Introduction to Managerial Accounting, 1st Edition, by Folk, Garrison, and Noreen Alternate Problems-Set A, C a!

ter " PROBLEM 4-1A Equivalent Units; Cost ReconciliationWeighte Ave!age Metho (LO2, LO5)
CHECK FIGURE (2) June 30 WIP: $3,570

Martin Company manufactures a single product. The company uses the weighted-average method in its process costing system. Activity for June has just been completed. An incomplete production report for the first processing department follows: Quantity Schedule and Equivalent Units Quantity Schedule nits to be accounted for: !or" in process# June $ %materials &'( complete) labor and overhead *'( complete+ ,tarted into production Total units

$'#''' *-#''' .-#''' Equivalent units (EU) Materials Labor Overhead

nits accounted for as follows: Transferred to the ne/t department !or" in process# June 1' %materials 2'( complete# labor and overhead 3'( complete+ Total units Cost per Equivalent Unit

*&#''' *#''' .-#'''

0 0 0

0 0 0

0 0 0

Total Cost Cost to be accounted for: !or" in process# June $ Cost added by the department Total cost %a+ 67uivalent units %b+ Cost per 6 # %a+ 8 %b+ Cost econciliation Total Cost Cost accounted for as follows: 0 Required: 0 4 $$#5'' $'.#3.' 4$$5#$.'

Materials

Labor 4 3#$' ' 33#$3 ' 43-#33 ' *5#3'' 4'.12 9

Overhead

Whole Unit

4 *#&'' 21#22' 4*'#12' .$#''' 4'.&2 9

4 1#''' 1$#*'' 41-#*'' *5#3'' 4'.2' :

4$..'

$. ;repare a schedule showing how the e7uivalent units were computed for the first processing department. 3. Complete the <Cost =econciliation> part of the production report for the first processing department.

# $ e McGra%-&ill Com!anies, Inc', ())(' All rig ts reser*ed'

Introduction to Managerial Accounting, 1st Edition, by Folk, Garrison, and Noreen Alternate Problems-Set A, C a!ter " PROBLEM 4-"A #nte!$!eting A P!o uction Re$o!tWeighte -Ave!age Metho (LO2, LO3, LO4)
CHECK FIGURE (1) M !e"# $%: 1&1,000 e'u#( $en! un#!% (2) C)n(e"%#)n: $1*45 +e" un#! (3) 144,000 un#!%

Cooperative ,an Jos? of southern ,onora state in Me/ico ma"es a uni7ue syrup using cane sugar and local herbs. The syrup is sold in small bottles and is pri@ed as a flavoring for drin"s and for use in desserts. The bottles are sold for 4$$.'' each. %The Me/ican currency is the peso and is denoted by 4.+ The first stage in the production process is carried out in the Mi/ing Aepartment# which removes foreign matter from the raw materials and mi/es them in the proper proportions in large vats. The company uses the weighted-average method in its process costing system. A hastily prepared report for the Mi/ing Aepartment for April appears below: Quantity Schedule nits to be accounted for: !or" in process# April $ %materials $''( complete) conversion 52( complete+ ,tarted into production Total units nits accounted for as follows: Transferred to the ne/t department !or" in process# April 1' %materials $''( complete# conversion 1'( complete+ Total units Total Cost Cost to be accounted for: !or" in process# April $ Cost added during the month Total cost Cost econciliation Cost accounted for as follows: Transferred to the ne/t department !or" in process# April 1' Total cost 4*'-#2' ' $.#1$ ' 4*3$#&$ ' 4 33#&$ ' 255#'' ' 4*3$#&$ '

$$#''' $2'#''' $*$#'''

$22#''' *#''' $*$#'''

Cooperative ,an Jos? has just been ac7uired by another company# and the management of the ac7uiring company wants some additional information about its operations. Required: $. !hat were the e7uivalent units for the month0 3. !hat were the costs per e7uivalent unit for the month0 The beginning inventory consisted of the following costs: materials# 4$5#-2')and conversion cost# 41#1*'. The costs added during the month consisted of: materials# 41.2#''')and conversion cost# 433-#'''. 1. Bow many of the units transferred to the ne/t department were started and completed during the month0

# $ e McGra%-&ill Com!anies, Inc', ())(' All rig ts reser*ed'

"

Introduction to Managerial Accounting, 1st Edition, by Folk, Garrison, and Noreen Alternate Problems-Set A, C a!ter " -. The manager of the Mi/ing Aepartment# an/ious to ma"e a good impression on the new owner# stated# <Materials prices jumped from about 4$.&' per unit in Cctober to 43.2' per unit in April# but due to good cost control D was able to hold our materials cost to less than 43.2' per unit for the month.> ,hould this manager be rewarded for good cost control0 6/plain.

