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Chapter 18: Q9RQ (page 1005)
Question: What is a production cost report?
Answer:
Production cost report is the report that shows in detail total cost, including the raw material and operating costs, of manufacturing the products.
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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.
Brian鈥檚 Frozen Pizzas uses FIFO process costing. Selected production and cost data follow for April 2018.
Prepping department | |
Units to account for: | |
Beginning work-in-process, March 31 | 20,000 |
Started in April | 45,000 |
Total units to account for | 65,000 |
Units accounted for: | |
Completed and transferred out during April: | |
From beginning work-in-process inventory | 20,000 |
Started and completed during April | 30,000 |
Ending work-in-process, April 30 | 15,000 |
Total units accounted for | 65,000 |
Requirements
1. Calculate the following:
a. On March 31, the Prepping Department beginning Work-in-Process Inventory was 75% complete for materials and 55% complete for conversion costs. This means that for the beginning inventory % of the materials and % of the conversion costs were added during April.
b. On April 30, the Prepping Department ending Work-in-Process Inventory was 60% complete for materials and 85% complete for conversion costs. This means that for the ending inventory % of the materials and % of the conversion costs were added during April.
2. Use the information in the table and the information in Requirement 1 to compute the equivalent units of production for direct materials and conversion costs for the Prepping Department.
Bert鈥檚 Exteriors produces exterior siding for homes. The Preparation Department begins with wood, which is chopped into small bits. At the end of the process, an adhesive is added. Then the wood/adhesive mixture goes on to the Compression Department, where the wood is compressed into sheets. Conversion costs are added evenly throughout the preparation process. January data for the Preparation Department are as follows:
UNITS | |
Beginning work-in-process inventory | 0 sheets |
Started in production | 3,800 sheets |
Completed and transferred out to compression in January | 2,900 sheets |
Ending work-in-process inventory (30% of the way through the preparation process) | 900 sheets |
COSTS | |
Beginning work-in-process inventory | $0 |
Costs added during January | |
Wood | 2,888 |
Adhesive | 1,914 |
Direct labor | 987 |
Manufacturing overhead allocated | 2,500 |
Total costs | 8,289 |
Requirements
1. Prepare a production cost report for the Preparation Department for January. The company uses the weighted-average method. (Hint: Each direct material added at a different point in the production process requires its own equivalent units of production computation.)
2. Prepare the journal entry to record the cost of the sheets completed and transferred out to the Compression Department.
3. Post the journal entries to the Work-in-Process Inventory鈥擯reparation T-account. What is the ending balance?
Refer to your answers from Exercise E18-21.
Requirements
1. Prepare the journal entries to record the assignment of direct materials and direct labor and the allocation of manufacturing overhead to the Blending Department. Also, prepare the journal entry to record the costs of the gallons completed and transferred out to the Packaging Department. Assume labor costs are accrued and not yet paid.
2. Post the journal entries to the Work-in-Process Inventory鈥擝lending T-account.
What is the ending balance?
3. What is the average cost per gallon transferred out of the Blending Department
into the Packaging Department? Why would the company managers want to
know this cost?
Describe some ways managers use production cost reports to make business decisions.
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