Horngren ch17 Sol

CHAPTER 17
PROCESS-COSTING
17-1 Industries using process costing in their manufacturing area include chemical processing,
oil refining, pharmaceutical, plastics, brick and tile manufacturing, semiconductor chips, beverages,
and breakfast cereals.
17-2 Process costing systems separate costs into cost categories according to the timing of
when costs are introduced into the process. Often, only two cost classifications, direct materials
and conversion costs, are necessary. Direct materials are frequently added at one point in time,
often the start or the end of the process, and all conversion costs are added at about the same time,
but in a pattern different from direct materials costs.
17-3 Equivalent units is a derived amount of output units that takes the quantity of each input
factor of production! in units completed or in incomplete units in work in process, and converts the
quantity of input into the amount of completed output units that could be made with that quantity of
input. Each equivalent unit is comprised of the physical quantities of direct materials or conversion
costs inputs necessary to produce output of one fully completed unit. Equivalent unit measures are
necessary since all physical units are not completed to the same e"tent.
17-4 #he accuracy of the estimates of completion depend on the care and skill of the estimator
and the nature of the process. $ircraft blades may differ substantially in the finishing necessary to
obtain a final product. #he amount of work necessary to finish a product may not always be easy to
ascertain in advance.
17-5 #he five key steps in process costing follow%
&tep '% &ummari(e the flow of physical units of output.
&tep )% *ompute output in terms of equivalent units.
&tep +% *ompute equivalent unit costs.
&tep ,% &ummari(e total costs to account for.
&tep -% $ssign total costs to units completed and to units in ending work in process.
17-6 #hree inventory methods associated with process costing are%
. /eighted average.
. 0irst1in, first1out.
. &tandard costing.
17-7 #he weighted1average process1costing method calculates the equivalent1unit cost of all the
work done to date regardless of the accounting period in which it was done!, assigns this cost to
equivalent units completed and transferred out of the process, and to equivalent units in ending
work1in1process inventory.
17-1
17-8 0I0O computations are distinctive because they assign the cost of the previous accounting
period2s equivalent units in beginning work1in1process inventory to the first units completed and
transferred out of the process and assigns the cost of equivalent units worked on during the current
period first to complete beginning inventory, ne"t to start and complete new units, and finally to
units in ending work1in1process inventory. In contrast, the weighted1average method costs units
completed and transferred out and in ending work in process at the same average cost.
17-9 0I0O should be called a modified or departmental 0I0O method because the goods
transferred in during a given period usually bear a single average unit cost as a matter of
convenience.
17-10 $ ma3or advantage of 0I0O is that managers can 3udge the performance in the current
period independently from the performance in the preceding period.
17-11 #he 3ournal entries in process costing are basically similar to those made in 3ob1costing
systems. #he main difference is that, in process costing, there is often more than one work1in1
process account44one for each process.
17-12 &tandard1cost procedures are particularly appropriate to process1costing systems where
there are various combinations of materials and operations used to make a wide variety of similar
products as in the te"tiles, paints, and ceramics industries. &tandard1cost procedures also avoid the
intricacies involved in detailed tracking with weighted1average or 0I0O methods when there are
frequent price variations over time.
17-13 #here are two reasons why the accountant should distinguish between transferred-in costs
and additional direct materials costs for a particular department%
a! $ll direct materials may not be added at the beginning of the department process.
b! #he control methods and responsibilities may be different for transferred1in items and
materials added in this department.
17-14 5o. #ransferred1in costs or previous department costs are costs incurred in a previous
department that have been charged to a subsequent department. #hese costs may be costs incurred
in that previous department during this accounting period or a preceding accounting period.
17-15 6aterials are only one cost item. Other items often included in a conversion costs pool!
include labor, energy, and maintenance. If the costs of these items vary over time, this variability
can cause a difference in cost of goods sold and inventory amounts when the weighted1average or
0I0O methods are used.
$ second factor is the amount of inventory on hand at the beginning or end of an
accounting period. #he smaller the amount of production held in beginning or ending inventory
relative to the total number of units transferred out, the smaller the effect on operating income, cost
of goods sold, or inventory amounts from the use of weighted1average or 0I0O methods.
17-16 )- min.! Equivale! ui!"# $e%& 'e(ii( ive!&%)*
'. Direct materials cost per unit 78)9,999 : '9,999! 7 8)
*onversion cost per unit 78;9,999 : '9,999! 8;
$ssembly Department cost per unit 7',<
17-2
17-16 *ont2d.!
)a. &olution E"hibit '81';$ calculates the equivalent units of direct materials and conversion
costs in the $ssembly Department of International Electronics in 0ebruary )99,.
&olution E"hibit '81';= computes equivalent units costs.
)b. Direct materials cost per unit 7 8)
*onversion cost per unit <9
$ssembly Department cost per unit 7'-)
+. #he difference in the $ssembly Department cost per unit calculated in requirements ' and )
arises because the costs incurred in >anuary and 0ebruary are the same but fewer equivalent units of
work are done in 0ebruary relative to >anuary. In >anuary, all '9,999 units introduced are fully
completed resulting in '9,999 equivalent units of work done with respect to direct materials and
conversion costs. In 0ebruary, of the '9,999 units introduced, '9,999 equivalent units of work is
done with respect to direct materials but only ?,-99 equivalent units of work is done with respect to
conversion costs. #he $ssembly Department cost per unit is, therefore, higher.
SO+,TION E-HI.IT 17-16A
&teps ' and )% &ummari(e Output in Physical @nits and *ompute Equivalent @nits
$ssembly Department of International Electronics for 0ebruary )99,
/S!e0 21
/S!e0 11 Equivale! ,i!"
P2)"i3al 4i%e3! C&ve%"i&
5l&6 &7 P%&8u3!i& ,i!" 9a!e%ial" C&"!"
/ork in process, beginning 9
&tarted during current period '9,999
#o account for '9,999
*ompleted and transferred out
during current period ?,999 ?,999 ?,999
/ork in process, endingA ',999
',999 '99BC ',999 -9B ',999 -99
$ccounted for '9,999
/ork done in current period only '9,999 ?,-99
A
Degree of completion in this department% direct materials, '99BC conversion costs, -9B.
SO+,TION E-HI.IT 17-16.
*ompute Equivalent @nit *osts,
$ssembly Department of International Electronics for 0ebruary )99,
T&!al
P%&8u3!i&
C&"!"
4i%e3!
9a!e%ial"
C&ve%"i&
C&"!"
S!e0 3!*osts added during 0ebruary 7',,<9,999 78)9,999 78;9,999
Divide by equivalent units of work done
in current period &olution E"hibit '81l;$! '9,999 ?,-99
*ost per equivalent unit 7 8) 7 <9
17-3
17-17 )9 min.! :&u%al e!%ie" /3&!iua!i& &7 17-161*
'. /ork in Process44$ssembly 8)9,999
$ccounts Payable 8)9,999
#o record 78)9,999 of direct materials
purchased and used in production during
0ebruary )99,
). /ork in Process44$ssembly 8;9,999
Darious accounts 8;9,999
#o record 78;9,999 of conversion costs
for 0ebruary )99,C e"amples include energy,
manufacturing supplies, all manufacturing
labor, and plant depreciation
+. /ork in Process44#esting ',+;<,999
/ork in Process44$ssembly ',+;<,999
#o record ?,999 units completed and
transferred from $ssembly to #esting
during 0ebruary )99, at
7'-) ?,999 units E 7',+;<,999
Postings to the /ork in Process44$ssembly account follow.
;&%< i P%&3e"" == A""e>'l) 4e0a%!>e!
=eginning inventory, 0eb. ' 9 +. #ransferred out to
'. Direct materials 8)9,999 /ork in Process44#esting ',+;<,999
). *onversion costs 8;9,999
Ending inventory, 0eb. )? ''),999
17-4
17-18 )- min.! ?e%& 'e(ii( ive!&%)# >a!e%ial" i!%&8u3e8 i >i88le &7
0%&3e""*
'. &olution E"hibit '81'<$ shows equivalent units of work done in the current period of
*hemical P, -9,999C *hemical F, +-,999C *onversion costs, ,-,999.
). &olution E"hibit '81'<= calculates cost per equivalent unit of work done in the current period
for *hemical P, *hemical F, and *onversion costs, summari(es the total 6i"ing Department costs
for >uly )99,, and assigns these costs to units completed and transferred out! and to units in ending
work in process.
6i"ing Department of Daasa *hemicals for >uly )99,
/S!e0 11
/S!e0 21
Equivale! ,i!"
P2)"i3al C&ve%"i&
5l&6 &7 P%&8u3!i& ,i!" C2e>i3al P C2e>i3al @ C&"!"
/ork in process, beginning 9
&tarted during current period -9,999
#o account for -9,999
during current period +-,999 +-,999 +-,999 +-,999
/ork in process, endingA '-,999
'-,999 '99BC '-,999 9BC
'-,999 ;; )G+B '-,999 9 '9,999
$ccounted for -9,999
/ork done in current period only -9,999 +-,999 ,-,999
A
Degree of completion in this department% *hemical P, '99BC *hemical F, 9BC conversion costs, ;; )G+B.
17-5
17-18 *ont2d.!
&teps +, ,, and -% *ompute Equivalent @nit *osts, &ummari(e #otal *osts to $ccount 0or, and
$ssign *osts to @nits *ompleted and to @nits in Ending /ork in Process, 6i"ing Department of
Daasa *hemicals for >uly )99,
T&!al
P%&8u3!i&
C&"!" C2e>i3al P C2e>i3al @
C&ve%"i&
C&"!"
S!e0 3!*osts added during >uly 7,--,999 7)-9,999 789,999 7'+-,999
Divide by equivalent units of work
done in current period &olution
E"hibit '81l<$! -9,999 +-,999 ,-,999
*ost per equivalent unit

7 - 7 ) 7 +
/S!e0 41#otal costs to account for 7,--,999
/S!e0 51 $ssignment of costs%
+-,999 units! 7+-9,999 +-,999A 7-! H +-,999A7)! H +-,999A7+!
/ork in process ending
'-,999 units!
*hemical P 8-,999 '-,999
I
7-
*hemical F 9 9
I
7)
*onversion costs +9,999 '9,999
I
7+
#otal work in process '9-,999
#otal costs accounted for 7,--,999
AEquivalent units completed and transferred out from &olution E"hibit '81'<$, &tep ).

