process costing-practice sheet

Process Costing-Process Costing- Practice Sheet

DEPARTMENT OF ACCOUNTING & INFORMATIONDEPARTMENT OF ACCOUNTING & INFORMATION SYSTEMSYSTEM

FACULTY OF BUSINESS ADMINISTRATIONFACULTY OF BUSINESS ADMINISTRATIONJAGANNATH UNIVERSITY JAGANNATH UNIVERSITY

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Practice test – 1

The assembly department of Reynolds Electronics begins its process with a circuit board adds some components, performs a test (rejected units at this point are discarded), adds further components, tests the product again (rejected units at this point are returned for rework) and finally adds a cabinet to complete the product.

The department began the period with 12,000 units in process 60% completed. An additional 73,000 units were placed into production. The firm ended the period with 8,000 units in process 90% complete.

The first inspection (spoilage) occurs when the units are considered 20% complete. Normally, management expects 10% of the units inspected to be discarded. During the current period, 9,000 units were discarded. The second inspection (rework) occurs when the units are 75% complete. Rejected units are returned to be 50% complete point in the process. Management allows for 15% of the units inspected being normal rework. During the period, 95,000 units were inspected for rework.

The cost of beginning work-in-process was $50,000 for circuit boards and $70,000 for conversion costs. The costs incurred during the period for circuit boards were $3, 75,000 and conversion costs were $7, 06,625.

Required: Using the weighted average costing and FIFO costing Method:

(a) Draw a process line for the above case.(b) How many units are completed and transferred out during the period?(c) What percentage of additional work need to be done during rework?(d) What percentage of circuit boards costs incurred during rework?(e) What percentage of labor costs incurred during rework?(f) How many units are inspected during the period?(g) How many units are normal reworks?(h) How many units are normal spoilage?(i) How many units are abnormal rework (abnormal gain)?(j) How many units are abnormal spoilage.(k) How many EU have been worked for spoilage in terms of circuit boards?(l) How many EU have been worked for spoilage in terms of Cc?(m)How many EU have been worked for rework in terms of circuit boards?(n) How many EU have been worked for rework in terms of Cc?(o) Determine the cost of normal rework.(p) Determine the cost of normal spoilage.(q) How many EU of BWIP have been completed last period in terms of circuit boards?(r) How many EU of BWIP have been completed last period in terms of Cc?(s) Determine the cost of goods completed and transferred out during the period(t) Determine the cost of ending work-in-process.(u) Prepare the process account.

Practice test – 2

Selkirk Company makes super-premium cake mixes that goes through two processing departments, Blending and Packaging. Materials are added at the beginning of the

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blending process and conversion costs are incurred uniformly throughout the process. The following activity was recorded in the Blending Department during July:

UnitsDirect

Material Costs

Conversion Costs

Work in Process 7/1/10 (40% completed)

6,000 $ 1,70,100 $ 27,400

Units started in production 54,000

Costs for July $14,51,900 $15,07,000


10,000

Required:

(a) Prepare a quantity schedule for the process under FIFO costing method.(b)Calculate cost per equivalent unit for each cost components under FIFO costing

method.(c) Prepare a cost report for Selkirk Company under FIFO average costing method.

Practice test – 3

ABC Company makes super-premium cake mixes that goes through two processing departments, Blending and Packaging. Materials are added at the beginning of the blending process and conversion costs are incurred uniformly throughout the process. The following activity was recorded in the Blending Department during July:

UnitsDirect

Material Costs

Conversion Costs


10,000

$ 2,70,000 $ 87,000


Costs for July $24,50,000 $25,00,000


20,000

Required:

(d)Prepare a quantity schedule for the process under weighted costing method.(e) Calculate cost per equivalent unit for each cost components under weighted costing

method.(f) Prepare a cost report for Selkirk Company under weighted average costing method.

Practice test – 4

XYZ Products manufactures an industrial cleaning compound that goes through three processing departments – Grinding, Mixing and Cooking. All raw materials are introduced in the process of Mixing Department when process reached 45% level of work. Labors are paid when the work has been completed by 60% and overheads are incurred uniformly

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throughout the process. The work in process T-account for the Mixing Department for a recent month is given below:

Work-in-Process (Mixing Department)

$ $Inventory, May 1 (10,000 units 80% completed): 34,58

5

Completed and transferred to Cooking Department (70,000 units)

?

May costs added (65,000 units introduced in the process):

Inventory, May 31 (6,000 units, 80% completed) ?

Direct materials 162,500

Direct labor 111,600

Manufacturing overhead 109,650

Total 418,335

418,335

The May 1 work in process inventory consists of $36,000 in materials, $40,000 in labor and $7,000 in overhead costs. The company uses the weighted method to account for units and costs.

Required: Prepare a production report for Mixing Department for the month.

Practice test – 5

Jan Jose of northern Monroe state in Newport makes a unique syrup using cane sugar and local herbs. The syrup is sold in small bottles and is prized as a flavoring for drinks and for use in desserts. The bottles are sold for $35 each. The first stage in the production process is carried out in the Mixing Department, which removes foreign matter from the raw materials and mixes them in the proper proportions in large vats. The company uses the FIFO method in its process costing system. Materials in the department needs to be introduced in several stages, 40% of the total materials are introduced when production has been started, 60% of the total materials are introduced when production has been completed by 70% and the rest 30% of the total material should be introduced at 80% process level. Labor will be paid when work has been done by 40% and overhead costs are incurred uniformly throughout the process. The company uses FIFO method of costing.

The following activity was recorded in the Mixing Department during July:

Units DM DL MOHWork in Process 7/1/12 (40% completed)

30,000

$25,000

- $15,000


Costs for July $3,50,000

$2,00,000

$344,000


50,000

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Required: Prepare a production report for the Mixing Department for the month.

Practice test – 6

Next Products, Inc. manufactures a cooking compound that goes through three processing stages prior to completion. Information on work in the first department, cooking, is given below for May:

Production data:

Units in process, May 1; 100% complete as to materials and 80% complete as to conversion.

7,500

Units started into production during May 67,500

Good units completed and transferred out during May

55,500

Units in process, May 31; 100% complete as to materials and 25% complete as to conversion

12,000

Cost data:

Work in process inventory, May 1:

Materials cost $7,500

Conversion cost 6,000

Cost added during May:

Materials cost $67,500

Conversion cost 60,000

Materials are added at beginning of the cooking process, whereas labor and overhead costs are incurred uniformly. Spoiled units are detected upon inspection at the end of the process (normal spoilage is 5% of units inspected) and are disposed of at zero net disposal value. All completed work is transferred to the next department. The company uses the weighted-average method and FIFO costing method.

Required:

Prepare a quantity schedule and a computation of equivalent units; Compute the costs per equivalent unit for the month; and prepare cost reconciliation.