# $ e McGra%-&ill Com!anies, Inc', ())(' All rig ts reser*ed'

Introduction to Managerial Accounting, 1st Edition, by Folk, Garrison, and Noreen Alternate Problems-Set A, C a!ter " PROBLEM 4-%A P!o uction Re$o!tWeighte -Ave!age Metho (LO2, LO3, LO4, LO5)
CHECK FIGURE June 30 WIP: $13,150

,unspot Eeverages# Ftd. of Giji ma"es blended tropical fruit drin"s in two stages. Gruit juices are e/tracted from fresh fruits and blended in the Elending Aepartment. The blended juices are then bottled and pac"ed for shipping in the Eottling Aepartment. The following information pertains to the operations of the Elending Aepartment for June. %The currency in Giji is the Gijian dollar.+ !ercent Co"pleted Units Materials Conversion 1'#''' $''( &'( 32'#'' ' 3*'#'' ' 3'#''' $''( -2(

!or" in process# beginning ,tarted into production Completed and transferred out !or" in process# ending

Cost in the beginning wor" in process inventory and cost added during June were as follows for the Elending Aepartment: Material Conversio s n 4 $3#''' 4$'#&'' $3&#''' &1#12'

!or" in process# beginning Cost added during June Required:

;repare a production report for the Elending Aepartment for June assuming that the company uses the weightedaverage method.

# $ e McGra%-&ill Com!anies, Inc', ())(' All rig ts reser*ed'

Introduction to Managerial Accounting, 1st Edition, by Folk, Garrison, and Noreen Alternate Problems-Set A, C a!ter " PROBLEM 4-4A &te$-B'-&te$ P!o uction Re$o!tWeighte -Ave!age Metho (LO2, LO3, LO4, LO5)
CHECK FIGURE (2) M !e"# $%: $0*74 +e" un#! (3) M , 31 WIP: $23,--0

Euilder ;roducts# Dnc.# manufactures a caul"ing compound that goes through three processing stages prior to completion. Dnformation on wor" in the first department# Coo"ing# is given below for May: ;roduction data: nits in process# May $ %materials 52( complete) labor and overhead *2( complete+ nits started into production during May nits completed and transferred out nits in process# May 1$ %materials &'( complete) labor and overhead 2'( complete+ Cost data: !or" in process inventory# May $: Materials cost Fabor cost Cverhead cost Cost added during May: Materials cost Fabor cost Cverhead cost

2#''' &'#''' .'#''' 0

4 1#-3' 1#.$' 3#.*' 2.#3*' &1#'5' *2#--'

Materials are added at several stages during the coo"ing process# whereas labor and overhead costs are incurred uniformly. The company uses the weighted-average method. Required: ;repare a production report for the Coo"ing Aepartment for May. se the following three steps in preparing your report: $. ;repare a 7uantity schedule and a computation of e7uivalent units. 3. Compute the costs per e7uivalent unit for the month. 1. sing the data from %$+ and %3+ above# prepare a cost reconciliation.

# $ e McGra%-&ill Com!anies, Inc', ())(' All rig ts reser*ed'

Introduction to Managerial Accounting, 1st Edition, by Folk, Garrison, and Noreen Alternate Problems-Set A, C a!ter " PROBLEM 4-(A P!e$a!ation o) P!o uction Re$o!t *!o+ Anal'sis o) Wo!, #n P!ocessWeighte -Ave!age Metho (LO2, LO3, LO4, LO5)
CHECK FIGURE (1) M !e"# $%: $1*30 +e" un#!. M , 31 WIP $40,105

!eston ;roducts manufactures an industrial cleaning compound that goes through three processing departmentsH Irinding# Mi/ing# and Coo"ing. All raw materials are introduced at the start of wor" in the Irinding Aepartment# with conversion costs being incurred evenly throughout the grinding process. The !or" in ;rocess T-account for the Irinding Aepartment for a recent month is given below: Wor# in !rocess$%rindin& 'epart"ent Dnventory# May $ %3-#''' units# Completed and transferred 1J- processed+ -.#.2' to mi/ing % 0 units+ May costs added: =aw material %31'#''' units+ 35&#2*. Fabor and overhead 3$$#1-& Dnventory# May 1$ %3*#''' units# $J- processed+ 0