I
Equivalent units in work in process, ending from &olution E"hibit '81'<$, &tep ).
17-6
17-19 '- min.! ;ei(2!e8-ave%a(e >e!2&8# equivale! ui!"*
@nder the weighted1average method, equivalent units are calculated as the equivalent units of
work done to date. &olution E"hibit '81'? shows equivalent units of work done to date for the
&atellite $ssembly Division of $erospatiale for direct materials and conversion costs.
SO+,TION E-HI.IT 17-19
/eighted1$verage 6ethod of Process *osting, &atellite $ssembly Division of $erospatiale for
6ay )99,
/S!e0 11 /S!e0 21
P2)"i3al Equivale! ,i!"
,i!" 4i%e3! C&ve%"i&
5l&6 &7 P%&8u3!i& /(ive1 9a!e%ial" C&"!"
/ork in process beginning <
&tarted during current period -9
#o account for -<
*ompleted and transferred out during current period ,; ,;.9 ,;.9
/ork in process, endingA ') ;9BC ') +9B! ') 8.) +.;
$ccounted for -<
/ork done to date -+ .) ,? .;
A
Degree of completion in this department% direct materials, ;9BC conversion costs, +9B.
17-7
17-20 )9 min.! ;ei(2!e8-ave%a(e >e!2&8# a""i(i( 3&"!" /3&!iua!i& &7 17-191*
&olution E"hibit '81)9 calculates cost per equivalent unit of work done to date in the $ssembly
Department of $erospatiale, summari(es total costs to account for, and assigns costs to units
completed and to units in ending work1in1process inventory.
$ssign *osts to @nits *ompleted and to @nits in Ending /ork in Process
/eighted1$verage 6ethod of Process *osting, &atellite $ssembly Department of $erospatiale for
6ay )99,
T&!al
P%&8u3!i&
C&"!"
4i%e3!
9a!e%ial"
C&ve%"i&
C&"!"
/S!e0 3! /ork in process, beginning given! 7 -,<,,,999 7 ,,?++,;99 7 ?'9,,99
*osts added in current period given! ,;,')9,999 +),)99,999 '+,?)9,999
*osts incurred to date 7+8,'++,;99 7',,<+9,,99
Divide by equivalent units of work done to date
&olution E"hibit '81'?! -+.) ,? .;
*ost per equivalent unit of work done to date 7 ;?<,999 7 )??,999
S!e0 4! #otal costs to account for -',?;,,999
S!e0 5! $ssignment of costs%
*ompleted and transferred out ,; units! ,-,<;),999 ,;A 7;?<,999! H ,;A 7)??,999!
/ork in process, ending ') units!
Direct materials -,9)-,;99 8.)
I
7;?<,999
*onversion costs
#otal work in process
#otal costs accounted for
',98;,,99
;,'9),999
7-',?;,,999
+.;
I
7)??,999
A
Equivalent units completed and transferred out from &olution E"hibit '81'?, &tep ).
I
Equivalent units in work in process, ending from &olution E"hibit '81'?, &tep ).
17-8
17-21 '- min.! 5I5O >e!2&8# equivale! ui!"*
@nder the 0I0O method, equivalent units are calculated as the equivalent units of work done in the
current period only. &olution E"hibit '81)' shows equivalent units of work done in 6ay )99, in
the $ssembly Department of $erospatiale for direct materials and conversion costs.
0I0O 6ethod of Process *osting, &atellite $ssembly Division of $erospatiale for 6ay )99,

/S!e0 11
/S!e0 21
Equivale! ,i!"
5l&6 &7 P%&8u3!i&
P2)"i3al
,i!"
4i%e3!
9a!e%ial"
C&ve%"i&
C&"!"
/ork in process, beginning given!
&tarted during current period given!
#o account for
<
-9
-<
work done before current period!
*ompleted and transferred out during current
period%
0rom beginning work in process
J
< '99B ?9B!C < '99B ,9B!
<
9.< ,.<
&tarted and completed
+< '99B, +< '99B
+<
I
+<.9 +<.9
/ork in process, endingA given!
') ;9BC ') +9B
')
8.) +.;
$ccounted for -<

/ork done in current period only ,; .9 ,; .,
J
Degree of completion in this department% direct materials, ?9BC conversion costs, ,9B.
I
,; physical units completed and transferred out minus < physical units completed and transferred out from beginning
ADegree of completion in this department% direct materials, ;9BC conversion costs, +9B.
17-9
17-22 )9 min.! 5I5O >e!2&8# a""i(i( 3&"!" /3&!iua!i& &7 17-211*
&olution E"hibit '81)) calculates cost per equivalent unit of work done in 6ay )99, in the
$ssembly Department of $erospatiale, summari(es total costs to account for, and assigns costs to
units completed and to units in ending work1in1process inventory.
0I0O 6ethod of Process *osting, &atellite $ssembly Division of $erospatiale for 6ay )99,
T&!al
P%&8u3!i&
C&"!"
4i%e3!
9a!e%ial"
C&ve%"i&
C&"!"
/ork in process, beginning 7,,?++,;99 H 7?'9,,99! 7 -,<,,,999 costs of work done before current period!
S!e0 3! *osts added in current period given! ,;,')9,999 7+),)99,999 7 '+,?)9,999
Divide by equivalent units of work done in
current period &olution E"hibit '81)'! ,; ,; .,
*ost per equivalent unit of work done in current period 7 899,999 7 +99,999
S!e0 4! #otal costs to account for 7-',?;,,999
*ompleted and transferred out ,; units!%
/ork in process, beginning < units!
Direct materials added in current period
7 -,<,,,999
-;9,999 9.<A 7899,999
*onversion costs added in current period
#otal from beginning inventory
&tarted and completed +< units!
#otal costs of units completed K transf. out
Direct materials
*onversion costs
#otal work in process, ending
',,,9,999
8,<,,,999
+<,999,999
,-,<,,,999
-,9,9,999
',9<9,999
;,')9,999
7-',?;,,999
,.<A 7+99,999
+<
I
7899,999! H +<
I
7+99,999!
8.)
L
7899,999
+.;
L
7+99,999
AEquivalent units used to complete beginning work in process from &olution E"hibit '81)', &tep ).
A
Equivalent units started and completed from &olution E"hibit '81)', &tep ).
L
Equivalent units in work in process, ending from &olution E"hibit '81)', &tep ).
17-10
17-23 )-1+9 min.! S!a8a%8-3&"!i( >e!2&8# a""i(i( 3&"!" Mefer to the information
in E"ercise '81'?!.
'. #he calculations of equivalent units for direct materials and conversion costs are identical to
the calculations of equivalent units under the 0I0O method. &olution E"hibit '81)' shows the
equivalent unit calculations under standard costing given by the equivalent units of work done in
6ay )99, in the $ssembly Department.
). &olution E"hibit '81)+ summari(es the total costs to account for, and assigns these costs to
units completed and transferred out and to units in ending work in process.
+. &olution E"hibit '81)+ shows the direct materials and conversion cost variances for
Direct materials 7)+9,999 @
*onversion costs 7)+),999 @
@se of &tandard *osts in Process *osting, &atellite $ssembly Division of $erospatiale for 6ay
)99,.
T&!al
P%&8u3!i&
C&"!"
4i%e3!
9a!e%ial"
C&ve%"i&
C&"!"
/S!e0 3! &tandard cost per equivalent unit given! 7 ;?-,999 7 )?-,999
Direct materials, 8.) 7;?-,999C *onversion costs,
+.) 7)?-,999 7 -,?,<,999
*osts added in current period at standard costs
Direct materials, ,;.9 7;?-,999C *onversion
costs, ,;., 7)?-,999
,-,;-<,999

7+',?89,999 7'+,;<<,999
S!e0 41 *osts to account for 7-',;9;,999
/S!e0 5! $ssignment of costs at standard costs%
*ompleted and transferred out ,; units!%
/ork in process, beginning < units!
7 -,?,<,999
--;,999
',,';,999
8,?)9,999
9.<A 7;?-,999
,.<A 7)?-,999
&tarted and completed +< units!
#otal costs of units transferred out
+8,;)9,999
,-,-,9,999
+<
I
7;?-,999 H +<
I
7)?-,999
8.)
L
7;?-,999
+.;
L