Practice test – 7

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The Sporting Bag Company manufactures golf bags in a two-department process: Assembly and Finishing. The Assembly Department uses weighted average costing; the cost driver for overhead in this department is unrelated to direct labor. The Finishing Department adds the hardware to the assembled bags and uses weighted-average method. Overhead is applied to the bags in this department on a direct labor basis. During June, the following production data and costs have been gathered:

Assembly Department: UnitsBeginning work in process

(100% complete for material; 40% complete for labor; 30% complete for overhead) 750 units

Units started 25,400 unitsEnding work in process

(100% complete for material; 70% complete for labor; 90% complete for overhead) 1,200 units

Assembly Department: Costs

Material

Direct Labor

Overhead

Total

Beginning inventory

$ 3,755 $ 690 $ 250 $ 4,695

Current 100,320

63,606 27,681 191,607

Totals $104,075

$64,296 $27,931 $196,302

Finishing Department: UnitsBeginning work in process

(100% complete for transferred-in; 75% complete for material; 50% complete for conversion) 300 units

Units transferred in 25,950 unitsEnding work in process

(100% complete for transferred-in; 80% complete for material; 75% complete for conversion) 600 units

Finishing Department: Costs

Transferred-In

Direct Materi

al

Conversion Total

Beginning inventory

$ 2,176 $ 30 $ 95 $ 2,301

Current 188,570 15,471 21,600 225,641Totals $190,746 $15,50

1 $21,695 $227,94

2

Required:

(a) Prepare a cost of production report for the Assembly Department.(b)Prepare a cost of production report for the Finishing Department.

Practice test – 8

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Acer Co. Ltd. began the current period with 2,000 units, which were 60% complete. During the period, works on additional 1, 00,000 units were started. Materials are added at the start of the process while labor is added when units are 40% complete. Overhead costs are incurred uniformly. Units are inspected for rework when they are 50% complete. Rejected units are returned to 20% complete point for rework. Normal rework is 1% of the units inspected. Units are again inspected when they are 70% complete. Rejected units are thrown away as spoiled. Normal spoilage is 2% of the units inspected. There were 1,04,000 units inspected for rework and 1,600 units were rejected as spoilage. Ending work in process consists of 12,000 units, 80% complete. Costs attached to opening inventory were $75000 for material, $ 63,000 for labor and $1,50,000 for overheads; Current costs were material $12,25,000, labor $7,06,000 and $ 10,00,000 for overhead.

Required: Using the weighted average costing method and FIFO costing method find out –

(a) Cost of goods completed(b)Cost of ending work in process(c) Cost of abnormal rework and (d)Cost of abnormal spoilage.

Practice test – 9

PQS Company produces outdoor brooms. On April 30, 2012, the firm had 7,200 units in process that were 80% complete as to material, 50% complete as to direct labor, and 30% complete as to overhead. During May, 2, 80,000 brooms were started. Records indicate that 2, 84,000 units were transferred to Finished Goods Inventory in May. Ending units in process were 40% complete as to material, 25% complete as to direct labor, and 10% complete as to overhead.

Required:

(a) Calculate the physical units to account for in May.(b) How many units were started and completed during May?(c) Determine May’s EUP for each category using the weighted average method.(d) Determine May’s EUP for each category using the FIFO method.(e) Reconcile your answers to parts (c) and (d).

Practice test – 10

The Northwest Coal Company mines and processes coal that is sold to four power plants in central Pennsylvania. The company employs a process costing system to assign production costs to the coal it processes. For the third week in March 2011, the firm had a beginning Work in Process Inventory of 1,00,000 tons of ore that were 100% complete as to material and 30% complete as to conversion costs. During the week, an additional 4, 00,000 tons of ore were started in process. At the end of the week, 70,000 tons remained in Work in Process Inventory and were 70% complete as to material and 60% complete as to conversion. For the third week in March:

Required:

(a) Compute the total units to account for.(b) Determine how many units were started and completed.

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(c) Determine the equivalent units of production using the weighted average method.(d) Determine the equivalent units of production using the FIFO method.


Mimi (Mother is My Identity) Products manufactures an electronic language translator. The device can translate seven languages in either direction. Analysis of beginning Work in Process Inventory for February 2012 revealed the following:

1,600 Units % Complete Cost Incurred

Material 55 $ 18,000Direct labor

60 13,000

Overhead 50 16,000Total beginning WIP $47,000

During February, Mimi Products started production of another 8,000 translators and incurred $95,000 for material, $23,000 for direct labor, and $65,000 for overhead. On February 29, the company had 800 units in process (70% complete as to material, 90% complete as to direct labor, and 80% complete as to overhead).

Required: Prepare a cost of production report for February using the weighted average method and FIFO method


Melt Enterprises manufactures belt buckles in a single-step production process. To determine the proper valuations for inventory balances and Cost of Goods Sold, you have obtained the following information for August 2011:

Whole Units

Cost of Material

Cost of Labor

Beginning work in process 2,00,000 $ 2,00,000 $ 3,15,000

Units started during period 1,000,000 1,300,000 1,995,000Units transferred to finished goods

9,00,000

Beginning inventory units were 100% complete as to material, but only 80% complete as to labor and overhead. The ending inventory units were 100% complete as to material and 50% complete as to conversion. Overhead is applied to production at the rate of 60% of direct labor cost.

Required:

(a) Prepare a schedule to compute equivalent units of production by cost component assuming the FIFO method.

(b)Determine the unit production costs for material and conversion.(c) Calculate the costs assigned to completed units and ending inventory for August 2011.


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The following information has been gathered from the records of Jack’s Snacks for August 2011. The firm makes a variety of snacks; the information presented here is for a cashew and dried mango mix. Materials are added at the beginning of processing; overhead is applied on a direct labor basis. The mix is transferred to a second department for packaging. Jack’s uses a weighted average process costing system.

Beginning WIP inventory (50% complete as to conversion)

10,000 pounds

Mix started in August 1,80,000 poundsEnding WIP inventory (80% complete as to conversion)

8,000 pounds

Materials cost incurred in August $9,00,000

Conversion costs incurred in August $200,000

Beginning inventory cost totaled $26,000. For August 2011, compute the following:

Required:

(a) Equivalent units of production by cost component.(b)Cost per equivalent unit by cost component.(c) Cost of mix transferred to the packaging department in August.(d)Cost of August’s ending inventory.


In a single-process production system, the Cleopatra Corporation produces press-on fingernails. For October 2012, the company’s accounting records reflected the following:

Beginning Work in Process Inventory

(100% complete as to material; 40% complete as to direct labor;

70% complete as to overhead) 3,000 units

Units started during the month 22,000 units

Ending Work in Process Inventory

(100% complete as to material; 30% complete as to direct labor;

60% complete as to overhead) 8,000 units

Cost Component

Beginning Inventory

October

Material $4,000 $45,000

Direct labor 750 21,000Overhead 3,000 33,000

Required:

(a) For October, prepare a cost of production report assuming the company uses the weighted average method.

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(b)For October, prepare a cost of production report assuming the company uses the FIFO method.


