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Chapter 18: Q21RQ (page 1006)
Describe ways the production cost report can be used by management.
The production cost report used by the management in the following ways:
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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 Mixing Department鈥檚 production cost report for May shows \(12,500 in total costs, of which \)2,500 will remain in the department assigned to the units still in process at the end of the month. Prepare the journal entry to record the transfer of costs from the Mixing Department to the Packaging Department.
Question: Explain the terms to account for and accounted for.
Question: Department 4 has completed production on units that have a total cost of $15,000. The units are ready for sale. Give the journal entry.
Happy 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 April 1, 2018, consisted of 300 batches of crayons that were 30% of the way through the production process. The beginning balance in Work-in-Process Inventory鈥擬ixing was \(27,800, which consisted of \)10,700 in direct materials costs and $17,100 in conversion costs. During April, 3,200 batches were started in production. The Mixing Department transferred 2,800 batches to the Molding Department in April, and 700 were still in process on April 30. This ending inventory was 80% of the way through the mixing process. Happy Colors uses FIFO process costing.
At April 30, before recording the transfer of costs from the Mixing Department
to the Molding Department, the Happy Colors general ledger included the following account:
Work-in-process inventory 鈥� Mixing
Balance, March 1 | 27,800 | ||
Direct materials | 22,400 | ||
Direct labor | 21,330 | ||
Manufacturing overhead | 44,070 |
Requirements
1. Prepare a production cost report for the Mixing Department for April. Round
equivalent unit costs to four decimal places. Round all other costs to the nearest
dollar.
2. Journalize all transactions affecting the Mixing Department during April, including the entries that have already been posted. Assume the labor costs are accrued and not yet paid.
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