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Exercises

1.

Following are production data for a process costing system.


Beginning work in process, 30% complete
12,000 units
Started
90,000 units
Ending work in process, 70% complete
8,000 units
Costs:
Beginning work in process:
Direct Materials
Conversion costs
Materials used during the period
Conversion costs incurred during the period

$ 28,800
5,220
216,000
139,200

a. Using the FIFO basis, prepare a process costing report.


b. Write out the journal entries for the costs incurred and the work performed this period under
the FIFO method.
2.

Following are production data for a process costing system.


Beginning work in process, 30% complete
12,000 units
Started
90,000 units
Ending work in process, 70% complete
8,000 units
Costs:
Beginning work in process:
Direct Materials
Conversion costs
Materials used during the period
Conversion costs incurred during the period

$ 28,800
5,220
216,000
139,200

a. Using the weighted average, prepare a process costing report.


b. Write out the journal entries for the costs incurred and the work performed this period under
the weighted average method.
3.

Mojdehi Manufacturing Co. uses a weighted average process costing system. During the current
period 4,800 units were transferred in (cost $150,000) to Department Q. In Department Q
materials were added costing $20,000 and conversion costs of $55,000 were incurred. A total of
4,400 good units were transferred to finished goods. Normal spoilage is 2% of the units
inspected, and the inspection occurs at the end of the process. Direct materials are added at the
beginning of the process. Additionally:
Beginning WIP:

1,000 units, 40% complete


Direct materials costs = $4,070
Conversion costs = $6,008
Transferred-in costs = $10,080

Ending WIP:

1,200 units, 30% complete

Prepare a complete process costing report for the current period.


4.

At the beginning of August 20x1, CHN Corporation had 100 units in beginning work in process,
which were 100% complete with respect to materials and 20% complete with respect to
conversion. CHN started 500 units during August. Ending work in process consisted of 50 units,

which were 100% complete with respect to materials and 60% complete with respect to
conversion.
a. Calculate CHNs equivalent units for August using the FIFO method.
b. Calculate CHNs equivalent units for August using the weighted average method.
5.

Felix and Sons produce a small plastic toy called the Monster Car. Materials are added at the
beginning of the process in the plastic forming process. Conversion was 75% complete for the
8,000 units in work in process on February 1 and 50% complete for the 6,000 units in work in
process on February 29. During February 12,000 Monster Cars were started and completed with
respect to the forming department and transferred to the next department. There was no spoilage
over the period. Here is an analysis of the costs for the period:
Direct Materials Conversion Costs
Work in process, July 1
$ 9,900
$ 3,600
Costs added in July
15,600
10,800
$25,500
$14,400
Using the weighted average method, prepare a schedule to show the calculation of the total cost
per equivalent unit for February. That is, calculate the equivalent unit cost for direct materials
and for conversion costs and then sum them.

6.

DPH Corporation is in the chemical manufacturing business. Products go through two


production departments (A first, then B). Data from those departments for November 20x1 are
presented below.
Department A
Beginning
work in process

Number of units
% complete for materials
% complete for conversion
Total materials cost
Total conversion cost

500
100%
60%
$12,000
$15,000
Department B
Beginning
work in process

Number of units
% complete for materials
% complete for conversion
Total materials cost
Total conversion cost
Total transferred-in costs

Ending
work in process

100
100%
30%
-0$20,000
7,500

300
100%
30%

Ending
work in process
150
100%
40%

DPH started 1,300 units of product during the month in Department A. Costs incurred in
Department A for November 20x1 totaled $32,000 for material and $66,000 for conversion.
Additionally, Department B incurred conversion costs in November 20x1 of $300,000.
Department B adds no materials to the product.
a. Prepare a production cost report for Department B for November 20x1. DPH accounts for its
costs using the weighted-average method.
b. Write out the journal entry for the transfer of goods from Department A to Department B.

7.

Sunflower Seed Producers manufactures cooking oil and other products made from sunflower
seeds. All direct materials are added at the beginning of the production process. Data for the
direct materials used in the manufacture of cooking oil for the month of December is listed below.
Production data:
Beginning work in process
25,000 units
Units started during the period
50,000 units
Completed and transferred out
67,500 units
Manufacturing costs:
Beginning work in process (direct materials)
$35,000
Direct material used
$75,000
a. Under the FIFO method, how many units were started and completed with respect to direct
materials during the month?
b. Under the FIFO method, what is the cost of the direct materials in ending work in process at
the end of the month?
c. Under the FIFO method, what is the amount of direct materials cost transferred out this
period?
d. Calculate the direct materials cost per equivalent unit under the weighted average method.
e. Did the purchase price of direct materials increase or decrease this period compared to last
period? Explain.