You have just been hired as the cost accountant for Sun Valley Micro, a producer of personal computer cases. This position has been vacant for one month. John Amos, manager of the firm’s tax department, has performed some computations for last month’s information; however, he confesses to you that he doesn’t remember a great deal about

cost accounting. In the production process, materials are added at the beginning of production and overhead is applied to each product at the rate of 70 percent of direct labor cost. There was no Finished Goods Inventory at the beginning of July. A review of the firm’s inventory cost records provides you with the following information:

Units DM Cost

DL Cost

Work in Process 7/1/12(70% complete as to labor and overhead)

200,000 $ 15,00,0

00

$ 4,30,00

0Units started in production 2,600,0

00Costs for July 8,850,0

006,265,0

00Work in Process 7/31/12

(40% complete as to labor and overhead)

8,00,000

At the end of July, the cost of Finished Goods Inventory was determined to be $124,000.

Required:

(a) Prepare schedules for July 2012, to compute the following:

1. Equivalent units of production using the weighted average method.

2. Unit production costs for material, labor, and overhead.

3. Cost of Goods Sold.

(b) Prepare the journal entries to record the July transfer of completed goods and the July cost of goods sold.


Foreign Defense, Inc. is a manufacturer of military equipment. Its Halifax plant manufactures the Interceptor missile under contract to the Canadian government and friendly countries. All Interceptors go through an identical manufacturing process. Every effort is made to ensure that all Interceptors are identical and meet many demanding performances specifications. The product-costing system at the Halifax plant has a single direct cost category (direct materials) and a single indirect cost category (conversion costs). Each Interceptor passes through two departments – the Assembly Department and

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the Testing Department. Direct materials are added at the beginning of the process in Assembly. Conversion costs are added evenly throughout the two departments. When the Assembly Department finishes work on each Interceptor, it is immediately transferred to Testing.

Foreign Defense uses the weighted-average method of process costing. Data for the Assembly Department for October 2009 are:

Physical units

(missiles)

DirectMaterials

Conversion

CostsWork in process, October 1[Conversion completed 60%]

30 $5,60,000 $2,20,000

Started during October 2009 70Completed during October 2009 80Work in process, October 31[Conversion completed 80%]

20

Costs are added during October 2009 $2,000,000

$955,000

Required:

1. For each cost element, compute equivalent units of work done in October 2009 in the Assembly Department. Show physical units in the first column.

2. For each cost element, calculate cost per equivalent unit of beginning work in process and of work done in October 2009.

3. Summarize the total Assembly Department costs for October 2009, and assign these costs to units completed (and transferred out) and to units in ending work in process using the FIFO method.

4. Prepare a set of summarized journal entries for all October 2009 transactions affecting Work in Process-Assembly. Set up at T-account for Work in Process-Assembly, and post the entries to it.


[Continuing practice test of 15] Foreign Defense, Inc., as you know, manufactures the Interceptor missile at its Halifax plant. It has two departments-Assembly Department and Testing Department. This problem focuses on the Testing Department. Direct materials are added at the end of the Testing Department. Conversion costs are added evenly during the Testing Department’s process. As each unit is completed in Testing, it is immediately transferred to Finished Goods.

Global Defense uses the weighted-average method of process costing. Data for the Testing Department for October 2009 are:

Physical units

(missiles)

Transferred in costs

DirectMaterial

s

Conversion

CostsWork in process, October 1[Conversion completed 70%]

30 $985,000 $0 $331,000

Started during October 2009 ?Completed during October 2009 100Work in process, October 31[Conversion completed 60%]

15

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Costs are added during October 2009 $3,192,000

$3,885,000

$1,581,000

Required:

1. Prepare a Production Report for the Testing Department for October 2009.2. Prepare journal entries for October transfers from the Assembly Department to the

Testing Department and from Testing to Finished Goods.


Star Toys manufactures one type of wooden toy figure. It buys wood as its direct material for the Forming Department of its Fredericton plant. The toys are transferred to the Finishing Department, where they are hand-shaped and metal is added to them. In the Forming Department materials are added at the beginning of the process whereas, direct materials are added when conversion is completed 80% in the Finishing Department.

A star toy uses the weighted-average method of process costing. Consider the following data for the Forming Department in April 2011:

Physical units

(missiles)

DirectMaterial

s

Conversion

CostsWork in process, April 1 [Conversion completed 40%]

3000 $75000 $21250

Started during April 2011 22000Completed during April 2011 20000Work in process, April 31 [Conversion completed 25%]

5000

Costs are added during April 2011 $700000 $425000

Required:

1. Summarize the total Forming Department costs for April 2011, and assign these costs to units completed (and transferred out) and to units in ending work in process using the FIFO method.

2. Prepare a set of summarized journal entries for all April transactions affecting Work in Process-Forming. Set up a T-account for Work in Process-Forming, and post the entries to it.

Given the following information for the Finishing DepartmentPhysical

units(missiles)

Transferred in costs

DirectMaterial

s

Conversion

CostsWork in process, April 1[Conversion completed 60%]

5000 $177500 $0 $72500

Started during April 2009 20000Completed during April 2009 21000Work in process, April 31[Conversion completed 30%]

4000

Costs are added during April 2009 $1040000 $231000 $384000

3. Summarize the total Finishing Department costs for April 2011, and assign these costs to units completed (and transferred out) and to units in ending work in process using the FIFO method.

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4. Prepare journal entries for April transfers from the Forming Department to the Finishing Department and from the Finishing Department to Finished Goods.


Same, Inc., manufactures a cooking compound that goes through three processing stages prior to completion. Information on work in the first department, cooking, is given below for July:

Production data:Units in process, July 1 (Materials 100%

completed, conversion 50% completed)20,000

Units started into production during December

4,40,000

Units completed and transferred out 4,10,000Units in process, July 31 (Materials 60%

completed, conversion 45% completed)?

Cost data:Work in process inventory, July 1:

Materials cost $11,50,000Conversion cost 1,38,000

Cost added during July:Materials cost 71,72,000Conversion cost 86,71,000

Materials are added at different stages during the cooking process, whereas labor and overhead costs are incurred uniformly. The company uses the weighted-average method.

Required:



Builder Products, Inc., manufactures a caulking compound that goes through three processing stages prior to completion. Information on work in the first department, cooking, is given below for December:

Work-in-Process Account

$ $Balance B/d (15,000 units; full competed as to material and 4/5 completed as to conversion costs)

$1,92,000

Units completed and transferred out (1,05,000 units) ?

Units started into production during December (1,10,000 units)Costs added during the year: Balance C/d ( ? units

completed; 3/5 completed as to material and 1/5 completed as to conversion costs)

Material 5,71,200Labor 2,87,000Overhead 4,11,600 ?

$14,61,8 $14,61,8

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00 00Costs details from last month record for the beginning work-in-process are given below:

Materials cost : $80,000

Labor cost : $40,000

Overhead cost : $60,000

Materials are added at several stages during the cooking process, whereas labor and overhead costs are incurred uniformly. The company uses the FIFO method.

