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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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Question: Identify each costing system characteristic as job order costing or process costing.
a. One Work-in-Process Inventory account
b. Production cost reports
c. Cost accumulated by process
d. Job cost sheets
e. Manufactures homogenous products through a series of uniform steps
f. Multiple Work-in-Process Inventory accounts
g. Costs transferred at end of period
h. Manufactures batches of unique products or provides specialized services
Refer to your answers from Exercise E18-21.
Requirements
1. Prepare the journal entries to record the assignment of direct materials and direct labor and the allocation of manufacturing overhead to the Blending Department. Also, prepare the journal entry to record the costs of the gallons completed and transferred out to the Packaging Department. Assume labor costs are accrued and not yet paid.
2. Post the journal entries to the Work-in-Process Inventory鈥擝lending T-account.
What is the ending balance?
3. What is the average cost per gallon transferred out of the Blending Department
into the Packaging Department? Why would the company managers want to
know this cost?
Question: Explain the terms to account for and accounted for.
Question: Cadwell manufactures cell phones. The conversion costs to produce cell phones for November are added evenly throughout the process in the Assembly Department. The company uses the weighted-average method. For each of the following separate assumptions, calculate the equivalent units of production for conversion costs in the ending Work-in-Process Inventory for the Assembly Department:
1. 12,000 cell phones were 60% complete
2. 21,000 cell phones were 40% complete
Cheerful Colors manufactures crayons in a three-step process: mixing, molding, and packaging. The Mixing Department combines the direct materials of paraffin wax and pigments. The heated mixture is pumped to the Molding Department, where it is poured into molds. After the molds cool, the crayons are removed from the molds and are transferred to the Packaging Department, where paper wrappers are added and the crayons are boxed.
In the Mixing Department, the direct materials are added at the beginning of the
process and the conversion costs are incurred evenly throughout the process. Work in process of the Mixing Department on March 1, 2018, consisted of 800 batches of crayons that were 10% of the way through the production process. The beginning balance in Work-in-Process Inventory鈥擬ixing was \(32,800, which consisted of \)14,000 in direct materials costs and $18,800 in conversion costs. During March, 5,200 batches were started in production. The Mixing Department transferred 3,000 batches to the Molding Department in March, and 3,000 were still in process on March 31. This ending inventory was 80% of the way through the mixing process. Cheerful Colors uses FIFO process costing.
At March 31, before recording the transfer of costs from the Mixing Department
to the Molding Department, the Cheerful Colors general ledger included the following account:
Work-in-process inventory 鈥� Mixing
Balance, March 1 | 32,800 | ||
Direct materials | 42,000 | ||
Direct labor | 24,610 | ||
Manufacturing overhead | 65,830 |
Requirements
1. Prepare a production cost report for the Mixing Department for March. Round
equivalent unit of production costs to four decimal places. Round all other costs to the nearest whole dollar.
2. Journalize all transactions affecting the Mixing Department during March, including the entries that have already been posted. Assume labor costs are accrued and not yet paid.
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