7)?-,999
Direct materials -,99,,999
*onversion costs
',9;),999
;,9;;,999
7-',;9;,999
&ummary of variances for current performance%
*osts added in current period at standard prices see above!
$ctual costs incurred given!
Dariance
7+',?89,999
+),)99,999
7 )+9,999 @
7'+,;<<,999
'+,?)9,999
7 )+),999 @
AEquivalent units to complete beginning work in process from &olution E"hibit '81)', &tep ).
I
Equivalent units started and completed from &olution E"hibit '81)', &tep ).
L
Equivalent units in work in process, ending from &olution E"hibit '81)', &tep ).
17-11
17-24 )- min.! ;ei(2!e8-ave%a(e >e!2&8# a""i(i( 3&"!"*
'. K ). &olution E"hibit '81), calculates the cost per equivalent unit of work done to date for
direct materials and conversion costs, summari(es total costs to account for, and assigns these costs
to units completed and transferred out and to units in ending work1in1process inventory.
/eighted1$verage 6ethod of Process *osting, *hatham *ompany for >uly )99,
T&!al
P%&8u3!i&
C&"!"
4i%e3!
9a!e%ial"
C&ve%"i&
C&"!"
/S!e0 3! /ork in process, beginning given! 7'+9,999 7 ;9,999 7 89,999
*osts added in current period given! ;-',999 )<9,999 +8',999
*osts incurred to date 7+,9,999 7,,',999
Divide by equivalent units of work done to
date given! -9,999 ,),999
*ost per equivalent unit of work done to date 7 ; .<9 7 '9 .-9
S!e0 4! #otal costs to account for 78<',999
*ompleted and transferred out +,,999 units! -<<,)99 +,,999A 7;.<9! H +,,999A 7'9.-9!
/ork in process, ending ';,999 units!
Direct materials '9<,<99 ';,999
I
7;.<9
*onversion costs
#otal work in process
<,,999
'?),<99
78<',999
<,999
I
7'9.-9
AEquivalent units completed and transferred out given!.
I
Equivalent units in work in process, ending given!.
17-12
17-25 +9 min.! 5I5O >e!2&8# a""i(i( 3&"!"*
'. K ). &olution E"hibit '81)-$ calculates the equivalent units of work done in the current period.
&olution E"hibit '81)-=, calculates the cost per equivalent unit of work done in the current period
for direct materials and conversion costs, summari(es total costs to account for, and assigns these
costs to units completed and transferred out and to units in ending work1in1process inventory.
0I0O 6ethod of Process *osting, *hatham *ompany for >uly )99,

/S!e0 11
/S!e0 21
Equivale! ,i!"
5l&6 &7 P%&8u3!i&
P2)"i3al
,i!"
4i%e3!
9a!e%ial"
C&ve%"i&
C&"!"
#o account for
'9,999
,9,999
-9,999
*ompleted and transferred out during current period%
J
'9,999 '99B '99B!C '9,999 '99B 4 89B!
'9,999
9 +,999
),,999 '99B, ),,999 '99B
),,999
I
),,999 ),,999
';,999 '99BC ';,999 -9B
';,999

';,999 <,999
$ccounted for -9,999

/ork done in current period only ,9,999 +-,999
J
Degree of completion in this department% direct materials, '99BC conversion costs, 89B.
I
+,,999 physical units completed and transferred out minus '9,999 physical units completed and transferred out from
beginning work1in1process inventory.
ADegree of completion in this department% direct materials, '99BC conversion costs, -9B.
17-13
17-25 *ont2d.!
0I0O 6ethod of Process *osting, *hatham *ompany for >uly )99,
T&!al
P%&8u3!i&
C&"!"
4i%e3!
9a!e%ial"
C&ve%"i&
C&"!"
/ork in process, beginning 7;9,999 H 789,999! 7'+9,999 costs of work done before
current period!
S!e0 3! *osts added in current period given! ;-',999 7)<9,999 7+8',999
current period &olution E"hibit '81)-$!
,9,999 +-,999
*ost per equivalent unit of work done in current period 7 8 7 '9.;9
S!e0 4! #otal costs to account for 78<',999
*ompleted and transferred out +,,999 units!%
/ork in process, beginning '9,999 units!
7'+9,999
9 9A 78
&tarted and completed ),,999 units!
#otal costs of units completed K transferred out
Direct materials
*onversion costs
+',<99
';',<99
,)),,99
-<,,)99
''),999
<,,<99
'?;,<99
78<',999
+,999A

7'9.;9
),,999
I
78 H ),,999
I
'9.;9
';,999
L
78
<,999
L
7'9.;9
AEquivalent units used to complete beginning work in process from &olution E"hibit '81)-$, &tep ).

A
Equivelant units started and completed from &olution E"hibit '81)-$, &tep ).
L
Equivalent units in work in process, ending from &olution E"hibit '81)-$, &tep ).
17-14
17-26 +9 min.! S!a8a%8-3&"!i( >e!2&8# a""i(i( 3&"!" Mefer to the information
in E"ercise '81),!.
'. #he calculations of equivalent units for direct materials and conversion costs are identical to
the calculations of equivalent units under the 0I0O method. &olution E"hibit '81)-$ shows the
equivalent unit calculations for standard costing given by the equivalent units of work done in >uly
)99,. &olution E"hibit '81); uses the standard costs direct materials, 7;.-9C conversion costs,
7'9.+9! to summari(e total costs to account for, and to assign these costs to units completed and
transferred out and to units in ending work1in1process inventory.
). &olution E"hibit '81); shows the direct materials and conversion costs variances for
Direct materials 7)9,999 @
*onversion costs 7'9,-99 @
@se of &tandard *osts in Process *osting, *hatham *ompany for >uly )99,.
T&!al
P%&8u3!i&
C&"!"
4i%e3!
9a!e%ial"
C&ve%"i&
C&"!"
/S!e0 3! &tandard cost per equivalent unit given! 7 ; .-9 7 '9 .+9
Direct materials, '9,999 7;.-9C *onversion costs,
8,999 7'9.+9
7'+8,'99
Direct materials, ,9,999 7;.-9C
*onversion costs, +-,999 7'9.+9
;)9,-99 );9,999 +;9,-99
S!e0 41 *osts to account for 78-8,;99
*ompleted and transferred out +,,999 units!%
/ork in process, beginning '9,999 units!
7'+8,'99
9
+9,?99
';<,999
9A 7;.-9
+,999A 7'9.+9
&tarted and completed ),,999 units!
,9+,)99
-8',)99
),,999
I
7;.-9! H ),,999
I
7'9.+9!
Direct materials '9,,999 ';,999
L
7;.-9
*onversion costs
<),,99
'<;,,99
78-8,;99
<,999
L
7'9.+9
&ummary of variances for current performance%
*osts added in current period at standard prices see above!
Dariance
7);9,999
)<9,999
7 )9,999 @
7+;9,-99
+8',999
7 '9,-99 @
AEquivalent units to complete beginning work in process from &olution E"hibit '81)-$, &tep ).
I
Equivalent units started and completed from &olution E"hibit '81)-$, &tep ).
L
Equivalent units in work in process, ending from &olution E"hibit '81)-$, &tep ).
17-15
17-27 +-4,9 min.! T%a"7e%%e8-i 3&"!"# 6ei(2!e8-ave%a(e >e!2&8*
'. K ). &olution E"hibit '81)8$ calculates the equivalent units of work done to date. &olution
E"hibit '81)8= calculates the cost per equivalent unit of work done to date for transferred1in costs,
direct materials, and conversion costs, summari(es total costs to account for, and assigns these costs
to units completed and transferred out and to units in ending work1in1process inventory.
/eighted1$verage 6ethod of Process *osting
*ooking Department of Nideo *hemicals for >une )99,
/S!e0 11 /S!e0 21
5l&6 &7 P%&8u3!i&
,i!"
/(ive1
T%a"7e%%e8-
i C&"!"
4i%e3!
9a!e%ial"
C&ve%"i&
C&"!"
/ork in process, beginning ,9
#ransferred in during current period <9
#o account for ')9
during current period ?9 ?9 ?9 ?9
/ork in process, endingA +9
+9 '99BC +9 9BC +9 -9B +9 9 '-
$ccounted for ')9
/ork done to date ')9 ?9 '9-
A
Degree of completion in this department% transferred1in costs, '99BC direct materials, 9BC conversion costs, -9B.
17-16
17-27 *ont2d.!
T&!al
P%&8u3!i&
C&"!"
T%a"7e%%e8
-i C&"!"
4i%e3!
9a!e%ial"
C&ve%"i&
C&"!"
S!e0 3! /ork in process, beginning given! 7 -<,999 7 ,9,999 7 9 7'<,999
*osts added in current period given! '8),?)- <8,)99 +;,999 ,?,8)-
*osts incurred to date 7')8,)99 7+;,999 7;8,8)-
to date &olution E"hibit '81)8$! ')9 ?9 '9-
Equivalent unit costs of work done to date 7 ',9;9 7 ,99 7 ;,-
S!e0 4! #otal costs to account for 7)+9,?)-
*ompleted and transferred out ?9 units! 7'<?,,-9 ?9A 7',9;9! H ?9A 7,99! H ?9A 7;,-!
/ork in process, ending +9 units!
#ransferred1in costs
Direct materials
+',<99
9
+9
I
7',9;9
9
I

7,99
*onversion costs
?,;8-
,',,8-
7)+9,?)-
'-
I
7;,-
AEquivalent units completed and transferred out from &olution E"hibit '81)8$, &tep ).
IEquivalent units in work in process, ending from &olution E"hibit '81)8$, &tep ).
17-28 +-4,9 min.! T%a"7e%%e8-i 3&"!"# 5I5O >e!2&8*
'. K ). &olution E"hibit '81)<$ calculates the equivalent units of work done in the current period
for transferred1in costs, direct1materials, and conversion costs! to complete beginning work1in1
process inventory, to start and complete new units, and to produce ending work in process.
&olution E"hibit '81)<= calculates the cost per equivalent unit of work done in the current period
for transferred1in costs, direct materials, and conversion costs, summari(es total costs to account
for, and assigns these costs to units completed and transferred out and to units in ending work1in1
process inventory.
17-17
17-28 *ont2d.!
0I0O 6ethod of Process *osting
/S!e0 11
/S!e0 21
Equivale! ,i!"
5l&6 &7 P%&8u3!i&
P2)"i3al
,i!"
T%a"7e%%e8-
i C&"!"
4i%e3!
9a!e%ial"
C&ve%"i&
C&"!"
#ransferred in during current period given!
#o account for
,9
<9
')9
J
,9 '99B '99B!C ,9 '99B 9B!C
,9 '99B 8-B!
,9
9 ,9 '9
-9 '99BC -9 '99BC -9 '99B
-9
I
-9 -9 -9
+9 '99BC +9 9BC +9 -9B
+9