Required:



Paradise Products, Inc., manufactures a cooking compound that goes through three processing stages prior to completion. Information on work in the first department, cooking, is given below for December:

Production data:Units in process, December 1; 80% complete as to

materials and 60% complete as to conversion. 28,000Units started into production during December 4,32,000Units completed and transferred out ?Units in process, December 31; 80% complete as to

materials and 40% complete as to conversion 40,000Cost data:

Work in process inventory, December 1:Materials cost $2,15,000Conversion cost 3,25,000

Cost added during December:Materials cost 12,12,000Conversion cost 28,68,000


Required:



Brady Products, Inc., manufactures a caulking compound that goes through three processing stages prior to completion. Information on work in the first department, Pressuring, is given below for March:

Production data:Units in process, March 01 (4/5 completed) 25,000Units started into production during March 2,00,000

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Units completed and transferred out 80% of total inputsUnits in process, March 31 (1/5 completed) ?

Cost data:Work-in-process inventory, March 01 –

Material $66,000Labor 40,000Manufacturing overhead 68,000

Cost added during March – Material $5,70,000Labor 2,87,000Manufacturing overhead 4,11,000

Materials are introduced at the start of cooking process, whereas labor and overhead costs are incurred uniformly. The company uses the weighted-average method.

Required:

Prepare a production cost report for the month.


Deplored Aluminum Inc., manufactures a cooking compound that goes through three processing stages prior to completion. Information on work in the first department, Molding, is given below for December:

Production data:Units in process, December 1 (2/5th completed) 1,500Units started into production during December 19,500Units completed and transferred out ?Units in process, December 31 (3/5th completed) 2,250

Cost data:Work in process inventory, December 1:

Materials cost $2,82,000Conversion cost 68,000

Cost added during December:Materials cost 32,17,000Conversion cost 22,77,000

Materials are added at the beginning during the cooking process, whereas labor and overhead costs are incurred uniformly. The company uses the FIFO method.

Required:

(a) Prepare a quantity schedule and a computation of equivalent units.(b)Compute the costs per equivalent unit for the month.(c) Using the data from (a) and (b) above, prepare cost reconciliation.


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Builder Products, Inc., manufactures a caulking compound that goes through three processing stages prior to completion. Information on work in the first department, Shaping, is given below for November:

UnitsFraction completed

Material Conversion

Production data:Work in process, November 1

22,000 Nil 2/7

Started into production 4,28,000

Completed and transfer out ?Work in process, November 30

30,000 100% 3/5

Cost data:Work in process, November 1

$4,500

Cost added during November:

Materials cost 322,500Conversion cost 206,500


Required:

1. Prepare a quantity schedule and a computation of equivalent units.2. Compute the costs per equivalent unit for the month.3. Using the data from (1) and (2) above, prepare cost reconciliation.


The Mosley Co. Ltd. has two departments and uses a weighted-average process costing system. The following information pertains to department 2 for the month of April 2009. Materials are added at the beginning of the process. Based on the following data prepare a cost of production report for Department 2:

a) At March 31, 2009, the work in process inventory in department 2 consisted of 6,000 units which were 50% complete and had been charged $50,000 for department 1 costs, $14,000 for direct materials, and $24,000 for conversion costs in department 2 in the previous period.

b) During April, 22,000 units were received from department 1 at a cost of $224,000.c) Department 2 costs during April were $42,000 for materials and $156,000 for

conversion costs.d) 16,000 units were completed and transferred to finished goods.e) At the end of April, 10,000 units were still in process in department 2. They were

estimated to be 40% complete.In department 2, it is expected that 5% of good output will be spoiled. Inspection takes place at the end of the process.


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The Lerado Company uses a process costing system to account for the costs of three production departments (departments I, II, and III). Department II receives units from department I and applies conversion costs evenly throughout the process. When the units are 90% complete, they are inspected and all materials are then added to the good units. The following is additional information related to department II for the month of November 2009:

(a) 2,000 units were in process at the beginning of November 2009. They were estimated to be 40% complete. Costs associated with these units were as follows:

Department I costs ………………………………………….....$10,000

Department II costs (all CC) ……………………………….......2,000

(b)During November 2009, 35,000 units were received from Dept. 1 at a cost of $210,000.(c) Actual costs incurred by department II during November 2009 were:

Materials ………………………………………………………. $12,000

Conversion costs …………………………………………...…. 100,000

(d)During November 2009, 32,000 units were completed and transferred to department III.

(e) At the end of November 2009, there were 4,000 units in process, which were estimated to be 60% complete.

(f) Assume normal spoilage on 32,000 good units produced, is 1,000 units.

Required:

Prepare a cost of production report for department II for November 2009 using the weighted-average method, Note: Calculations of unit costs should be rounded to five decimals places.


The Mie forth Co. Ltd. operates under a FIFO process cost system. It has two departments, 1 and 2. In department 2, materials are added at the end of the process, following inspection. Normal spoilage is considered to be 2% of good output. Labor and overhead

costs are assumed to apply evenly throughout the process. Inventory at the beginning of

the period was one-half complete; ending inventory is two-thirds complete. Following are the costs and unit production statistics for the period:

Beginning inventory……………………………………….. 4,000 units

Received from department 1..……………………………… 16,000 units

Completed and transferred to

finished goods storeroom……….…………………………... 14,000 units

Ending inventory……………………………………………. 3,000 units

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CostsTransferred

form Department 1

Materials Labor

Overhead

Beginning inventory

$6,100 - $1,400 $550

Current costs 23,900 $7,000 12,000 5,050

Required: Prepare cost of production report for department 2.


Based on the following process line prepare a cost of production report under –

(a) Weighted average method(b)FIFO method


Based on the following process line prepare a cost of production report under –

(a) Weighted average method(b)FIFO method

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0% 100%85%25% 55%

BWIP

24,0

Units Started

1,30,000 units

Units Complete

d

EWIP

18,000

units40%

Inspection

Point

Direct Materi

al

Last period costs:

Cost added during the period:

Cc

Normal Spoilage: 5% of good units

80%

Direct Materi

al

0% 100%60%30% 90%

EWIP

5,00

US

44,000 units

Units Complete

d

39,000 units

BWIP

2,000

units75%

Inspection point

Last period costs:

TIC = $35,000;

DM = $11,200

Cc

20% DM

20%

40%DM

30%

DM

50%

3/4th of the defective units identified at the inspection point can be reworked and the other 1/4th should be treated as spoiled units


Draw a process line for the following case: Materials are added at the beginning of the process, labor are paid when conversion is done by 80% and overhead incurred uniformly throughout the process. BWIP 18,000 units (60% completed); units started during the period 1,20,000; units completed during the period 1,26,000 and EWIP 12,000 units (70% completed).

Hints: Identify where to put Material, labor and overhead costs and also where is the standing of inputs (BWIP and units started) and outputs (units completed and EWIP).


