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Chapter 18: Q.18-15RQ (page 1006)
Question: How is the cost per equivalent unit of production calculated?
Answer:
The cost per equivalent unit of production is calculated by dividing the total cost with the Equivalent unit of production.
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Complete the missing amounts in the following production report. Materials are added at the beginning of the process; conversion costs are incurred evenly; the ending inventory is 60% complete. The company uses the weighted-average method.
NATHAN COMPANY Production Cost Report 鈥� Finishing Department Month Ended September 30, 2018 | ||||
| Physical units | Equivalent Units | ||
| Direct materials | Conversion costs | |||
Units to account for: | ||||
| 500 | |||
| 2,200 | |||
Total units to account for | (a) | |||
Units accounted for: | ||||
| (b) | (d) | (g) | |
| 500 | (e ) | (h) | |
Total units accounted for | (c) | (f) | (i) | |
COSTS | Direct materials | Conversion costs | Total costs | |
Cost to account for: | ||||
| \(1,200 | (j) | \)2,140 | |
| 12,030 | 8,310 | (k) | |
Total costs to account for | (l) | 9,250 | 22,480 | |
Divided by: Total EUP | (m) | (n) | ||
Cost per equivalent unit | (o) | (p) | ||
Costs accounted for: | ||||
| (q) | (r) | (s) | |
| (t) | (u) | (v) | |
Total cost accounted for | (w) | (x) | $22,480 | |
Question: The Jimenez Toy Company makes wooden toys. The company uses a process costing system. Arrange the company鈥檚 accounts in the order the production costs are most likely to flow, using 1 for the first account, 2 for the second, and so on.
Order | Account |
Work-in-process inventory 鈥� Packaging | |
Cost of goods sold | |
Work-in-process inventory 鈥� Cutting | |
Work-in-process inventory 鈥� Finishing | |
Finished goods inventory |
Bergeron鈥檚 Exteriors produces exterior siding for homes. The Preparation Department begins with wood, which is chopped into small bits. At the end of the process, an adhesive is added. Then the wood/adhesive mixture goes on to the Compression Department, where the wood is compressed into sheets. Conversion costs are added evenly throughout the preparation process. January data for the Preparation Department are as follows:
UNITS | |
Beginning work-in-process inventory | 0 sheets |
Started in production | 3,900 sheets |
Completed and transferred out to compression in January | 2,700 sheets |
Ending work-in-process inventory (25% of the way through the preparation process) | 1,200 sheets |
COSTS | |
Beginning work-in-process inventory | \(0 |
Costs added during January | |
Wood | 3,120 |
Adhesive | 1,836 |
Direct labor | 990 |
Manufacturing overhead allocated | 2,100 |
Total costs | \)8,046 |
Requirements
1. Prepare a production cost report for the Preparation Department for January. The company uses the weighted-average method. (Hint: Each direct material added at a different point in the production process requires its own equivalent unit of production computation.)
2. Prepare the journal entry to record the cost of the sheets completed and
transferred out to the Compression Department.
3. Post the journal entries to the Work-in-Process Inventory鈥擯reparation T-account. What is the ending balance?
The Finishing Department reports the following data for the month:
Equivalent unit of production:
Transferred in | 3,000 |
Direct materials | 3,000 |
Conversion cost | 2,250 |
Costs: | Beginning WIP | Added this month | Total |
Transferred in | \(7,500 | \)15,000 | \(22,500 |
Direct materials | 3,250 | 6,500 | 9,750 |
Conversion costs | 6,125 | 13,000 | 19,125 |
Total | \)16,875 | \(34,500 | \)51,375 |
Calculate the cost per equivalent units of production for each input. The company
uses the weighted-average method.
Question: What are the primary differences between job order costing systems and process costing systems?
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