+9 9 '-
$ccounted for ')9
/ork done in current period only <9 ?9 8-
J
Degree of completion in this department% #ransferred1in costs, '99BC direct materials, 9BC conversion costs, 8-B.
I
?9 physical units completed and transferred out minus ,9 physical units completed and transferred out from beginning
ADegree of completion in this department% transferred1in costs, '99BC direct materials, 9BC conversion costs, -9B.
17-18
17-28 *ont2d.!
&teps +, ,, and -% *ompute Equivalent @nit *osts, &ummari(e #otal *osts to $ccount 0or,
and $ssign *osts to @nits *ompleted and to @nits in Ending /ork in Process
T&!al
P%&8u3!i&
C&"!"
T%a"7e%%e8
-i C&"!"
4i%e3!
9a!e%ial"
C&ve%"i&
C&"!"
/ork in process, beginning
7+?,)99 H 79 H 7'<,999! 7 -8,)99
*osts of work done before current period!
S!e0 3! *osts added in current period given! '8',+)- 7<-,;99 7+;,999 7,?,8)-
current period &olution E"hibit '81)<$! <9 ?9 8-
*ost per equiv. unit of work done in current period 7 ',989 7 ,99 7 ;;+
S!e0 4! #otal costs to account for 7))<,-)-
*ompleted and transferred out ?9 units!%
/ork in process, beginning ,9 units!
#ransferred1in costs added in current period
7 -8,)99
9
';,999
9A7',989
,9A7,99
&tarted and completed -9 units!
#otal costs of units completed K tfd. out
/ork in process, ending +9 units!
Direct materials
*onversion costs
;,;+9
8?,<+9
'9;,;-9
'<;,,<9
+),'99
9
?,?,-
,),9,-
7))<,-)-
'9A7;;+
-9
I
7',989! H -9
I
7,99!H -9
I
7;;+!
+9
L
7',989
9
L
7,99
'-
L
7;;+
AEquivalent units used to complete beginning work in process from &olution E"hibit '81)<$, &tep ).
I
Equivalent units started and completed from &olution E"hibit '81)<$, &tep ).
L
Equivalent units in work in process, ending from &olution E"hibit '81)<$, &tep ).
17-19
17*29 '- min.! O0e%a!i& 3&"!i( *hapter $ppendi"!.
*osts of /ork Order <'- and /ork Order <+' are as follows%
;&%< O%8e% 815 ;&%< O%8e% 831
5umber of units pairs! ',999 -,999
Direct materials costs 7+9,999 7 -9,999
*onversion costs%
*utting ',999C -,999 O 7'9! '9,999 -9,999
&ewing ',999C -,999 O 7'-! '-,999 8-,999
Pining ',999C 9 O 7<! <,999 4
Packing ',999C -,999 O 7)! ),999 '9,999
#otal costs 7;-,999 7'<-,999
#otal cost per unit
',999
7;-,999
E 7;-
-,999
7'<-,999
E 7+8
17-30 )- min.! ;ei(2!e8-ave%a(e >e!2&8*
'. &olution E"hibit '81+9$ shows equivalent units of work done to date
Direct materials '99 equivalent units
*onversion costs ?8 equivalent units
). K +. &olution E"hibit '81+9= calculates cost per equivalent unit of work done to date#
summari(es the total $ssembly Department costs for October )99,, and assigns these costs to units
completed and transferred out! and to units in ending work in process using the weighted1average
method.
17-20
17-30 *ont2d.!
/eighted1$verage 6ethod of Process *osting, $ssembly Department of Qlobal Defense Inc. for
October )99,
/S!e0 11 /S!e0 21
,i!" 4i%e3! C&ve%"i&
5l&6 &7 P%&8u3!i& /(ive1 9a!e%ial" C&"!"
/ork in process, beginning )9
&tarted during current period <9
#o account for '99
during current period ?9 ?9 ?9
/ork in process, endingA '9
'9 '99BC '9 89B '9 8
$ccounted for '99
/ork done to date '99 ?8
A
Degree of completion in this department% direct materials, '99BC conversion costs, 89B.
/eighted1$verage 6ethod of Process *osting, $ssembly Department of Qlobal Defense Inc.
for October )99,
T&!al
P%&8u3!i&
C&"!"
4i%e3!
9a!e%ial"
C&ve%"i&
C&"!"
/S!e0 3! /ork in process, beginning given! 7 -<9,999 7 ,;9,999 7 ')9,999
*osts added in current period given! ),?+-,999 ),999,999 ?+-,999
*osts incurred to date 7),,;9,999 7',9--,999
Divide by equivalent units of work done to date
&olution E"hibit '81+9$! '99 ?8
*ost per equivalent unit of work done to date 7 ),,;99 7'9,<8; .)?
S!e0 4! #otal costs to account for 7+,-'-,999
*ompleted and transferred out ?9 units! 7+,'?),<;; ?9A 7),,;99! H ?9A 7'9,<8;.)?!
/ork in process, ending '9 units!
Direct materials ),;,999 '9
I
7),,;99
*onversion costs
8;,'+,
+)),'+,
7+,-'-,999
8
I
7'9,<8;.)?
AEquivalent units completed and transferred out from &olution E"hibit '81+9$, &tep ).
I
Equivalent units in work in process, ending from &olution E"hibit '81+9$, &tep ).
17-21
17-30 *ont2d.!
17-30 EB3el A00li3a!i&
Process Costing
Global Defense, Inc.
Original Data
Physical Units Direct Conversion
(Missiles) Materials Costs
Work in process, October 1 20 $460,000 $120,000
Started during October 2004 80
Completed during October 2004 90
Work in process, October 1 10
Costs added during October 2004 $2,000,000 $9!,000
Problem 1
Direct Conversion
lo! of Pro"#ction Physical Units Materials Costs
Work in process, beginning 20
Started during current period 80
"o account #or 100
$ood units completed and trans#erred out
during current period 90 90 90
Work in process, ending 10
10 % 100&' 10 % (0& 10 (
)ccounted #or 100
Work done to date 100 9(
Problem $
%otal Direct Conversion
Pro"#ction Materials Costs
Costs
Work in process, beginning $ !80,000 $ 460,000 $ 120,000
Costs added in current period 2,9!,000 2,000,000 9!,000
Costs incurred to date $2,460,000 $1,0!!,000
*+ui,alent units o# -ork done
to date 100 9(
Cost per e+ui,alent unit o# -ork
done to date $24,600 $10,8(6.29
Problem &
%otal
Pro"#ction Direct Conversion
Costs Materials Costs
"otal costs to account #or $,!1!,000
)ssignment o# costs/
Completed and trans#erred out $,192,866 2,214,000 9(8,866
Work in process, ending
0irect materials 246,000
Con,ersion costs (6,14
"otal -ork in process ending 22,14
"otal costs accounted #or $,!1!,000
17-22
17-31 '9 min.! :&u%al e!%ie" /3&!iua!i& &7 17-301*
'. /ork in Process44$ssembly Department ),999,999
$ccounts Payable ),999,999
Direct materials purchased and used in
production in October.
). /ork in Process44$ssembly Department ?+-,999
Darious accounts ?+-,999
*onversion costs incurred in October.
+. /ork in Process44#esting Department +,'?),<;;
/ork in Process44$ssembly Department +,'?),<;;
*ost of goods completed and transferred out
in October from the $ssembly Department
to the #esting Department.
;&%< i P%&3e""==A""e>'l) 4e0a%!>e!
=eginning inventory, October ' -<9,999
'. Direct materials ),999,999
). *onversion costs ?+-,999
+. #ransferred out to
/ork in Process4#esting +,'?),<;;
Ending Inventory, October +' +)),'+,
'81)+
17-32 )9 min.! 5I5O >e!2&8 /3&!iua!i& &7 17-30 a8 17-311*
'. #he equivalent units of work done in the current period in the $ssembly Department in
October )99, for direct materials and conversion costs are shown in &olution E"hibit '81+)$.
). #he cost per equivalent unit of work done in the current period in the $ssembly Department
in October )99, for direct materials and conversion costs is calculated in &olution E"hibit '81+)=.
+. &olution E"hibit '81+)= summari(es the total $ssembly Department costs for October )99,,
and assigns these costs to units completed and transferred out! and units in ending work in
process under the 0I0O method.
#he cost per equivalent unit of beginning inventory and of work done in the current period
differ%
.e(ii(
Ive!&%)
;&%< 4&e i
Cu%%e! Pe%i&8
Direct materials
*onversion costs
7)+,999 7,;9,999 )9 equiv. units!
7'9,999 7')9,999 ') equiv. units!
7)-,999
7'',999
4i%e3!
9a!e%ial"
C&ve%"i&
C&"!"
*ost per equivalent unit weighted1average! 7),,;99A 7'9,<8;.)?A
*ost per equivalent unit 0I0O! 7)-,999AA 7'',999AA
Afrom &olution E"hibit '81+9=
AAfrom &olution E"hibit '81+)=
#he cost per equivalent unit differs between the two methods because each method uses different
costs to calculate the numerator of the calculation. 0I0O uses only the costs added during the
period whereas weighted1average uses the costs from the beginning work1in1process as well as
costs added during the period. =oth methods also use different equivalent units in the denominator.
#he following table summari(es the costs assigned to units completed and those still in
process under the weighted1average and 0I0O process1costing methods for our e"ample.
;ei(2!e8
Ave%a(e
/S&lu!i&
EB2i'i! 17-30.1
5I5O
/S&lu!i&
EB2i'i! 17-32.1 4i77e%e3e
*ost of units completed and transferred out
/ork in process, ending
7+,'?),<;;
+)),'+,
7+,-'-,999
7+,'<<,999
+)8,999
7+,-'-,999
47,,<;;
H7,,<;;
#he 0I0O ending inventory is higher than the weighted1average ending inventory by 7,,<;;.
#his is because 0I0O assumes that all the lower1cost prior1period units in work in process are the
first to be completed and transferred out while ending work in process consists of only the higher1
cost current1period units. #he weighted1average method, however, smoothes out cost per
equivalent unit by assuming that more of the higher1cost units are completed and transferred out,
while some of the lower1cost units in beginning work in process are placed in ending work in
process. Nence, in this case, the weighted1average method results in a higher cost of units
completed and transferred out and a lower ending work1in1process inventory relative to 0I0O.
'81),
17-32 *ont2d.!
0I0O 6ethod of Process *osting, $ssembly Department of Qlobal Defense Inc. for October )99,