Calculate number of equivalent units based on the following case:

Materials are added at the beginning of the process and conversion costs incurred uniformly throughout the process. BWIP 6,000 units (70% completed); units started during the period 70,000; units completed during the period 64,000 and EWIP 12,000 units (40% completed).

19 | P a g e

Cost added during the period:

TIC = $3,72,500; DM = $1,51,550; Cc = $1,89,570

Normal Rework: 3% of units inspected

Normal Spoilage: 5% of units inspected

Note: Total output [F/G+EWIP] is 44,000 units whereas total input was 46,000 units. Therefore, total spoiled units are 2,000 which is 1/4th of total defective units. So total defective units were 8,000 units which indicate 6,000 of the defective units were reworked.

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Units

Started

0% 100%

Units

Completed

70%

Beginning

WIP

20%

Ending

WIP

Materials

Quantity Schedule:

Weighted Average FIFO

OutputsPhysical flow

Equivalent units Equivalent unitsMaterial

sConversio

nMaterial

sConversio

n

Units completed

Ending WIP

Total Outputs

Total Woks Done

Less: Last period works doneCurrent period works done


Calculate number of equivalent units based on the following case:

Materials are added twice in the process. First 70% of the total materials are introduced at the start of the process and the rest 30% are introduced when conversion is done by 60%. Conversion costs incurred uniformly throughout the process. Inspection is done at 50% work level.

Quantity Schedule:




sConversio

nMaterial

sConversio

n

Units completed

Normal spoilage

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Conversion Costs

0%

100%

60%30% 70%

EWIP

30,0

Units Started

2, 50,000 units

Units Completed

2, 20,000 units

BWIP

25,000

units50%

IP

DM [70% of total

material] Cc

NS: 2% of total

inputs

DM [30% of total

material]

Abnormal spoilage

Ending WIP

Total Outputs

Total Woks Done


Practice test –33

Draw a process line and answer the required questions based on the following case:A process has started with 12,000 units of BWIP (80% completed) and new units added in the process during the period totaled 1,44,000. Out of these inputs, 8,000 units (20% completed) remained in the process as EWIP at the end of the period and 3,000 units are found as spoiled units. Materials in the process are added twice, first, 70% of the total materials are introduced at the start of the process and the remaining 25% are added when conversion is done by 60%. Conversion costs are incurred uniformly throughout the process. The process has been inspected twice, one to identify units subject to rework (at 70%) and another to identify spoiled units at 90% work level. At 70%, total 1, 40,000 units were inspected and the units subject to rework have been sent back to 60% work level to do the necessary work. The process expects 2% of units inspected under both the inspection points as normal loss.

Answer the following questions based on the above case and process line:

1. How many units are completed and transferred out during the

period?

:

2. What percentage of additional work need to be done during

rework?

:

3. What percentage of DM costs incurred during rework? :

4. What percentage of labor costs incurred during rework? :

5. How many units are inspected at 90% level of inspection? :

6. How many units are normal spoilage? :

7. How many units are abnormal rework (abnormal gain)? :

8. How many EU have been worked for spoilage in terms of DM? :

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0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

9. How many EU have been worked for spoilage in terms of Cc?

10. How many EU have been worked for rework in terms of DM? :

11. How many EU have been worked for rework in terms of Cc?

12. Cost of normal rework should be allocated among ________ (put

tick)?

:

13. Cost of normal spoilage should be allocated among _______ (put

tick)?

:

14. How many EU of BWIP have been completed last period in

terms of DM?

:

15. How many EU of BWIP have been completed last period in

terms of Cc?

:

Here, EU refer ‘Equivalent Units’; DM refers to ‘Direct Materials’; and Cc refers to ‘Conversion Costs’.


Calculate number of equivalent units based on the following case:Materials are added at the start of the process, labors are paid when conversion is done by 35% and overheads are incurred uniformly throughout the process. Inspection for rework is at 50% work level and the defective units are sent back to 30% level for the additional work. Inspection for spoilage is at 90% level and the company is expecting 5% of the units inspected as normal loss (both normal spoilage and normal rework).

Quantity Schedule:




sConversio

nMaterial

sConversio

n

Units completed

Normal Rework

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0% 100%50%35%

75%

BWIP

4,000

units

Units Started

Units Complete

d

62,000 units

EWIP

8,000

units90%IP

Spoilage

IP

Rework

Cc

30%Number of units inspecte

d: 76,000

Direct

Labor

DM

20%

Units inspected:

Abnormal rework (GAIN)

Normal spoilage

Abnormal spoilage

Ending WIP

Total Outputs

Total Woks Done



Calculate and allocate the normal rework cost based on the following case:

Normal rework and normal spoilage is 3% of units inspected

Cost of Normal rework: Direct material cost : $

Direct labor cost : $

Manufacturing Overhead cost : $______________ Total cost of normal rework : $

Allocation of Normal rework to – Units completed : $

EWIP : $

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0%100%

50%35% 75%

BWIP

3,000

units

Units Complete

d

61,000 units

EWIP

7,000

units 90%IP

Spoilage

IP

Rework

Cc

30%Number of

units inspected:

60,000

Direct

Labor

20%

NS = 1,000AS = 440

Units Started

DM

Quantity Schedule

Physical

Flow

Equivalent Units (EU)

DM DL MOH

Normal spoilage : $

Abnormal spoilage : $______________ Total : $


Calculate and allocate the normal rework and normal spoilage cost based on the following case:

Normal rework and normal spoilage is 2% of units inspected

Cost of Normal rework: Direct material cost : $Direct labor cost : $Manufacturing Overhead cost : $______________ Total cost of normal rework : $

Allocation of Normal rework to – Units completed : $EWIP : $Normal spoilage : $Abnormal spoilage : $______________ Total : $

Cost of Normal SpoilageDirect material cost : $Direct labor cost : $Manufacturing Overhead cost : $(+) Share of normal rework : $______________ Total cost of normal rework : $

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0% 100%50%35% 75%

BWIP

9,000

units

Units Complete

d

79,000 units

EWIP

8,000

units 90%IP

Spoilage

IP

Rework

Cc

30%Number of units inspecte

d: 92,000

Direct

Labor

20%

Units Started

DM

Quantity Schedule

Physical

Flow

Equivalent Units (EU)

DM DL MOH

Normal rework - 1,780 356

Allocation of Normal rework to – Units completed : $EWIP : $______________ Total : $


The W.L. Smith Machine shop specializes in manufacturing precision parts for jet aircraft. One of the firm’s major products is a bevel-shaped roller. The firm cuts high-quality stainless steel rods into 1-inch lengths and then lathes a bevel into the middle of the roller. The cutting and machining of the rollers are done on semiautomatic equipment. Although the equipment is capable of producing rollers to the close tolerances demanded by the firm’s customers. All units produced by the equipment are inspected for conformity to specified dimensions. Units cut to smaller than desired dimensions must be thrown away. Units cut larger than the specification can be machined by hand to the correct dimensions and than returned to the process. The last step in the process is to cut a slit into one end of those rollers meeting specifications. For the current period, the machining department began with 2,000 rollers in process. The units were complete with regard to materials but only 40% complete with regard to conversion costs. Work was begun on another 40,000 rollers during the period. The department ended the period with 1,500 rollers in process, 70% complete with regard to conversion costs and totally complete with regard to materials. The inspection of units is considered the point at which units are 85% complete with regard to conversion costs. Management normally expects 20% of the units inspected to fail to meet specifications. Half of these units can usually be reworked; other half must be discarded. During the period, 4,500 units were discarded and 4,200 units were reworked. The beginning work in process for this department was $4,600 for materials and $2,200 for conversion costs. During the period materials totaling $1, 30,000 were put into process, and conversion costs were $1, 67,000. It cost another $14,000 to operate the rework station.

