ACC 117 Lecture Notes - Lecture 8: Sept, Process Manufacturing

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tealmammoth179

24 Jul 2020

School

Tunxis Community College

Department

Accounting

Course

ACC 117

Professor

Muccino

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Document Summary

Process costing works well with homogenous products pass through a series of processes and receive a similar amount of manufacturing costs. Sequential processing: units need to pass through one process before they can move on to the next. Parallel processing: units can go through different processes simultaneously then combined at the end to complete a finished product. Manufacturing cost flows are the same as those for job-order system. As raw materials are purchased, cost of these materials flow into a raw materials account. Materials, labour, and overhead flow into a wip account. Completed goods are transferred out of wip to fg account. Goods that are sold are transferred out of fg to a cogs account. Costs transferred from a prior process to a subsequent process. From the viewpoint of subsequent process, transferred-in costs are a type of raw material. Summary of the manufacturing activity of a process department over a certain period of time.

Related Questions

Kansas Supplies is a manufacturer of plastic parts that uses the weighted-average process costing method to account for costs of production. It produces parts in three separate departments: Molding, Assembling, and Packaging. The following information was obtained for the Assembling Department for the month of April.

Work in process on April 1 had 75,000 units made up of the following:

	Amount		Degree of Completion
Prior department costs transferred in from the Molding Department	$	192,000		100	%
Costs added by the Assembling Department
Direct materials	$	120,000		100	%
Direct labor		43,200		60	%
Manufacturing overhead		27,600		50	%
	$	190,800
Work in process, April 1	$	382,800

During April, 375,000 units were transferred in from the Molding Department at a cost of $960,000. The Assembling Department added the following costs:


Direct materials	$	576,000
Direct labor		216,000
Manufacturing overhead		113,400
Total costs added	$	905,400

Assembling finished 300,000 units and transferred them to the Packaging Department.

At April 30, 150,000 units were still in work-in-process inventory. The degree of completion of work-in-process inventory at April 30 was as follows:


Direct materials	90	%
Direct labor	70
Manufacturing overhead	35

Required:

a. Prepare a production cost report using the weighted-average method. (Round "Cost per equivalent unit" to 2 decimal places.)

KANSAS SUPPLIES
Assembling Department
Production Cost ReportâWeighted-Average
Flow of Production Units
	Physical units
Units to be accounted for:
Beginning WIP inventory
Units started this period
Total units to be accounted for

	DETAILS
	Total Costs	Prior Department Costs	Materials	Labor	Manufacturing Overhead
Costs to be accounted for:
Costs in beginning WIP inventory
Current period costs
Total costs to be accounted for

Cost per equivalent unit:
Prior department costs
Materials
Labor
Manufacturing overhead

Costs accounted for:
Costs assigned to units transferred out:
Prior department costs
Materials
Labor
Manufacturing overhead
Total costs of units transferred out
Costs assigned to ending WIP inventory:
Prior department costs
Materials
Labor
Manufacturing overhead
Total ending WIP inventory
Total costs accounted for

yellowseal74

Required information

[The following information applies to the questions displayed below.]

Sierra Company manufactures woven blankets and accounts for product costs using process costing. Data below are for one of its processing departments. The following information is available regarding its May inventories

	Beginning Inventory		Ending Inventory
Raw materials inventory	$	65,000	$	77,000
Work in process inventory		441,500		555,000
Finished goods inventory		632,000		517,000

The following additional information describes the company's production activities for May.


Raw materials purchases (on credit)	$	250,000
Factory wages cost (paid in cash)		1,562,000
Other overhead cost (Other Accounts credited)		38,000
Materials used
Direct	$	158,000
Indirect		80,000
Labor used
Direct	$	800,000
Indirect		762,000
Overhead rate as a percent of direct labor		110	%
Sales (on credit)	$	3,500,000

The predetermined overhead rate was computed at the beginning of the year as 110% of direct labor cost.

1. Compute the cost of products transferred from production to finished goods and cost of goods sold.

Raw Materials (RM)	Work in Process (WIP)






Factory Wages Payable	Finished Goods (FG)





Factory Overhead	Income Statement (Partial)


		$0


	Cost of goods transferred
	Cost of goods sold

ceriseplatypus220

Hello, someone posted the answers (below) to my question. ButI'd like someone to explain how they arrived at each of the numbersin the journal entries so I can learn how to figure it out on myown later. Thanks in advance for your help.

Problem 4-16 Cost Flows [LO1]

Natureâs Way, Inc., keeps one of its production facilities busymaking a perfume called Essence de la Vache. The perfume goesthrough two processing departments: Blending and Bottling.

The following incompleteWork in Process account is provided for the Blending Department forMarch:

Work in ProcessâBlending


March 1 balance	33,500	Completed and transferred to Bottling (760,000ounces)	?
Materials	138,600
Direct labor	63,200
Overhead	477,000

March 31 balance	?

The $33,500 beginning inventory inthe Blending Department consisted of the following elements:materials, $8,100; direct labor, $3,600; and overhead applied,$21,800.

Costs incurred during March in theBottling Department were: materials used, $45,000; direct labor,$16,800; and overhead cost applied to production, $106,000.

Required:

1.	Prepare journal entries to record the costs incurred in both theBlending Department and Bottling Department during March.(Omit the "$" sign in your response.)

a.	Raw materialswere issued for use in production.
b.	Direct laborcosts were incurred.
c.	Manufacturing overhead costs for the entire factory wereincurred, $626,000. (Credit Accounts Payable and use a singleManufacturing Overhead control account for the entire factory.)
d.	Manufacturingoverhead was applied to production using a predetermined overheadrate.
e.	Units that were complete with respect to processing in theBlending Department were transferred to the Bottling Department,$642,000.
f.	Units that were complete with respect to processing in theBottling Department were transferred to Finished Goods,$710,000.
g.	Completed unitswere sold on account for $1,450,000. The cost of goods sold was$600,000.

Expert Answer

		Debit	Credit
a)	Work in process (Bottling)	$ 45,000
	Work in process (Blending)	$ 138,600
	Raw materials		$ 183,600
	Raw materials used for production

b)	Work in process (Bottling)	$ 16,800
	Work in process (Blending)	$ 63,200
	Salaries payable		$ 80,000
	Direct labor cost incurred on production

c)	Manufacturing overheads	$ 626,000
	Accounts payable		$ 626,000
	Incurred Manufacturing overhead costs forthe entire factory for $626,000

d)	Work in process (Bottling)	$ 106,000
	Work in process (Blending)	$ 477,000
	Manufacturing Overheads		$ 583,000
	Manufacturing overhead applied to production

e)	Work in process - Bottling	$ 642,000
	Work in process - (Blending)		$ 642,000
	Units transferred to Bottling

f)	Finshed goods	$ 710,000
	Work in process - Bottling		$ 710,000
	Units transferred to finished goods

g)	Accounts receivable	$1,450,000
	Sales		$1,450,000
	Goods sold on account

	Cost of goods sold	$ 600,000
	Finished Goods		$ 600,000
	Cost of goods sold worth $600,000

harlequingrasshopper250

ACC 117 Lecture Notes - Lecture 8: Sept, Process Manufacturing

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