/S!e0 11
/S!e0 21
Equivale! ,i!"
5l&6 &7 P%&8u3!i&
P2)"i3al
,i!"
4i%e3!
9a!e%ial"
C&ve%"i&
C&"!"
#o account for
)9
<9
'99
work done before current
period!
*ompleted and transferred out during current
period%
J
)9 '99B '99B!C )9 '99B ;9B!
)9
9 <
89 '99B, 89 '99B
89
I
89 89
'9 '99BC '9 89B
'9

'9 8
$ccounted for '99

/ork done in current period only <9 <-
J
Degree of completion in this department% direct materials, '99BC conversion costs, ;9B.
I
?9 physical units completed and transferred out minus )9 physical units completed and transferred out from
ADegree of completion in this department% direct materials, '99BC conversion costs, 89B.
'81)-
17-32 *ont2d.!
0I0O 6ethod of Process *osting, $ssembly Department of Qlobal Defense Inc. for October )99,
T&!al
P%&8u3!i&
C&"!"
4i%e3!
9a!e%ial"
C&ve%"i&
C&"!"
/ork in process, beginning 7,;9,999 H 7')9,999! 7 -<9,999 costs of work done before
current period!
S!e0 3! *osts added in current period given! ),?+-,999 7),999,999 7?+-,999
current period &olution E"hibit '81+)$! <9 <-
*ost per equivalent unit of work done in current period 7 )-,999 7 '',999
S!e0 4! #otal costs to account for 7+,-'-,999
*ompleted and transferred out ?9 units!%
/ork in process, beginning )9 units!
7 -<9,999
9 9A 7)-,999
&tarted and completed 89 units!
#otal costs of units completed K transf. out
Direct materials
*onversion costs
<<,999
;;<,999
),-)9,999
+,'<<,999
)-9,999
88,999
+)8,999
7+,-'-,999
<A 7'',999
89
I
7)-,999! H 89
I
7'',999!
'9
L
7)-,999
8
L
7'',999
AEquivalent units used to complete beginning work in process from &olution E"hibit '81+)$, &tep ).
A
Equivelant units started and completed from &olution E"hibit '81+)$, &tep ).
L
Equivalent units in work in process, ending from &olution E"hibit '81+)$, &tep ).
17*33 +9 min.! T%a"7e%%e8-i 3&"!"# 6ei(2!e8-ave%a(e >e!2&8
/%ela!e8 !& 17-30 !& 17-321*
'. #ransferred1in costs are '99B complete, and direct materials are 9B complete in both
beginning and ending work1in1process inventory. #he reason is that transferred1in costs are
always '99B complete as soon as they are transferred in from the $ssembly Department to the
#esting Department. Direct materials in beginning or ending work in process for the #esting
Department are 9B complete because direct materials are added only when the testing process is
?9B complete and the units in beginning and ending work in process are only 89B and ;9B
complete respectively.
). &olution E"hibit '81++$ computes the equivalent units of work done to date in the #esting
Department for transferred1in costs, direct materials, and conversion costs.
+. &olution E"hibit '81++= calculates the cost per equivalent unit of work done to date in the
#esting Department for transferred1in costs, direct materials, and conversion costs, summari(es
total #esting Department costs for October )99,, and assigns these costs to units completed and
transferred out and to units in ending work in process using the weighted1average method.
'81);
17-33 *ont2d.!
,. >ournal entries%
a. /ork in Process44#esting Department +,'?),<;;
/ork in Process44$ssembly Department +,'?),<;;
during October from the $ssembly
Department to the #esting Department
b. 0inished Qoods ?,+9+,')+
/ork in Process44#esting Department ?,+9+,')+
during October from the #esting Department
to 0inished Qoods inventory
#esting Department of Qlobal Defense Inc. for October )99,
/S!e0 11 /S!e0 21
5l&6 &7 P%&8u3!i&
,i!"
/(ive1
T%a"7e%%e8-i
C&"!"
4i%e3!
9a!e%ial"
C&ve%"i&
C&"!"
/ork in process, beginning +9
#ransferred in during current period ?9
#o account for ')9
during current period '9- '9- '9- '9-
/ork in process, endingA '-
'- '99BC '- 9BC '- ;9B '- 9 ?
$ccounted for ')9
/ork done to date ')9 '9- '',
A
Degree of completion in this department% transferred1in costs, '99BC direct materials, 9BC conversion costs, ;9B.
'81)8
17-33 *ont2d.!
T&!al
P%&8u3!i&
C&"!"
T%a"7e%%e8
-i C&"!"
4i%e3!
9a!e%ial"
C&ve%"i&
C&"!"
S!e0 3! /ork in process, beginning given! 7',+'8,;99 7 ?<-,<99 7 9 7 ++',<99
*osts added in current period given! <,;-<,<;; +,'?),<;; +,<<-,999 ',-<',999
*osts incurred to date 7,,'8<,;;; 7+,<<-,999 7',?'),<99
to date &olution E"hibit '81++$! ')9 '9- '',
Equivalent unit costs of work done to date 7 +,,<)) .)) 7 +8,999 7 ';,88< .?-
S!e0 4! #otal costs to account for 7?,?8;,,;;
*ompleted and transferred out '9- units! 7?,+9+,')+ '9-A 7+,,<)).))! H'9-A7+8,999! H '9-A7';,88<.?-!
/ork in process, ending '- units!
Direct materials
-)),+++
9
'-
I
7+,,<)).))
9
I

7+8,999
*onversion costs
'-',9'9
;8+,+,+
7?,?8;,,;;
?
I
7';,88<.?-
AEquivalent units completed and transferred out from &olution E"hibit '81++$, &tep ).
I
Equivalent units in work in process, ending from &olution E"hibit '81++$, &tep ).
17-34 +9 min.! T%a"7e%%e8-i 3&"!"# 5I5O >e!2&8 /3&!iua!i& &7 17-331*
'. $s e"plained in Problem '81++, requirement ', transferred1in costs are '99B complete and
direct materials are 9B complete in both beginning and ending work1in1process inventory.
). #he equivalent units of work done in October )99, in the #esting Department for
transferred1in costs, direct materials, and conversion costs are calculated in &olution E"hibit '81
+,$.
+. &olution E"hibit '81+,= calculates the cost per equivalent unit of work done in October
)99, in the #esting Department for transferred1in costs, direct materials, and conversion costs,
summari(es total #esting Department costs for October )99,, and assigns these costs to units
completed and transferred out and to units in ending work in process using the 0I0O method.
,. >ournal entries%
a. /ork in Process44#esting Department +,'<<,999
/ork in Process44$ssembly Department +,'<<,999
during October from the $ssembly Dept. to
the #esting Dept.
'81)<
17-34 *ont2d.!
b. 0inished Qoods ?,)<',-)8
/ork in Process44#esting Department ?,)<',-)8
during October from the #esting Department
to 0inished Qoods inventory.
/S!e0 11
/S!e0 21
Equivale! ,i!"
5l&6 &7 P%&8u3!i&
P2)"i3al
,i!"
T%a"7e%%e8-
i C&"!"
4i%e3!
9a!e%ial"
C&ve%"i&
C&"!"
#ransferred1in during current period given!
#o account for
+9
?9
')9
J
+9 '99B '99B!C +9 '99B 9B!C
+9 '99B 89B!
+9
9 +9 ?
8- '99BC 8- '99BC 8- '99B
8-
I
8- 8- 8-
'- '99BC '- 9BC '- ;9B
'-

