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Chapter 18: Q.18-2SE (page 1007)

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

Short Answer

Expert verified

Answer

Order

Account

1

Work-in-process inventory 鈥� Cutting

2

Work-in-process inventory 鈥� Packaging

3

Work-in-process inventory 鈥� Finishing

4

Finished goods inventory

5

Cost of goods sold

Step by step solution

01

Inventory

Inventory means the raw material used by the company in manufacturing the final product which can be consumed by the customers. It is considered as the current asset of the company and shown in the balance sheet.

02

Flow of manufacturing process

The manufacturing process flows from assembly department to cutting department from cutting department to packaging department and then to finishing department. Afterwards, the flow is from finishing department to finished goods inventory and when the goods are sold, it is transferred to the cost of goods sold.

It is clear from the example, the company engaged in manufacturing the puzzles, first assemble the cardboard and the picture with the help of glue. After that the cardboard is cutted into puzzle pieces and transferred to the packaging department for packing. The final packed product is transferred to the finished goods inventory and to the cost of goods sold once the goods are sold to the customers.

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Most popular questions from this chapter

Question: Spring Fresh produces premium bottled water. Spring Fresh purchases artesian water, stores the water in large tanks, and then runs the water through two processes: filtration and bottling.

During February, the filtration process incurred the following costs in processing

200,000 liters:

Wages of workers operating filtration equipment

$34,950

Manufacturing overhead allocated to filtration

19,050

Water

110,000

Spring Fresh had no beginning Work-in-Process Inventory in the Filtration Department in February.

Requirements

1. Use the FIFO method to compute the February conversion costs in the Filtration Department.

2. The Filtration Department completely processed 200,000 liters in February. Use

the FIFO method to determine the filtration cost per liter.

Question: Mayhem Electronics makes game consoles in three processes: assembly, programming, and packaging. Direct materials are added at the beginning of the assembly process. Conversion costs are incurred evenly throughout the process. The Assembly Department had no Work-in-Process Inventory on March 31. In mid-April, Mayhem Electronics started production on 99,000 game consoles. Of this number, 95,000 game consoles were assembled during April and transferred out to the Programming Department. The April 30 Work-in-Process Inventory in the Assembly Department was 45% of the way through the assembly process. Direct materials costing \(301,950 were placed in production in Assembly during April, direct labor of \)100,960 was assigned, and manufacturing overhead of $136,200 was allocated to that department.

Requirements

1. Prepare a production cost report for the Assembly Department for April. The

company uses the weighted-average method.

2. Prepare a T-account for Work-in-Process Inventory鈥擜ssembly to show its activity during April, including the April 30 balance.

What is the weighted-average method for process costing systems?

Question: The Finishing Department of Lee and Lewis, Inc., the last department in the manufacturing process, incurred production costs of \(220,000 during the month of June.If the June 1 balance in Work-in-Process Inventory鈥擣inishing is \)0 and the June 30balance is $70,000, what amount was transferred to Finished Goods Inventory?

Match the following terms to their definitions.

1. Direct labor plus manufacturing

Overhead

a. Expresses partially completed units in terms of fully completed units

2. Prepared by department for EUP, production costs, and assignment of costs

b. Used by companies that manufacture

homogenous products

3. Equivalent units of production

c. Previous costs brought into later

process

4. Process costing system

d. Conversion costs

5. Transferred in costs

e. Combines prior period costs with current period costs

6. Weighted-average method

f. Production cost report
See all solutions

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