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Chapter 18: Q45PGB (page 1024)

Preparing a production cost report, second department, withbeginning WIP and transferred in costs; journal entries; FIFO method Work Problem P18-40B using the FIFO method. The Mixing Department beginningwork in process of 400 units is 80% complete as to both direct materials and conversion costs. Round equivalent unit costs to four decimal places. Round all other costs to the nearest dollar.

Short Answer

Expert verified

1. Production cost report


Production Cost Report- Department 2



Equivalent unit of production

UNITS

Physical units

Direct material

Conversion costs

Total

Units to account for:

  • Beginning WIP

400

  • Started in production

4,600

Total units to account for

5,000

Units accounted for:

  • Completed and transferred

4,500

4,180

4,180

  • Ending WIP

500

100

100

Total units accounted for

5,000

4,280

4,280

COSTS

Direct material

Conversion costs

Total costs

Costs to account for:

Beginning WIP

$475

$575

$1,050

Cost added during the period

5,045

5,865

10,910

Total cost to account for

5,520

6,440

11,960

Divided by: total EUP

4,280

4,280

Cost per equivalent unit

$1.29

$1.50

Costs accounted for:

  • - Completed and transferred out

5,391

(4,180 x $1.29)

6,290

(4,180x$1.50)

11,681

  • - Ending WIP

129

(100x $1.29)

150

(100x$1.50)

279

Total costs accounted for

5,520

6,440

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 shows the direct material, and the conversion cost separately of a product that involves a certain number of manufacturing processes.

02

Equivalent unit of production for direct material cost

Particulars

EUP

Opening WIP (400 x 20%)

80

Completed and transferred (4,500 鈥� 400) x 100%

4,100

Ending WIP (500 x 20%)

100

Total EUP

4,280

03

Equivalent unit of production for conversion costs

Particulars

EUP

Opening WIP (400 x 20%)

80

Completed and transferred (4,500 鈥� 400) x 100%

4,100

Ending WIP (500 x 20%)

100

Total EUP

4,280

04

Journal Entries

Date

Particulars

Debit ($)

Credit ($)

1.

WIP Inventory-Mixing department

5,045

Raw material

5,045

2.

WIP inventory-Mixing department

2,900

Wages payable

2,900

3.

WIP inventory 鈥� mixing department

2,965

Manufacturing overhead

2,965

4.

WIP inventory-cooking department

11,681

WIP inventory 鈥� mixing department

11,681

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Most popular questions from this chapter

Sea Worthy uses three processes to manufacture lifts for personal watercrafts: forming a lift鈥檚 parts from galvanized steel, assembling the lift, and testing the completed lift. The lifts are transferred to finished goods before shipment to marinas across the country. Sea Worthy鈥檚 Testing Department requires no direct materials. Conversion costs are incurred evenly throughout the testing process. Other information follows for October 2018:

UNITS

Beginning work-in-process inventory

2,300 units

Transferred in from assembling department during the period

6,800 units

Completed during the period

4,100 units

Ending work in process inventory (40% complete for conversion work)

5,000 units

COSTS

Beginning work in process inventory (transferred in costs, \(93,400, conversion costs, \)18,100)

$111,500

Transferred in from the assembly department during the period

671,000

Conversion cost added during the period

49,000

The cost transferred into Finished Goods Inventory is the cost of the lifts transferred out of the Testing Department. Sea Worthy uses weighted-average process costing.

Requirements

1. Prepare a production cost report for the Testing Department.

2. What is the cost per unit for lifts completed and transferred out to Finished Goods Inventory? Why would management be interested in this cost?

Ocean Worthy uses three processes to manufacture lifts for personal watercraft: forming a lift鈥檚 parts from galvanized steel, assembling the lift, and testing the completed lift. The lifts are transferred to Finished Goods Inventory before shipment to marinas across the country.

Ocean Worthy鈥檚 Testing Department requires no direct materials. Conversion costs are incurred evenly throughout the testing process. Other information follows for the month of August:

UNITS

Beginning work-in-process inventory

2,000 units

Transferred in from assembling department during the period

7,000 units

Completed during the period

4,000 units

Ending work in process inventory (40% complete for conversion work)

5,000 units

COSTS

Beginning work in process inventory (transferred in costs, \(93,400, conversion costs, \)18,100)

$111,500

Transferred in from the assembly department during the period

672,000

Conversion cost added during the period

54,000

The cost transferred into Finished Goods Inventory is the cost of the lifts transferred out of the Testing Department. Ocean Worthy uses weighted-average

process costing.

Requirements

1. Prepare a production cost report for the Testing Department.

2. What is the cost per unit for lifts completed and transferred out to Finished Goods Inventory? Why would management be interested in this cost?

Question: How is the cost per equivalent unit of production calculated?

The Finishing Department started the month with 500 units in process, received 2,000 units from the Assembly Department, and transferred 2,100 units to the finished goods storage area. All direct materials are added at the beginning of the process. The units in process at the end of the month are 45% complete concerning conversion costs. The department uses the weighted-average method. The Finishing Department incurred the following costs:

Beginning WIP

Added this month

Total

Transferred in

\(6,250

\)25,000

\(31,250

Direct materials

500

2,000

2,500

Conversion cost

1,250

5,590

6,840

Total

\)8,000

\(32,590

\)40,590

8. How many units are still in process at the end of the month?

9. Compute the equivalent units of production for the Finishing Department.

10. Determine the cost per equivalent unit for transfer, direct materials, and conversion costs.

11. Determine the cost to be transferred to Finished Goods Inventory.

Question: Explain the terms to account for and accounted for.
See all solutions

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