The May $ wor" in process inventory consists of 41$#*11 in materials cost and 4$*#$$. in labor and overhead cost. The company uses the weighted-average method to account for units and costs. Required: $. ;repare a production report for the Irinding Aepartment for the month. 3. !hat criticism can be made of the unit costs that you have computed on your production report0

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Introduction to Managerial Accounting, 1st Edition, by Folk, Garrison, and Noreen Alternate Problems-Set A, C a!ter " PROBLEM 4--A Costing #nvento!ies; .ou!nal Ent!ies; Cost O) /oo s &ol Weighte -Ave!age Metho (LO1, LO2, LO4, LO5)
CHECK FIGURE/ (1) L 0)": $0*1- +e" un#! (2)2e3e40e" 31 WIP: $11,240 (4) COG/: $115,210

Kou are employed by ,pirit Company# a manufacturer of digital watches. The companyLs chief financial officer is trying to verify the accuracy of the ending wor" in process and finished goods inventories prior to closing the boo"s for the year. Kou have been as"ed to assist in this verification. The year-end balances shown on ,pirit CompanyLs boo"s are as follows: Units !or" in process# Aecember 1$ %labor and overhead 1'( complete+ Ginished goods# Aecember 1$ -'#''' 22#''' Costs 4&3#2'' 4$&*#'''

Materials are added to production at the beginning of the manufacturing process# and overhead is applied to each product at the rate of 2'( of direct labor cost. There was no finished goods inventory at the beginning of the year. A review of ,pirit CompanyLs inventory and cost records has disclosed the following data# all of which are accurate: Costs Materials Labor 421#5'' 435#*$'

Units !or" in process# January $ %labor and overhead 5'( complete+ nits started into production Cost added during the year: Materials cost Fabor cost nits completed during the year 12#''' $$5#'''

4335#-*' 451#&.' $$-#'''

The company uses the weighted-average cost method. Required: $. Aetermine the e7uivalent units and costs per e7uivalent unit for materials# labor# and overhead for the year. 3. Aetermine the amount of cost that should be assigned to the ending wor" in process and finished goods inventories. 1. ;repare the necessary correcting journal entry to adjust the wor" in process and finished goods inventories to the correct balances as of Aecember 1$. -. Aetermine the cost of goods sold for the year assuming there is no under- or overapplied overhead. %C;A# adapted+

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Introduction to Managerial Accounting, 1st Edition, by Folk, Garrison, and Noreen Alternate Problems-Set A, C a!ter " PROBLEM 4-0A Co+$!ehensive P!ocess Costing P!o1le+Weighte -Ave!age Metho (LO1, LO2, LO3, LO4, LO5)
CHECK FIGURE M "35 31 Re6#n#n7 2e+ "!4en! WIP: $1-3,4-0

Fubricants# Dnc.# produces a special "ind of grease that is widely used by racecar drivers. The grease is produced in two processes: refining and blending. =aw materials are introduced at various points in the =efining Aepartment) labor and overhead costs are incurred evenly throughout the refining operation. The refined output is then transferred to the Elending Aepartment. The following incomplete !or" in ;rocess account has been provided for the =efining Aepartment for March: !or" in ;rocess H=efining Aepartment March $ inventory %$&'#''' gallons) materials $''( complete) labor Completed and transferred to and overhead -2( complete+ 3&$#5.' Elending % 0 gallons+ March costs added: =aw materials %5''#''' gallons+ &$-#1&' Airect labor 5.*#2'' Cverhead 1-.#-1' March 1$ inventory %$3'#''') materials 5'( complete) labor and overhead 2'( complete+ 0

The March $ wor" in process inventory in the =efining Aepartment consists of the following cost elements: raw materials# 4$2.#2'') direct labor# 45-#2'') and overhead# 435#5.'. Costs incurred during March in the Elending Aepartment were: materials used# 41-'#''') direct labor# 4-$'#''') and overhead cost applied to production# 43.'#'''. The company accounts for units and costs using the weighted-average method. Required: $. ;repare journal entries to record the costs incurred in both the =efining Aepartment and Elending Aepartment during March. Mey your entries to the items %a+ through %g+ below. a. =aw materials were issued for use in production. b. Airect labor costs were incurred. c. Manufacturing overhead costs for the entire factory were incurred# 4*2'#'''. %Credit Accounts ;ayable.+ d. Manufacturing overhead cost was applied to production using a predetermined overhead rate. e. nits that were complete as to processing in the =efining Aepartment were transferred to the Elending Aepartment# 43#31*#&''. f. nits that were complete as to processing in the Elending Aepartment were transferred to Ginished Ioods# 41#$5'#'''. g. Completed units were sold on account# 41#5''#'''. The Cost of Iood ,old was 41#'''#'''. 3. ;ost the journal entries from %$+ above to T-accounts. The following account balances e/isted at the beginning of March. %The beginning balance in the =efining AepartmentLs !or" in ;rocess account is given above.+ =aw Materials !or" in ;rocessHElending Aepartment Ginished Ioods 4$#3*'#' '' *2#''' 1$'#'''