'- 9 ?
$ccounted for ')9
/ork done in current period only ?9 '9- ?+
J
Degree of completion in this department% #ransferred1in costs, '99BC direct materials, 9BC conversion costs, 89B.
I
'9- physical units completed and transferred out minus +9 physical units completed and transferred out from
ADegree of completion in this department% transferred1in costs, '99BC direct materials, 9BC conversion costs, ;9B.
'81)?
17-34 *ont2d.!
T&!al
P%&8u3!i&
C&"!"
T%a"7e%%e8
-i C&"!"
4i%e3!
9a!e%ial"
C&ve%"i&
C&"!"
7++',<99 H 79 H 7?<9,9;9!! 7',+'',<;9 *osts of work done before current period!
S!e0 3! *osts added in current period given! <,;-,,999 7+,'<<,999 7+,<<-,999 7',-<',999
current period &olution E"hibit '81+,$! ?9 '9- ?+
*ost per equiv. unit of work done in current period 7 +-,,)) .)) 7 +8,999 7 '8,999
S!e0 4! #otal costs to account for 7?,?;-,<;9
*ompleted and transferred out '9- units!%
/ork in process, beginning +9 units!
#fd1in costs added in current period
7',+'',<;9
9
',''9,999
9A 7+-,,)).))
+9A7+8,999
&tarted and completed 8- units!
/ork in process, ending '- units!
Direct materials
*onversion costs
'-+,999
),-8,,<;9
;,89;,;;8
?,)<',-)8
-+',+++
9
'-+,999
;<,,+++
7?,?;-,<;9
?A7'8,999
8-
I
7+-,,)).))!H8-
I
7+8,999!H8-
I
7'8,999!
'-
L
7+-,,)).))
9
L
7+8,999
?
L
7'8,999
AEquivalent units used to complete beginning work in process from &olution E"hibit '81+,$, &tep ).
I
Equivalent units started and completed from &olution E"hibit '81+,$, &tep ).
L
Equivalent units in work in process, ending from &olution E"hibit '81+,$, &tep ).
'81+9
17-35 )- min.! ;ei(2!e8-ave%a(e >e!2&8*
&olution E"hibit '81+-$ shows equivalent units of work done to date of
Direct materials ),-99 equivalent units
*onversion costs ),')- equivalent units
5ote that direct materials are added when the 0orming Department process is '9B complete.
=oth the beginning and ending work in process are more than '9B complete and hence are '99B
complete with respect to direct materials.
&olution E"hibit '81+-= calculates cost per equivalent unit of work done to date for direct
materials and conversion costs, summari(es the total 0orming Department costs for $pril )99,,
and assigns these costs to units completed and transferred out!, and to units in ending work in
process using the weighted1average method.
/eighted1$verage 6ethod of Process *osting, 0orming Department of &tar #oys for $pril )99,
/S!e0 11 /S!e0 21
,i!" 4i%e3! C&ve%"i&
5l&6 &7 P%&8u3!i& /(ive1 9a!e%ial" C&"!"
/ork in process, beginning +99
&tarted during current period ),)99
#o account for ),-99
during current period ),999 ),999 ),999
/ork in process, endingA -99
-99 '99BC -99 )-B -99 ')-
$ccounted for ),-99
/ork done to date ),-99 ),')-
A
Degree of completion in this department% direct materials, '99BC conversion costs, )-B.
'81+'
17-35 *ont2d.!
/eighted1$verage 6ethod of Process *osting, 0orming Department of &tar #oys for $pril )99,
T&!al
P%&8u3!i&
C&"!"
4i%e3!
9a!e%ial"
C&ve%"i&
C&"!"
/S!e0 3! /ork in process, beginning given! 7 ?,;)- 7 8,-99 7 ),')-
*osts added in current period given! ''),-99 89,999 ,),-99
*osts incurred to date 788,-99 7,,,;)-
Divide by equivalent units of work done to
date &olution E"hibit '81+-$! ),-99 ),')-
*ost per equivalent unit of work done to date 7 +' 7 )'
S!e0 4! #otal costs to account for 7')),')-
*ompleted and transferred out ),999 units! 7'9,,999 ),999A 7+' H ),999A 7)'
/ork in process, ending -99 units!
Direct materials '-,-99 -99
I
7+'
*onversion costs
),;)-
'<,')-
7')),')-
')-
I
7)'
AEquivalent units completed and transferred out from &olution E"hibit '81+-$, &tep ).
I
Equivalent units in work in process, ending from &olution E"hibit '81+-$, &tep ).
17-36 -4'9 min.! :&u%al e!%ie" /3&!iua!i& &7 17-351*
'. /ork in Process440orming Department 89,999
$ccounts Payable 89,999
#o record direct materials purchased and
used in production during $pril
). /ork in Process440orming Department ,),-99
Darious $ccounts ,),-99
#o record 0orming Department conversion
costs for $pril
+. /ork in Process440inishing Department '9,,999
/ork in Process440orming Department '9,,999
#o record cost of goods completed and transferred
out in $pril from the 0orming Department
to the 0inishing Department
'81+)
17-36 *ont2d.!
;&%< i P%&3e""==5&%>i( 4e0a%!>e!
=eginning inventory, $pril ' ?,;)- +. #ransferred out to
'. Direct materials 89,999 /ork in Process440inishing '9,,999
). *onversion costs ,),-99
Ending inventory, $pril +9 '<,')-
17-37 )9 min.! 5I5O >e!2&8 /3&!iua!i& &7 17-351*
#he equivalent units of work done in $pril )99, in the 0orming Department for direct
materials and conversion costs are shown in &olution E"hibit '81+8$.
&olution E"hibit '81+8= calculates the cost per equivalent unit of work done in $pril )99, in
the 0orming Department for direct materials and conversion costs, summari(es the total 0orming
Department costs for $pril )99,, and assigns these costs to units completed and transferred out!
and to units in ending work in process under the 0I0O method.
#he equivalent units of work done in beginning inventory is% direct materials, +99 '99B E
+99C and conversion costs +99 ,9B E ')9. #he cost per equivalent unit of beginning inventory
and of work done in the current period are%
.e(ii(
Ive!&%)
;&%< 4&e i
Cu%%e! Pe%i&8
/Cal3ula!e8 ,8e%
5I5O 9e!2&81
Direct materials
*onversion costs
7)- 78,-99 +99!
7'8.89< 7),')- ')9!
7+'.<'<
7)'.'?8
;ei(2!e8
Ave%a(e
/S&lu!i&
EB2i'i! 17-35.1
5I5O
/S&lu!i&
EB2i'i! 17-37.1 4i77e%e3e
7'9,,999
'<,')-
7')),')-
7'9+,-;;
'<,--?
7')),')-
47,+,
H7,+,
#he 0I0O ending inventory is higher than the weighted1average ending inventory by 7,+,.
#his is because 0I0O assumes that all the lower1cost prior1period units in work in process are the
first to be completed and transferred out while ending work in process consists of only the higher1
cost current1period units. #he weighted1average method, however, smoothes out cost per
equivalent unit by assuming that more of the higher1cost units are completed and transferred out,
while some of the lower1cost units in beginning work in process are placed in ending work in
process. Nence, in this case, the weighted1average method results in a higher cost of units
completed and transferred out and a lower ending work1in1process inventory relative to 0I0O.
'81++
17-37 *ont2d.!
0I0O 6ethod of Process *osting, 0orming Department of &tar #oys for $pril )99,

/S!e0 11
/S!e0 21
Equivale! ,i!"
5l&6 &7 P%&8u3!i&
P2)"i3al
,i!"
4i%e3!
9a!e%ial"
C&ve%"i&
C&"!"
#o account for
+99
),)99
),-99
J
+99 '99B '99B!C +99 '99B ,9B!
+99
9 '<9
',899 '99BC ',899 '99B
',899
I
',899 ',899
-99 '99BC -99 )-B
-99

-99 ')-
$ccounted for ),-99

/ork done in current period only ),)99 ),99-
J
Degree of completion in this department% direct materials, '99BC conversion costs, ,9B.
I
),999 physical units completed and transferred out minus +99 physical units completed and transferred out from
ADegree of completion in this department% direct materials, '99BC conversion costs, )-B.
'81+,
17-37 *ont2d.!
0I0O 6ethod of Process *osting, 0orming Department of &tar #oys for $pril )99,
T&!al
P%&8u3!i&
C&"!"
4i%e3!
9a!e%ial"
C&ve%"i&
C&"!"
given% 78,-99 H 7),')-! 7 ?,;)- work done before current period!
S!e0 3! *osts added in current period given! ''),-99 789,999 7,),-99
current period E"hibit '81+8$! ),)99 ),99-
*ost per equivalent unit of work done in current
period 7+'.<'< 7)'.'?8
S!e0 4! #otal costs to account for 7')),')-
*ompleted and transferred out ),999 units!%
/ork in process, beginning +99 units!
7 ?,;)-
9 9A 7+'.<'<
&tarted and completed ',899 units!
#otal costs of units completed K tsfd. out
Direct materials
*onversion costs
+,<'-
'+,,,9
?9,');
'9+,-;;
'-,?9?
),;-9
'<,--?
7')),')-
'<9
A
7)'.'?8
',899
I
7+'.<'<! H ',899
I
7)'.'?8!
-99
L
7+'.<'<
')-
L