Required:

Determine cost of goods completed the cost of ending work-in-process, and gain or loss from abnormal rework and spoilage.


Equivalent Units; Cost Reconciliation—Weighted Average MethodMartin Company manufactures a single product. The company uses the weighted-average method in its process costing system. Activity for June has just been completed. An incomplete production report for the first processing department follows:

Quantity Schedule and Equivalent Units

QuantitySchedule

Units to be accounted for:Work in process, June 1 (materials

80% complete; labor and overhead 60% complete)................................10,000

Started into production.....................64,000Total units............................................74,000

Equivalent units (EU) Materials Labor Overhead

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Units accounted for as follows:Transferred to the next department68,000 ? ? ? Work in process, June 30 (materials

50% complete, labor and overhead 20% complete)................................ 6,000 ? ? ?

Total units............................................74,000 ? ? ?

Cost per Equivalent UnitTotal Whole Cost Materials Labor Overhead Unit

Cost to be accounted for:Work in process, June 1....................$ 11,900$ 6,800 $ 2,100 $ 3,000Cost added by the department 107,270 53,550 22,120 31,600

Total cost (a)........................................$119,170$60,350 $24,220 $34,600Equivalent units (b)............................. 71,000 69,200 69,200Cost per EU, (a) ÷ (b).......................... $0.85 + $0.35 + $0.50 = $1.70

Cost ReconciliationTotalCost

Cost accounted for as follows:? ?

Required:1. Prepare a schedule showing how the equivalent units were computed for the first

processing department.1. Complete the “Cost Reconciliation” part of the production report for the first

processing department.


Interpreting A Production Report—Weighted-Average MethodCooperative San José of southern Sonora State in Mexico makes a unique syrup using cane sugar and local herbs. The syrup is sold in small bottles and is prized as a flavoring for drinks and for use in desserts. The bottles are sold for $11.00 each. (The Mexican currency is the peso and is denoted by $.) The first stage in the production process is carried out in the Mixing Department, which removes foreign matter from the raw materials and mixes them in the proper proportions in large vats. The company uses the weighted-average method in its process costing system.A hastily prepared report for the Mixing Department for April appears below:

Quantity ScheduleUnits to be accounted for:

Work in process, April 1 (materials 100% complete; conversion 95% complete)11,000

Started into production..............................150,000Total units...................................................161,000

Units accounted for as follows:Transferred to the next department...........155,000Work in process, April 30 (materials 100%

complete, conversion 30% complete) 6,000 Total units...................................................161,000

Total CostCost to be accounted for:

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Work in process, April 1.............................$ 22,810Cost added during the month..................... 599,000 Total cost....................................................$621,810

Cost ReconciliationCost accounted for as follows:

Transferred to the next department...........$604,500Work in process, April 30........................... 17,310 Total cost....................................................$621,810

Co-operative San José has just been acquired by another company, and the management of the acquiring company wants some additional information about its operations.

Required:1. What were the equivalent units for the month?2. What were the costs per equivalent unit for the month? The beginning inventory consisted

of the following costs: materials, $19,450; and conversion cost, $3,360. The costs added during the month consisted of: materials, $375,000; and conversion cost, $224,000.

3. How many of the units transferred to the next department were started and completed during the month?

4. The manager of the Mixing Department, anxious to make a good impression on the new owner, stated, “Materials prices jumped from about $1.80 per unit in October to $2.50 per unit in April, but due to good cost control I was able to hold our materials cost to less than $2.50 per unit for the month.” Should this manager be rewarded for good cost control? Explain.


Production Report—Weighted-Average MethodSunspot Beverages, Ltd. of Fiji makes blended tropical fruit drinks in two stages. Fruit juices are extracted from fresh fruits and blended in the Blending Department. The blended juices are then bottled and packed for shipping in the Bottling Department. The following information pertains to the operations of the Blending Department for June. (The currency in Fiji is the Fijian dollar.)

Percent CompletedUnits MaterialsConversion

Work in process, beginning30,000 100% 80%Started into production................250,000Completed and transferred out260,000Work in process, ending...............20,000 100% 45%

Cost in the beginning work in process inventory and cost added during June were as follows for the Blending Department:

MaterialsConversionWork in process, beginning$ 12,000$10,800Cost added during June.............128,000 83,350

Required:

Prepare a production report for the Blending Department for June assuming that the company uses the weighted-average method.


Step-By-Step Production Report—Weighted-Average Method

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Builder Products, Inc., manufactures a caulking compound that goes through three processing stages prior to completion. Information on work in the first department, Cooking, is given below for May:

Production data:Units in process, May 1 (materials 95%

complete; labor and overhead 65% complete)5,000Units started into production during May............................................80,000Units completed and transferred out...................................................70,000Units in process, May 31 (materials 80%

complete; labor and overhead 50% complete)?Cost data:

Work in process inventory, May 1:Materials cost...................................................................................$ 3,420Labor cost.........................................................................................3,710Overhead cost...................................................................................2,760

Cost added during May:Materials cost...................................................................................57,260Labor cost.........................................................................................83,090Overhead cost...................................................................................65,440

Materials are added at several stages during the cooking process, whereas labor and overhead costs are incurred uniformly. The company uses the weighted-average method.

Required:

Prepare a production report for the Cooking Department for May. Use the following three steps in preparing your report:1. Prepare a quantity schedule and a computation of equivalent units.2. Compute the costs per equivalent unit for the month.3. Using the data from (1) and (2) above, prepare a cost reconciliation.


Weston Products manufactures an industrial cleaning compound that goes through three processing departments—Grinding, Mixing, and Cooking. All raw materials are introduced at the start of work in the Grinding Department, with conversion costs being incurred evenly throughout the grinding process. The Work in Process T-account for the Grinding Department for a recent month is given below:

Work in Process—Grinding DepartmentInventory, May 1 (24,000 units,

3/4 processed) 47,750Completed and transferred

to mixing ( ? units) ? May costs added:

Raw material (230,000 units)298,567 Labor and overhead 211,348

Inventory, May 31 (26,000 units, 1/4 processed) ?

The May 1 work in process inventory consists of $31,633 in materials cost and $16,117 in labor and overhead cost. The company uses the weighted-average method to account for units and costs.Required:1. Prepare a production report for the Grinding Department for the month.2. What criticism can be made of the unit costs that you have computed on your production

report?


