||
| Inventory in process, January 31 | |||
| Total costs assigned by the Filling Department | $ | ||
Feedback
1. Calculate equivalent units for materials and conversion costs. Calculate the cost per equivalent unit for materials and conversion costs. Calculate the costs assigned to the beginning inventory, the units started and completed, and the ending inventory.
2. Journalize the entries for (1) costs transferred from Reaction to Filling and (2) the cost transferred from Filling to Finished Goods.
| (1) | Work in Process-Filling Department | ||
| Work in Process-Reaction Department | |||
| (2) | Finished Goods | ||
| Work in Process-Filling Department |
Feedback
2. Remember that there are three types of inventory; materials, work in process, and finished goods. What costs are captured in the work in process account? Are these units 100% complete or are they being transferred to another department?
3. Determine the increase or decrease in the cost per equivalent unit from December to January for direct materials and conversion costs. If required, round your answers to two decimal places.
| Increase or Decrease | Amount | |
| Change in direct materials cost per equivalent unit | Decrease | $ |
| Change in conversion cost per equivalent unit | Increase | $ |
4. Discuss the uses of the cost of production report and the results of part (3).
The cost of production report may be used as the basis for allocating product costs between Work in Process and Finished Goods . The report can also be used to control costs by holding each department head responsible for the units entering production and the costs incurred in the department. Any differences in unit product costs from one month to another, such as those in part (3), can be studied carefully and any significant differences investigated.