7)'.'?8
AEquivalent units used to complete beginning work in process from &olution E"hibit '81+8$, &tep ).
A
Equivelant units started and completed from &olution E"hibit '81+8$, &tep ).
L
Equivalent units in work in process, ending from &olution E"hibit '81+8$, &tep ).
'81+-
17*38 +9 min.! T%a"7e%%e8-i 3&"!"# 6ei(2!e8 ave%a(e
/%ela!e8 !& 17-35 !2%&u(2 17-371*
'. &olution E"hibit '81+<$ computes the equivalent units of work done to date in the 0inishing
Department for transferred1in costs, direct materials, and conversion costs.
&olution E"hibit '81+<= calculates the cost per equivalent unit of work done to date in the
0inishing Department for transferred1in costs, direct materials, and conversion costs, summari(es
total 0inishing Department costs for $pril )99,, and assigns these costs to units completed and
transferred out and to units in ending work in process using the weighted1average method.
). >ournal entries%
a. /ork in Process440inishing Department '9,,999
/ork in Process440orming Department '9,,999
during $pril from the 0orming Department
to the 0inishing Department
b. 0inished Qoods ';<,--)
/ork in Process440inishing Department ';<,--)
during $pril from the 0inishing Department
to 0inished Qoods inventory
0inishing Department of &tar #oys for $pril )99,
/S!e0 11 /S!e0 21
5l&6 &7 P%&8u3!i&
,i!"
/(ive1
T%a"7e%%e8-
i C&"!"
4i%e3!
9a!e%ial"
C&ve%"i&
C&"!"
/ork in process, beginning -99
#ransferred in during current period ),999
#o account for ),-99
during current period ),'99 ),'99 ),'99 ),'99
/ork in process, endingA ,99
,99 '99BC ,99 9BC ,99 +9B ,99 9 ')9
$ccounted for ),-99
/ork done to date ),-99 ),'99 ),))9
A
Degree of completion in this department% transferred1in costs, '99BC direct materials, 9BC conversion costs, +9B.
'81+;
17-38 *ont2d.!
T&!al
P%&8u3!i&
C&"!"
T%a"7e%%e8
-i C&"!"
4i%e3!
9a!e%ial"
C&ve%"i&
C&"!"
S!e0 3! /ork in process, beginning given! 7 )-,999 7 '8,8-9 7 9 7 8,)-9
*osts added in current period given! ';-,-99 '9,,999 )+,'99 +<,,99
*osts incurred to date 7')',8-9 7)+,'99 7,-,;-9
to date &olution E"hibit '81+<$! ),-99 ),'99 ),))9
Equivalent unit costs of work done to date 7 ,< .89 7 '' 7)9.-;+
S!e0 4! #otal costs to account for 7'?9,-99
*ompleted and transferred out ),'99 units! 7';<,--)
),'99A7,<.89! H ),'99A 7''! H ),'99A 7)9.-;+!
/ork in process, ending ,99 units!
Direct materials
'?,,<9
9
,99
I
7,<.89
9
I
7''
*onversion costs
),,;<
)',?,<
7'?9,-99
')9
I

7)9.-;+
AEquivalent units completed and transferred out from &olution E"hibit '81+<$, &tep ).
I
Equivalent units in work in process, ending from &olution E"hibit '81+<$, &tep ).
17-39 +9 min.! T%a"7e%%e8-i 3&"!"# 5I5O >e!2&8 /3&!iua!i& &7 17-381*
'. &olution E"hibit '81+?$ calculates the equivalent units of work done in $pril )99, in the
0inishing Department for transferred1in costs, direct materials, and conversion costs.
&olution E"hibit '81+8= calculates the cost per equivalent unit of work done in $pril )99, in
the 0inishing Department for transferred1in costs, direct materials, and conversion costs,
summari(es total 0inishing Department costs for $pril )99,, and assigns these costs to units
completed and transferred out and to units in ending work in process using the 0I0O method.
>ournal entries%
a. /ork in Process440inishing Department '9+,-;;
/ork in Process440orming Department '9+,-;;
during $pril from the 0orming Dept. to
the 0inishing Dept.
'81+8
17-39 *ont2d.!
b. 0inished Qoods ';;,8)+
/ork in Process440inishing Department ';;,8)+
during $pril from the 0inishing Department
to 0inished Qoods inventory.
). #he equivalent units of work done in beginning inventory is% #ransferred1in costs, -99
'99B E -99C direct materials, -99 9B E 9C and conversion costs, -99 ;9B E +99. #he cost per
equivalent unit of beginning inventory and of work done in the current period are%
.e(ii(
Ive!&%)
;&%< 4&e i
Cu%%e! Pe%i&8
#ransferred1in costs weighted average!
#ransferred1in costs 0I0O!
Direct materials
*onversion costs
7+-.-9 7'8,8-9 -99!
7+-.9, 7'8,-)9 -99!
R
7),.';8 78,)-9 +99!
7-) 7'9,,999 ),999!
7-'.8<+ 7'9+,-;; ),999!
7''
7)9
;ei(2!e8
Ave%a(e
/S&lu!i&
EB2i'i! 17-38.1
5I5O
/S&lu!i&
EB2i'i! 17-39.1 4i77e%e3e
7';<,--)
)',?,<
7'?9,-99
7';;,8)+
)+,''+
7'<?,<+;
47',<)?
H7',';-
#he 0I0O ending inventory is higher than the weighted1average ending inventory by 7',';-.
#his is because 0I0O assumes that all the lower1cost prior1period units in work in process
resulting from the lower transferred1in costs in beginning inventory! are the first to be completed
and transferred out while ending work in process consists of only the higher1cost current1period
units. #he weighted1average method, however, smoothes out cost per equivalent unit by assuming
that more of the higher1cost units are completed and transferred out, while some of the lower1cost
units in beginning work in process are placed in ending work in process. Nence, in this case, the
weighted1average method results in a higher cost of units completed and transferred out and a
lower ending work1in1process inventory relative to 0I0O. 5ote that the difference in cost of units
completed and transferred out 47',<)?! does not fully offset the difference in ending work1in1
process inventory H7',';-!. #his is because the 0I0O and weighted1average methods result in
different values for transferred1in costs with respect to both beginning inventory and costs
transferred in during the period.
'81+<
17-39 *ont2d.!
/S!e0 11
/S!e0 21
Equivale! ,i!"
5l&6 &7 P%&8u3!i&
P2)"i3al
,i!"
T%a"7e%%e8-
i C&"!"
4i%e3!
9a!e%ial"
C&ve%"i&
C&"!"
#o account for
-99
),999
),-99
J
-99 '99B '99B!C -99 '99B 9B!C
-99 '99B ;9B!
-99
9 -99 )99
',;99 '99BC ',;99 '99BC ',;99 '99B
',;99
I
',;99 ',;99 ',;99
,99 '99BC ,99 9BC ,99 +9B
,99

,99 9 ')9
$ccounted for ),-99
/ork done in current period only ),999 ),'99 ',?)9
J
Degree of completion in this department% #ransferred1in costs, '99BC direct materials, 9BC
conversion costs, ;9B.
I
),'99 physical units completed and transferred out minus -99 physical units completed and transferred out from
ADegree of completion in this department% transferred1in costs, '99BC direct materials, 9BC conversion costs, +9B.
'81+?
17-39 *ont2d.!
T&!al
P%&8u3!i&
C&"!"
T%a"7e%%e8
-i C&"!"
4i%e3!
9a!e%ial"
C&ve%"i&
C&"!"
7'8,-)9 H 79 H 78,)-9! 7 ),,889
*osts of work done before current period!
S!e0 3! *osts added in current period given! ';-,9;; 7'9+,-;; 7)+,'99 7+<,,99
current period &olution E"hibit '81+?$! ),999 ),'99 ',?)9
*ost per equiv. unit of work done in current
period 7 -'.8<+ 7 '' 7 )9
S!e0 4! #otal costs to account for 7'<?,<+;
*ompleted and transferred out ),'99 units!%
/ork in process, beginning -99 units!
7 ),,889
9
-,-99
9A7-'.8<+
-99A7''
&tarted and completed ',;99 units!
/ork in process, ending ,99 units!
Direct materials
*onversion costs
,,999
+,,)89
'+),,-+
';;,8)+
)9,8'+
9
),,99
)+,''+
7'<?,<+;
)99A7)9
',;99
I
7-'.8<+!H ',;99
I
7''!H ',;99
I
7)9!
,99
L
7-'.8<+
9
L
7''
')9
L
7)9
AEquivalent units used to complete beginning work in process from &olution E"hibit '81+?$, &tep ).
I
Equivalent units started and completed from &olution E"hibit '81+?$, &tep ).
L
Equivalent units in work in process, ending from &olution E"hibit '81+?$, &tep ).
'81,9
17-40 ,- min.! T%a"7e%%e8-i 3&"!"# 6ei(2!e8-ave%a(e a8 5I5O >e!2&8"*
'. &olution E"hibit '81,9$ computes the equivalent units of work done to date in the Drying
and Packaging Department for transferred1in costs, direct materials, and conversion costs. &olution
E"hibit '81,9= calculates the cost per equivalent unit of work done to date in the Drying and
Packaging Department for transferred1in costs, direct materials, and conversion costs, summari(es
total Drying and Packaging Department costs for week +8, and assigns these costs to units
completed and transferred out and to units in ending work in process using the weighted1average
method.
). &olution E"hibit '81,9* computes the equivalent units of work done in week +8 in the
Drying and Packaging Department for transferred1in costs, direct materials, and conversion costs.
&olution E"hibit '81,9D calculates the cost per equivalent unit of work done in week +8 in the
Drying and Packaging Department for transferred1in costs, direct materials, and conversion costs,
summari(es total Drying and Packaging Department costs for week +8, and assigns these costs to
units completed and transferred out and to units in ending work in process using the 0I0O method.
Drying and Packaging Department of 0rito1Pay Inc. for /eek +8
/S!e0 11 /S!e0 21
5l&6 &7 P%&8u3!i&
,i!"
/(ive1
T%a"7e%%e8-
i C&"!"
4i%e3!
9a!e%ial"
C&ve%"i&
C&"!"
/ork in process, beginning ',)-9
#ransferred in during current period -,999
#o account for ;,)-9
during current period -,)-9 -,)-9 -,)-9 -,)-9
/ork in process, endingA ',999
',999 '99BC ',999 9BC ',999 ,9B ',999 9 ,99
$ccounted for ;,)-9
/ork done to date ;,)-9 -,)-9 -,;-9
A
Degree of completion in this department% transferred1in costs, '99BC direct materials, 9BC conversion costs, ,9B.
'81,'
17-40 *ont2d.!
T&!al
P%&8u3!i&
C&"!"
T%a"7e%%e8
-i C&"!"
4i%e3!
9a!e%ial"
C&ve%"i&
C&"!"
S!e0 3! /ork in process, beginning given! 7 +<,9;9 7 )?,999 7 9 7 ?,9;9
*osts added in current period given! '-?,;99 ?;,999 )-,)99 +<,,99
*osts incurred to date 7')-,999 7)-,)99 7,8,,;9
to date &olution E"hibit '81,9$! ;,)-9 -,)-9 -,;-9
Equivalent unit costs of work done to date 7 )9 7 , .<9 7 < .,9
S!e0 4! #otal costs to account for 7'?8,;;9
*ompleted and transferred out -,)-9 units! 7'8,,+99
-,)-9A 7)9 H -,)-9A 7,.<9 H -,)-9A 7<.,9
/ork in process, ending ',999 units!
Direct materials
)9,999
9
',999
I
7)9
9
I