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You are employed by Spirit Company, a manufacturer of digital watches. The company’s chief financial officer is trying to verify the accuracy of the ending work in process and finished goods inventories prior to closing the books for the year. You have been asked to assist in this verification. The year-end balances shown on Spirit Company’s books are as follows:

Units CostsWork in process, December 31

(labor and overhead 30% complete)....................................40,000 $82,500

Finished goods, December 31........55,000 $186,000Materials are added to production at the beginning of the manufacturing process, and overhead is applied to each product at the rate of 50% of direct labor cost. There was no finished goods inventory at the beginning of the year. A review of Spirit Company’s inventory and cost records has disclosed the following data, all of which are accurate:

Costs Units Materials Labor

Work in process, January 1 (labor and overhead 90% complete)..................35,000 $53,900 $29,610

Units started into production..............119,000Cost added during the year:

Materials cost................................... $229,460Labor cost......................................... $93,870

Units completed during the year114,000The company uses the weighted-average cost method.

Required:

1. Determine the equivalent units and costs per equivalent unit for materials, labor, and overhead for the year.

2. Determine the amount of cost that should be assigned to the ending work in process and finished goods inventories.

3. Prepare the necessary correcting journal entry to adjust the work in process and finished goods inventories to the correct balances as of December 31.

4. Determine the cost of goods sold for the year assuming there is no under- or over-applied overhead.


Comprehensive Process Costing Problem—Weighted-Average MethodLubricants, Inc., produces a special kind of grease that is widely used by racecar drivers. The grease is produced in two processes: refining and blending. Raw materials are introduced at various points in the Refining Department; labor and overhead costs are incurred evenly throughout the refining operation. The refined output is then transferred to the Blending Department.The following incomplete Work in Process account has been provided for the Refining Department for March:

Work in Process —Refining DepartmentMarch 1 inventory (180,000 gallons;

materials 100% complete; labor and overhead 45% complete)281,970

Completed and transferred to Blending ( ? gallons) ?

March costs added: Raw materials (900,000 gallons)814,380 Direct labor 976,500 Overhead 347,430

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March 31 inventory (120,000; materials 90% complete; labor and overhead 50% complete) ?

The March 1 work in process inventory in the Refining Department consists of the following cost elements: raw materials, $157,500; direct labor, $94,500; and overhead, $29,970. Costs incurred during March in the Blending Department were: materials used, $340,000; direct labor, $410,000; and overhead cost applied to production, $270,000.The company accounts for units and costs using the weighted-average method.

Required:

1. Prepare journal entries to record the costs incurred in both the Refining Department and Blending Department during March. Key your entries to the items (a) through (g) below.a. Raw materials were issued for use in production.b. Direct labor costs were incurred.c. Manufacturing overhead costs for the entire factory were incurred, $650,000. (Credit

Accounts Payable.)d. Manufacturing overhead cost was applied to production using a predetermined

overhead rate.e. Units that were complete as to processing in the Refining Department were

transferred to the Blending Department, $2,236,800.f. Units that were complete as to processing in the Blending Department were

transferred to Finished Goods, $3,190,000.g. Completed units were sold on account, $3,900,000. The Cost of Good Sold was

$3,000,000.2. Post the journal entries from (1) above to T-accounts. The following account balances

existed at the beginning of March. (The beginning balance in the Refining Department’s Work in Process account is given above.)

Raw Materials....................................$1,260,000

Work in Process—Blending Department.....................................65,000

Finished Goods...................................310,000After posting the entries to the T-accounts, find the ending balance in the inventory accounts and the manufacturing overhead accounts.3. Prepare a production report for the Refining Department for March.


Hilox, Inc., produces a hot sauce that goes through two departments—Cooking and Bottling. The company has recently hired a new assistant accountant, who has prepared the following summary of production and costs for the Cooking Department for May using the weighted-average method.

Cooking Department costs:Work in process inventory, May 1: 43,000 quarts,

materials 90% complete and labor and overhead 75% complete............................................................................................$ 68,570*

Materials added during May................................................................73,700Labor added during May......................................................................33,580Overhead applied during May.............................................................. 16,150 Total departmental costs......................................................................$192,000

Cooking Department costs assigned to:

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Quarts completed and transferred to the Bottling Department: 100,000 quarts at ? per quart$ ?

Work in process inventory, May 31: 10,000 quarts, materials 50% complete and labor and overhead 20% complete............................................................................................ ?

Total departmental costs assigned.......................................................$ ? *Consists of materials, $41,800; labor, $17,420; and overhead, $9,350.The new assistant accountant has determined the cost per quart transferred to be $1.920 as follows:

However, the assistant accountant is unsure how to use this unit cost figure in assigning cost to the ending work in process inventory. In addition, the company’s general ledger shows only $185,000 in cost transferred from the Cooking Department to the Bottling Department, which does not agree with the $192,000 figure above.

The general ledger also shows the following costs incurred in the Bottling Department during May: materials used, $122,000; direct labor cost incurred, $61,000; and overhead cost applied to products, $35,000.

Required:

1. Prepare journal entries as follows to record activity in the company during May. Key your entries to the letters (a) through (g) below.a. Raw materials were issued to the two departments for use in production.b. Direct labor costs were incurred in the two departments.c. Manufacturing overhead costs were incurred, $50,050. (Credit Accounts Payable.)

The company maintains a single Manufacturing Overhead account for the entire plant.

d. Manufacturing overhead cost was applied to production in each department using predetermined overhead rates.

e. Units completed as to processing in the Cooking Department were transferred to the Bottling Department, $185,000.

f. Units completed as to processing in the Bottling Department were transferred to Finished Goods, $410,000.

g. Units were sold on account, $550,000. The Cost of Good Sold was $403,000.2. Post the journal entries from (1) above to T-accounts. Balances in selected accounts on

May 1 are given below:

Raw Materials................................$217,000

Work in Process—Bottling Department................................. 42,000

Finished Goods............................... 7,000After posting the entries to the T-accounts, find the ending balance in the inventory accounts and the Manufacturing Overhead accounts.3. Prepare a production report for the Cooking Department for May.


ABC Home Paint Company produces exterior latex paint, which it sells in one- gallon containers. The company has two processing departments- Mixing and Finishing. White

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paint, which is used as a mixing for all the company paints, is mixed from raw ingredients in the Mixing Departments. Pigments are then added to the basic white paints, the pigments is squirted under pressured into one- gallon containers, and the containers labeled and packed for shipping in the finishing department. Information relating to the company‘s operations for April Follows:

a. Raw Material was issued for the use in production: Mixing Department $8, 51,000; and Finishing Department $6, 29,000.

b. Direct Labor costs were incurred: Mixing Department$3, 30,000; and Finishing Department $2, 70,000.

c. Manufacturing Overhead cost was applied: Mixing Department$6, 65,000; and Finishing Department $4, 05,000.

d. Basic white paint was transferred from the Mixing Department to Finishing Department $18, 50,000.

e. Paint that has been prepared for shipping was transferred from the Finishing Department to finished goods $32, 00,000.

