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Chapter 18: Q38PGA (page 1020)

Work Problem P18-33A using the FIFO method. The Mixing Department beginning work in process of 300 units is 40% complete as to both direct materials and conversion costs. Round equivalent unit of production costs to four decimal places. Round all other costs to the nearest whole dollar.

Short Answer

Expert verified

1. Production cost report

Production Cost Report-Mixing Department


Equivalent unit of production

UNITS

Physical units

Direct material

Conversion costs

Total

Units to account for:

  • Beginning WIP

300

  • Started in production

4,700

Total units to account for

5,000

Units accounted for:

  • Completed and transferred

4,500

4,380

4,380

  • Ending WIP

500

100

100


Total units accounted for

5,000

4,480

4,480

COSTS

Direct material

Conversion costs

Total costs

Costs to account for:

Beginning WIP

$350

$445

$795

Cost added during the period


4,940

6,225

11,165

Total cost to account for

5,290

6,670

11,960

Divided by: total EUP


4,480

4,480


Cost per equivalent unit

$1.18

$1.49


Costs accounted for:

  • - Completed and transferred out

5,172

(4,380 x $1.18)

6,521

(4,380x$1.49)

11,693

  • - Ending WIP


118

(100x $1.18)

149

(100x$1.49)

267

Total costs accounted for

5,290

6,670

11,960

2. The journal entries to show the transaction affecting the mixing department are shown in step 4.

Step by step solution

01

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

A production cost report is a report prepared by a company that has several manufacturing processes, and this report shows the various kinds of costs of the product.

02

Equivalent unit of production for direct material cost

Particulars

EUP

Opening WIP (300 x 60%)

180

Completed and transferred (4,500 鈥� 300) x 100%

4,200

Ending WIP (500 x 20%)

100

Total EUP

4,480

03

Equivalent unit of production for conversion costs

Particulars

EUP

Opening WIP (300 x 60%)

180

Completed and transferred (4,500 鈥� 300) x 100%

4,200

Ending WIP (500 x 20%)

100

Total EUP

4,480

04

Journal Entries

Date

Particulars

Debit ($)

Credit ($)

1.

WIP Inventory-Mixing department

4,940

Raw material

4,940

2.

WIP inventory-Mixing department

3,000

Wages payable

3,000

3.

WIP inventory 鈥� mixing department

3,225

Manufacturing overhead

3,225

4.

WIP inventory-cooking department

11,693

WIP inventory 鈥� mixing department

11,693

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Most popular questions from this chapter

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.

Smith Paper Co. produces the paper used by wallpaper manufacturers. Smith鈥檚 four-stage process includes mixing, cooking, rolling, and cutting. On March 1, the Mixing Department had 400 rolls in process. During March, the Mixing Department completed the mixing process for those 400 rolls and also started and completed the mixing process for an additional 4,100 rolls of paper. The department started but did not finish the mixing process for an additional 500 rolls, which were 20% complete with respect to both direct materials and conversion work at the end of March. Direct materials and conversion costs are incurred evenly throughout the mixing process. The Mixing Department compiled the following data for March:

Direct materials

Direct labor

Manufacturing overhead allocated

Total costs

Beginning inventory, Mar. 1

\(475

\)275

\(300

\)1,050

Costs added during March

5,045

2,900

2,965

10,910

Total costs

\(5,520

\)3,175

\(3,265

\)11,960

Requirements

1. Prepare a production cost report for the Mixing Department for March. The company uses the weighted-average method.

2. Journalize all transactions affecting the company鈥檚 mixing process during March. Assume labor costs are accrued and not yet paid.

The comparative financial statements of Norfolk Cosmetic Supply for 2018, 2017, and

2016 include the data shown here:

2018 2017 2016

Balance sheet鈥攑artial

Current Assets:

Cash

Short-term investments

Accounts Receivable, Net

Merchandise Inventory

Prepaid Expenses

Total Current Assets

Total Current Liabilities

Income statement鈥攑artial

Net Sales (all on account)

\( 70,000

140,000

280,000

355,000

70,000

915,000

560,000

5,890,000

\) 60,000

170,000

240,000

330,000

35,000

835,000

630,000

5,130,000

$ 50,000

120,000

260,000

310,000

35,000

775,000

640,000

4,210,000

Requirements

1. Compute these ratios for 2018 and 2017:

a. Acid-test ratio (Round to two decimals.)

b. Accounts receivable turnover (Round to two decimals.)

c. Days鈥� sales in receivables (Round to the nearest whole day.)

2. Considering each ratio individually, which ratios improved from 2017 to 2018 and

which ratios deteriorated? Is the trend favorable or unfavorable for the company?

Question: Why is the calculation of equivalent units of production needed in a process costing system?

Question: The Mixing Department of Complete Foods had 62,000 units to account for in October. Of the 62,000 units, 38,000 units were completed and transferred to the next department, and 24,000 units were 20% complete. All of the materials are added at the beginning of the process. Conversion costs are added evenly throughout the mixing process and the company uses the weighted-average method.

Compute the total equivalent units of production for direct materials and

conversion costs for October.
See all solutions

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