After posting the entries to the T-accounts# find the ending balance in the inventory accounts and the manufacturing overhead accounts. 1. ;repare a production report for the =efining Aepartment for March.

# $ e McGra%-&ill Com!anies, Inc', ())(' All rig ts reser*ed'

Introduction to Managerial Accounting, 1st Edition, by Folk, Garrison, and Noreen Alternate Problems-Set A, C a!ter " PROBLEM 4-2A Co+$!ehensive P!ocess Costing P!o1le+Weighte -Ave!age Metho (LO1, LO2, LO3, LO4, LO5)
CHECK FIGURE M , 31 C))8#n7 2e+ "!4en! WIP: $7,000

Bilo/# Dnc.# produces a hot sauce that goes through two departmentsHCoo"ing and Eottling. The company has recently hired a new assistant accountant# who has prepared the following summary of production and costs for the Coo"ing Aepartment for May using the weighted-average method. Coo"ing Aepartment costs: !or" in process inventory# May $: -1#''' 7uarts# materials 4 *&#2. 5'( complete and labor and overhead .2( complete......... ' N Materials added during May.................................................... .1#.'' Fabor added during May.......................................................... 11#2&' $*#$2 Cverhead applied during May................................................. ' 4$53#'' Total departmental costs.......................................................... ' Coo"ing Aepartment costs assigned to: Ouarts completed and transferred to the Eottling Aepartment: $''#''' 7uarts at 0 per 7uart.................. 4 !or" in process inventory# May 1$: $'#''' 7uarts# materials 2'( complete and labor and overhead 3'( complete......... Total departmental costs assigned............................................ 4

0 0 0

NConsists of materials# 4-$#&'') labor# 4$.#-3') and overhead# 45#12'. The new assistant accountant has determined the cost per 7uart transferred to be 4$.53' as follows: Total departmental costs 4$53#''' : : 4$.53' per 7uart Ouarts completed and transferred $''#''' 7uarts Bowever# the assistant accountant is unsure how to use this unit cost figure in assigning cost to the ending wor" in process inventory. Dn addition# the companyLs general ledger shows only 4$&2#''' in cost transferred from the Coo"ing Aepartment to the Eottling Aepartment# which does not agree with the 4$53#''' figure above. The general ledger also shows the following costs incurred in the Eottling Aepartment during May: materials used# 4$33#''') direct labor cost incurred# 4*$#''') and overhead cost applied to products# 412#'''. Required: $. ;repare journal entries as follows to record activity in the company during May. Mey your entries to the letters %a+ through %g+ below. a. =aw materials were issued to the two departments for use in production. b. Airect labor costs were incurred in the two departments. c. Manufacturing overhead costs were incurred# 42'#'2'. %Credit Accounts ;ayable.+ The company maintains a single Manufacturing Cverhead account for the entire plant. d. Manufacturing overhead cost was applied to production in each department using predetermined overhead rates. e. nits completed as to processing in the Coo"ing Aepartment were transferred to the Eottling Aepartment# 4$&2#'''. f. nits completed as to processing in the Eottling Aepartment were transferred to Ginished Ioods# 4-$'#'''. g. nits were sold on account# 422'#'''. The Cost of Iood ,old was 4-'1#'''.

# $ e McGra%-&ill Com!anies, Inc', ())(' All rig ts reser*ed'

Introduction to Managerial Accounting, 1st Edition, by Folk, Garrison, and Noreen Alternate Problems-Set A, C a!ter " 3. ;ost the journal entries from %$+ above to T-accounts. Ealances in selected accounts on May $ are given below: =aw Materials !or" in ;rocessHEottling Aepartment Ginished Ioods 43$.#'' ' -3#''' .#'''

After posting the entries to the T-accounts# find the ending balance in the inventory accounts and the Manufacturing Cverhead accounts. 1. ;repare a production report for the Coo"ing Aepartment for May.

# $ e McGra%-&ill Com!anies, Inc', ())(' All rig ts reser*ed'

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