Required:1. Prepare the necessary Journal entries to record items (a) through (e) above.2. Post the Journal entries from requirement (1) above to “T” –Accounts. The balance in

the Mixing Department’s Work In Process account On April 1 was $1, 50,000; and the balance in the Finishing Department‘s Work in Process account was $70,000. After posting entries to the “T” Accounts , Find the ending balance in the each department’s Work In Process account

3. Prepare a Production Report for the Mixing Department for April. The following additional information is available regarding production in the Mixing Department during April.

Production Data:Units (gallons) in Process, April 1: Material 100% complete; Labor and Overhead 60% complete. 30,000.Units (gallons) Started into production during April 4, 20,000Units (gallons) completed and transferred to the finishing department 3, 70,000Units (gallons) in process, April 30: Material 50% complete Labor and Overhead 25% complete. 80,000Costs Data:Work in Process inventory, April 1:Material $92,000Labor 21,000Overhead 37,000 --------------------- Total costs of Work in Process $1,50,000 ============= Costs Added during April : Material $8,51,000Labor 3,30,000Overhead 6,65,,000 --------------------- Total costs added during April $18,46,000 ===========


Berger Paint Company produces exterior latex paint, which it sells in one- gallon containers. The company has two processing departments- Mixing and Finishing. White paint, which is used as a mixing for all the company paints, is mixed from Raw ingredients in the Mixing Departments. Pigments are then added to the basic white paints, the pigments is squirted under pressured into one- gallon containers, and the containers

32 | P a g e

labeled and packed for shipping in the finishing department. Information relating to the company‘s operations for April Follows:

f. Raw Material was issued for the use in production: Mixing Department $17, 02,000; and Finishing Department $12, 58,000.

g. Direct Labor costs were incurred: Mixing Department$6, 60,000; and Finishing Department $5, 40,000.

h. Manufacturing Overhead cost was applied: Mixing Department$13, 30,000; and Finishing Department $8,10,000.

i. Basic white paint was transferred from the Mixing Department to Finishing Department $37, 00,000.

j. Paint that have been prepared for shipping was transferred from the Finishing Department to Finished goods $64, 00,000.

Required:

1. Prepare the necessary Journal entries to record items (a) through (e) above.2. Post the Journal entries from requirement (1) above to “T” –Accounts. The balance

in the Mixing Department’s Work In Process account On April 1 was $3, 00,000; and the balance in the Finishing Department‘s Work in Process account was $1,40,000. After posting entries to the “T” Accounts , Find the ending balance in the each department’s Work In Process account

3. Prepare a Production Report for the Mixing Department for April. The following additional information is available regarding production in the Mixing Department during April.

Production Data:

Units (gallons) in Process, April 1: Material 100% complete; Labor and Overhead 60% complete. 60,000.Units (gallons) Started into production during April 8, 40,000Units (gallons) completed and transferred to the finishing department 7,4 0,000Units (gallons) in process, April 30: Material 50% complete Labor and Overhead 25% complete. 1, 60,000Costs Data:Work in Process inventory, April 1:Material $1, 84,000Labor 42,000Overhead 74,000 --------------------- Total costs of Work in Process $3, 00,000 ============= Costs Added during April: Material $17, 02,000Labor 6, 60,000Overhead 13, 30, 000 --------------------- Total costs added during April $36, 92,000 ===========


Wang Manufacturing Company uses the weighted average method of process costing. All direct materials are added at the beginning of the process and conversion costs are added evenly during the process. Spoiled units are detected upon inspection at the end of the process and are disposed of at zero net disposal value

33 | P a g e

The following information pertains to the Mixing Department for March 2009:

Units Work in process, March 1

(100% complete, materials; (60% complete, conversion).............................. 30,000

Started during March, 2009.................................. 50,000

Work in process, March 31(100% complete, materials; (75% complete, conversion).............................. 32,000

Good units completed and transferred out during March, 2009-------- 40,000

Normal Spoilage-----------------------------------------------6,000 units

Abnormal spoilage---------------------------------------------2,000 units

The costs of work in process at March 1 for the Mixing Department were as follows:

Mixing DepartmentWork in process, September 1:

Materials........................................................ 2, 40,000 $Conversion costs............................................ 1, 80,000----------------------------------------------------------------------------------------------

Total........................................................... $3, 20,000

Costs added by the Mixing Department during March were as follows:

Mixing DepartmentMaterials.................................................... 4, 20,000 $Conversion costs............................................ 5, 83,200----------------------------------------------------------------------------------------------

Total costs added................................... $10, 03,200

Using the Weighted average costing method and FIFO Method

Required:

1. For each cost category, compute equivalent units. Show physical units in the first column of your schedule.

2. For each cost category , calculate cost per equivalent unit3. Summarize total costs to account for and assign these costs to completed and transferred

out (including Normal Spoilage ) to Abnormal spoilage and to units in ending work in process.


The Jones Company manufactures medicated shampoo. It passes through two processes: (1) mixing, where ingredients are added and blended together, and (2) packaging, where the shampoo is put into bottles and packed for shipment.

The following information pertains to the Mixing Department for September 2009:

Units (Pounds)

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Work in process, September 1(80% complete, materials; (70% complete, labor and overhead)................. 10,000

Started during September.................................... 120,000

Work in process, September 30(60% complete, materials; (40% complete, labor and overhead)................. 12,000

The costs of work in process at September 1 for the Mixing Department were as follows:

Mixing DepartmentWork in process, September 1:

Materials........................................................ $ 60,000Direct labor.................................................... 40,000Overhead....................................................... 25,000

Total........................................................... $125,000

Costs added by the Mixing Department during September were as follows:

Mixing DepartmentMaterials.................................................... $ 880,000Direct labor................................................ 520,500Overhead.................................................... 208,600

Total costs added................................... $1,609,100

Using the weighted average costing method

Required: Prepare a production report.


The following information is obtained in respect of Process 3 for the month of November:

Work in process, November 1 1,000 units

The costs of work in process at November were as follows:

Work in process, November 1:Materials (1).................................................. $ 3,900

Materials (2)................................................ $ 750Direct labor.................................................... 1,120Overhead....................................................... 1180

Total........................................................... $

Process 2 transfers: 6,000 units at$23,600; transfer to process 4: 4,700 units

Direct materials add in process $5,200

Direct labor employed $10,360

Production overhead absorbed $15,410

Units scraped 300 units

Degree of completion:

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Direct materials 100%

Direct labor 80%

Overhead 60%

Work in process, November 30(60% complete, materials; 50% complete, labor and overhead 40%) ------- 2,000 units.

Normal loss: 5% of production; Units scrapped realized $2 each

Required:

1. Statement of Equivalent production2. Statement of cost3. Statement of Equivalent4. Process 3 account

THE END

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process costing-practice sheet

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