Exercises
1 and 2 share the following computations:

1.

a.
Calculate actual cost per equivalent unit
First-in, first-out
Direct materials
Conversion costs
Total cost per equivalent unit

Beginning work in process


Costs to complete BWIP
Materials
Conversion
Total costs added this period
Total cost of BWIP transferred out
New units started, completed &
transferred out
Total units completed & transferred out
Ending work in process
Materials
Conversion
Total EWIP cost
Total accounted for

Equivalent
units
96,000
96,000

Costs
$ 216,000
$ 139,200

Process cost reports


First-in, first-out
Units
Costs
12,000 $
34,020
$
$

18,900
12,180
31,080

65,100

82,000
94,000
8,000

102,000

303,400
$

368,500

12,600
8,120
20,720
389,220

$
$

$
$
$

Cost per equivalent unit


2.2500
1.4500
3.7000

Computation
12,000 * 70% * $2.25
12,000 * 70% * $1.45

82,000 * $3.70

8,000 * 70% * $2.25


8,000 * 70% * $1.45

b. Journal entries:

2.

Work in process inventory


Raw material inventory

$216,000

Work in process inventory


A/P, Wages Payable, etc.

$139,200

Finished goods inventory


Work in process inventory

$368,500

$216,000
$139,200
$368,500

a.

b.

Journal entries:
Work in process inventory
Raw material inventory

$216,000
$216,000

Work in process inventory


A/P, Wages Payable, etc.

$139,200

Finished goods inventory


Work in process inventory

$367,336

$139,200
$367,336

3.

4.

a.
b.

5.

Equivalent units for materials = 0 + 500 = 500


Equivalent units for conversion = (100 * 80%) + 450 + (50 * 60%) = 560
Equivalent units for materials = 100 + 500 = 600
Equivalent units for conversion = 550 + (50 * 60%) = 580

Equivalent units for direct materials = 8,000 + 12,000 + 8,000 = 26,000


Equivalent unit cost = ($25,500)/4,000 = $25,500/26,000 = $0.981
Equivalent units for conversion = 8,000 + (6,000 x 0.50) + 12,000 = 23,000
Equivalent unit cost = ($3,600 + $10,800)/23,000 = $0.626
Total equivalent unit cost = $1.607.

6.

a.

Physical units for Dept. B


Beginning WIP
Transferred from Dept. A
Ending WIP
Transferred to finished goods

100
1,500
(150)
1,450

Costs to account for in Dept. B


Beginning
Incurred in
WIP
November
Transferred from Dept. A
$
7,500 $ 113,082
Materials
Conversion
20,000
300,000
Totals $ 27,500 $ 413,082
Equivalent units for Dept. B
Materials
Transferred to finished goods
1,450
Ending WIP
150
Totals
1,600

$ 120,582
$
320,000
$ 440,582

Conversion
1,450
60
1,510

Cost per equivalent unit in Dept. B


Transferred in
$
75.36
Materials
Conversion
211.92
Total $ 287.28
Costs accounted for in Dept. B
Units transferred to finished goods
$
Ending WIP
Transferred in
$ 11,305
Materials
Conversion
12,715
Total costs accounted for
$

6.

7.

b.

a.
b.
c.
d.
e.

8.

a.
b.

416,562

24,020
440,582

Journal entry:
Work in process inventory Dept. B
Work in process inventory Dept. A

$113,082
$113,082

Units in ending WIP = 7,500 (25,000 + 50,000 67,500)


Units started and completed = 50,000 7,500 = 42,500
FIFO equivalent unit cost = $75,000/50,000 = $1.50, ending WIP = 7,500 x $1.50 = $11,250
Cost of units transferred out = $35,000 + (42,500 * $1.50) = $98,750
Equivalent unit cost under weighted average = $110,000/75,000 = $1.47
Costs increased from last period compared to this period because FIFO costs are current period costs
and the equivalent unit cost was $1.50, whereas the weighted average costs include last periods costs
and the equivalent unit cost was $1.47, which is lower than the FIFO cost. Therefore costs increased.
200 + 500 100 = 600
Materials: 640 = 600 started & completed + 100 (% complete) % complete = 40
Conversion: 615 = 600 started & completed + 100 (% complete) % complete = 15

9.

a.

b.

Journal entry:
Finished goods inventory
Work in process inventory

$861,478
$861,478

c.

10.

a.

86,000 * $10.02 = $861,720


Material
Labor
Overhead
Transferred in

b.
c.

Costs
207,580
131,920
224,092
397,700

Equivalent units
97,000
97,000
92,600
97,000

Cost per
equivalent unit
$
2.14
1.36
2.42
4.10
$
10.02

Journal entry:
Finished goods inventory
$861,720
Work in process inventory
11,000*($10.02-$2.42) + 11,000*0.6*$2.42 = $99,572

$861,720