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Chapter 18: Q25E (page 1014)

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

Units


Physical units
Equivalent Units
Direct materials
Conversion costs

Units to account for:

  • Beginning work-in-process

500

  • Started in production

2,200

Total units to account for

(a)

Units accounted for:

  • Completed and transferred out

(b)

(d)

(g)

  • Ending work-in-process

500

(e )

(h)

Total units accounted for

(c)

(f)

(i)

COSTS

Direct materials

Conversion costs

Total costs

Cost to account for:

  • Beginning work-in-process

\(1,200

(j)

\)2,140

  • Cost added during period

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:

  • Completed and transferred out

(q)

(r)

(s)

  • Ending work-in-process

(t)

(u)

(v)

Total cost accounted for

(w)

(x)

$22,480

Short Answer

Expert verified

Letter

A

2,700 units

B

2,200 units

C

2,700 units

D

2,200 units

E

500 units

F

2,700 units

G

2,200 units

H

300 units

I

2,500 units

J

$940

K

$20,340

L

$13,230

M

2,700 units

N

2,500 units

O

$4.90

P

$3.70

Q

$10,780

R

$8,140

S

$18,920

T

$2,450

U

$1,110

V

$3,560

W

$13,230

X

$9,250

Step by step solution

01

Step-by-Step Solution:Step 1: Production Cost Report

A production cost report is prepared by the company's management using the process costing system to represent the total cost incurred while manufacturing the products.

02

Calculation of letter (a) total units to account for

TotalUnitstoaccountfor=BeginningWIPunits+Startedinproduction=500+2,200=2,700

03

Calculation of letter (c) total units accounted for

The total units accounted for equals the total units to account for. Hence the total units accounted for is 2,700 units.

04

Calculation of letter (b) completed and transferred out units

Completedandtransferredoutunits=Totalunitsaccountedfor-EndingWIPunits=2,700-500=2,200

05

Calculation of letter (d) equivalent units of production of completed units for direct materials

EUPofCompletedunitsfordirectmaterials=Numberofunits脳Completion%=2,200脳100%=2,200

06

Calculation of letter (e) equivalent units of production of ending WIP for direct materials

EUPofendingWIPfordirectmaterials=Numberofunits脳Completion%=500脳100%=500

07

Calculation of letter (f) equivalent units of production for direct materials

EUPfordirectmaterials=EUPofcompletedunits+EUPofWIPunits=2,200+500=2,700

08

Calculation of letter (g) equivalent units of production of completed units for conversion cost

EUPofCompletedunitsforconversioncost=Numberofunits脳Completion%=2,200脳100%=2,200

09

Calculation of letter (h) equivalent units of production of ending WIP for conversion cost


EUPofendingWIPfordirectmaterials=Numberofunits脳Completion%=500脳60%=300

10

Calculation of letter (i) equivalent units of production for conversion costs

EUPforconversioncosts=EUPofcompletedunits+EUPofWIPunits=2,200+300=2,500

11

Calculation of letter (j) Conversion cost of beginning WIP

ConversioncostsofbeginningWIP=Totalcoststoaccountfor-Costaddedduringperiod=$9,250-$8,310=$940

12

Calculation of letter (k) Total cost added during the period


Totalcostsaddedduringtheperiod=Directmaterial+Conversioncosts=$12,030+$8,310=$20,340

13

Calculation of letter (l) Total cost to account for direct material

Totalcosttoaccountfordirectmaterial=BeginningWIP+Costsaddedduringtheperiod=$1,200+$12,030=$13,230

14

Calculation of letter (m) Total EUP for direct material

The total EUP for direct material equals the total units accounted for Direct material, which is 2,700 units.

15

Calculation of letter (n) Total cost to account for conversion costs

The total EUP for conversion costs equals the total units accounted for conversion costs, which is 2,500 units.

16

Calculation of letter (o) cost per equivalent units of direct materials

CostperEUP=TotalcosttoaccountfordirectmaterialTotalEUPofdirectmaterial=$13,2302,700=$4.90

17

Calculation of letter (p) cost per equivalent units of conversion costs

CostperEUP=TotalcosttoaccountforconversioncostsTotalEUPofconversioncosts=$9,2502,500=$3.70

18

Calculation of letter (q) Cost accounted for completed and transferred out units for direct material

Costofcompletedandtransferredoutunits=Completedandtransferredoutunits脳CostperEUP=2,200脳$4.90=$10,780

19

Calculation of letter (r) Cost accounted for completed and transferred out units for conversion cost

Costofcompletedandtransferredoutunits=Completedandtransferredoutunits脳CostperEUP=2,200脳$3.70=$8,140

20

Calculation of letter (s) Total cost of completed and transferred out units

TotalCostofcompletedandtransferredoutunits=CostofDirectmaterial+Costofconversioncost=$10,780+$8,140=$18,920

21

Calculation of letter (t) Cost accounted for Ending WIP units for direct material

CostofEndingWIP=EndingWIPunits脳CostperEUP=500脳$4.90=$2,450

22

Calculation of letter (u) Cost accounted for Ending WIP units for conversion costs

CostofEndingWIPforconversioncosts=EndingWIPunitsforconversioncosts脳CostperEUP=300脳$3.70=$1,110

23

Calculation of letter (v) Total costs of ending WIP

TotalcostofEndingWIP=Costofdirectmaterial+Costofconversioncosts=$2,450+$1,110=$3,560

24

Calculation of letter (w) Total costs accounted for direct material

Totalcostaccountedfordirectmaterial=Costofcompletedunits+EndingWIP=$10,780+$2,450=$13,230

25

Calculation of letter (x) Total costs accounted for conversion costs

Totalcostaccountedforconversioncosts=Costofcompletedunits+EndingWIP=$8,140+$1,110=$9,250

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Most popular questions from this chapter

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.

When might it be beneficial for a company to use the FIFO method? When is the weighted-average method more practical?

Question: What types of companies use process costing systems?

Salish Craft Beers provides the following information for the Malting Department for the month of August 2018:


UNITS
COSTS

Beginning Work-in-Process Inventory

0

\(0

Started in Production in August

26,000

54,000*

Total to Account For

26,000

\)54,000

Completed and Transferred to Packaging Department during August

21,000

?

Ending Work-in-Process Inventory (30% complete for direct materials and 60% complete for conversion work)

5,000

?

Total Accounted For

26,000

\(54,000

* Includes \)18,000 direct materials and $36,000 conversion costs

Requirements

Complete a production cost report for the Malting Department for the month of August 2018 to determine the cost of the units completed and transferred out, and the cost of the ending Work-in-Process Inventory. Assume Salish Craft Beers uses the weighted average method.

Question: Castillo Company has three departments: Mixing, Bottling, and Packaging. At the end of the month, the production cost reports for the departments show the costs of the products completed and transferred were \(75,000 from Mixing to Bottling, \)50,000 from Bottling to Packaging, and $65,000 from Packaging to Finished Goods Inventory. Prepare the journal entries for the transfer of the costs.
See all solutions

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