7,.<9
*onversion costs
+,+;9
)+,+;9
7'?8,;;9
,99
I
7<.,9
AEquivalent units completed and transferred out from &olution E"hibit '81,9$, &tep ).
IEquivalent units in work in process, ending from &olution E"hibit '81,9$, &tep ).
'81,)
17-40 *ont2d.!
SO+,TION E-HI.IT 17-40C
/S!e0 11
/S!e0 21
Equivale! ,i!"
5l&6 &7 P%&8u3!i&
P2)"i3al
,i!"
T%a"7e%%e8-
i C&"!"
4i%e3!
9a!e%ial"
C&ve%"i&
C&"!"
#o account for
',)-9
-,999
;,)-9
J
',)-9 '99B '99B!C ',)-9 '99B 9B!C
',)-9 '99B <9B!
',)-9
9 ',)-9 )-9
,,999 '99BC ,,999 '99BC ,,999 '99B
,,999
I
,,999 ,,999 ,,999
',999 '99BC ',999 9BC ',999 ,9B
',999

',999 9 ,99
$ccounted for ;,)-9
/ork done in current period only -,999 -,)-9 ,,;-9
J
Degree of completion in this department% #ransferred1in costs, '99BC direct materials, 9BC conversion costs, <9B.
I
-,)-9 physical units completed and transferred out minus ',)-9 physical units completed and transferred out from
ADegree of completion in this department% transferred1in costs, '99BC direct materials, 9BC conversion costs, ,9B.

'81,+
17-40 *ont2d.!
T&!al
P%&8u3!i&
C&"!"
T%a"7e%%e8
-i C&"!"
4i%e3!
9a!e%ial"
C&ve%"i&
C&"!"
7?,9;9 H 79 H 7)<,?)9! 7 +8,?<9 *osts of work done before current period!
S!e0 3! *osts added in current period given! '-8,;99 7?,,999 7)-,)99 7+<,,99
current period &olution E"hibit '81,9*! -,999 -,)-9 ,,;-9
*ost per equiv. unit of work done in current period 7 '< .<9 7 ,.<9 7 <.)-<
S!e0 4! #otal costs to account for 7'?-,-<9
*ompleted and transferred out -,)-9 units!%
/ork in process, beginning ',)-9 units!
7 +8,?<9
9
;,999
9A 7'<.<9
',)-9A 7,.<9
&tarted and completed ,,999 units!
/ork in process, ending ',999 units!
Direct materials
*onversion costs
),9;-
,;,9,-
')8,,+)
'8+,,88
'<,<99
9
+,+9+
)),'9+
7'?-,-<9
)-9A 7<.)-<
,,999
I
7'<.<9!H,,999
I
7,.<9! H,,999
I
7<.)-<!
',999
L
7'<.<9
9
L
7,.<9
,99
L
7<.)-<
AEquivalent units used to complete beginning work in process from &olution E"hibit '81,9*, &tep ).
I
Equivalent units started and completed from &olution E"hibit '81,9*, &tep ).
L
Equivalent units in work in process, ending from &olution E"hibit '81,9*, &tep ).
'81,,
17-41 )- min.! S!a8a%8 3&"!i( 6i!2 'e(ii( a8 e8i( 6&%< i
0%&3e""*
'. &olution E"hibit '81,'$ shows equivalent units of work done in the current period of
Direct materials )9,999 equivalent units
*onversion costs '<,899 equivalent units
&olution E"hibit '81,'= uses the standard costs of work done in the current period% direct
materials, 7;C conversion costs, 7+C to summari(e the total *ooking Department costs for 6ay
)99,, and assign these costs to units completed and transferred out! and to units in ending work
in process using the standard costing method.
). 6ay variances for direct materials and conversion costs are as follows%
4i%e3! 9a!e%ial" C&ve%"i& C&"!"
Output in equivalent units for 6ay
&tandard costs of 6ay monthSs output
Direct materials, 7;C *onversion costs, 7+
$ctual costs incurred during 6ay given!
Dariances
)9,999
7')9,999
')-,999
7 -,999 @
'<,899
7-;,'99
-8,999
7 ?99 @
@se of &tandard *osts in Process *osting, *ooking Department of Dictoria *orporation for 6ay
)99,
/S!e0 11
/S!e0 21
Equivale! ,i!"
5l&6 &7 P%&8u3!i&
P2)"i3al
,i!"
4i%e3!
9a!e%ial"
C&ve%"i&
C&"!"
#o account for
+,999
)9,999
)+,999
J
+,999 '99B '99B!C +,999 '99B ;9B!
+,999
9 ',)99
'-,999 '99BC '-,999 '99B
'-,999
TT
'-,999 '-,999
-,999 '99BC -,999 -9B
-,999

-,999 ),-99
$ccounted for )+,999
/ork done in current period only )9,999 '<,899
J
Degree of completion in this department% direct materials, '99BC conversions, ;9B.
TT
'<,999 physical units completed and transferred out minus +,999 physical units completed and transferred out from
ADegree of completion in this department% direct materials, '99BC conversion costs, -9B.
'81,-
17-41 *ont2d.!
@se of &tandard *osts in Process *osting, *ooking Department of Dictoria *orporation for 6ay
)99,.
T&!al
P%&8u3!i&
C&"!"
4i%e3!
9a!e%ial"
C&ve%"i&
C&"!"
/S!e0 3! &tandard cost per equivalent unit given! 7 ; 7 +
Direct materials, +,999 7;C *onversion costs, ',<99 7+ 7 )+,,99
Direct materials, )9,999 7;C *onversion costs, '<,899 7+ '8;,'99 ')9,999 -;,'99
S!e0 41 *osts to account for 7'??,-99
*ompleted and transferred out '<,999 units!%
/ork in process, beginning +,999 units!
7 )+,,99
9
+,;99
)8,999
9A 7;
',)99A 7+
&tarted and completed '-,999 units!
'+-,999
';),999
'-,999
I
7;!H'-,999
I
7+!
/ork in process, ending -,999 units!
Direct materials +9,999 -,999
L
7;
*onversion costs
8,-99
+8,-99
7'??,-99
),-99
L

7+
&ummary of variances for current performance
*osts added in current period at standard prices see step + above!
Dariance
7')9,999
')-,999
7 -,999 @
7-;,'99
-8,999
7 ?99 @
AEquivalent units to complete beginning work &olution E"hibit '81,'$, &tep ).

I
Equivalent units started and completed from &olution E"hibit '81,'$, &tep ).
L
Equivalent units in work in process, ending from &olution E"hibit '81,'$, &tep ).
'81,;
17-42 )-1+9 min.! O0e%a!i& 3&"!i(# equivale! ui!"*
'. 6aterials and conversion costs of each operation, the total units produced, and the material
and conversion cost per unit for the month of 6ay are as follows%
EB!%u"i& 5&%> T%i> 5ii"2
'. @nits produced '',999 '',999 -,999 ),999
). 6aterials costs 7'+),999 7 ,,,999 7'-,999 7'),999
+. 6aterials cost per unit ) :'! ').99 ,.99 +.99 ;.99
,. *onversion costs );?,-99 '+),999 ;?,999 ,),999
-. *onversion cost per unit , : '! ),.-9 ').99 '+.<9 )'.99
#he unit cost and total costs in 6ay for each product are as follows%
S!a8a%8 4eluBe EBe3u!ive
C&"! Ele>e!" 9&8el 9&8el 9&8el
E"trusion materials 7 ').99 7 ').99 7 ').99
0orm materials ,.99 ,.99 ,.99
#rim materials 4 +.99 +.99
0inish materials 4 4 ;.99
E"trusion conversion ),.-9 ),.-9 ),.-9
0orm conversion ').99 ').99 ').99
#rim conversion 4 '+.<9 '+.<9
0inish conversion 4 4 )'.99
#otal unit cost 7 -).-9 7 ;?.+9 7 ?;.+9
6ultiply by units produced O ;,999 O +,999 O ),999
#otal product costs 7+'-,999 7)98,?99 7'?),;99
). Equivale!
,i! C&"! ,i!" T&!al C&"!"
Delu"e model work1in process costs
at the trim operation
E"trusion material
'99B complete when transferred in! 7').99 ',999 7'),999
E"trusion conversion
'99B complete when transferred in! ),.-9 ',999 ),,-99
0orm material
'99B complete when transferred in! ,.99 ',999 ,,999
0orm conversion
'99B complete when transferred in! ').99

',999 '),999
#rim material '99B complete! +.99 ',999 +,999
#rim conversion ;9B complete! '+.<9 ;99A <,)<9
/ork1in1process costs 7;+,8<9
A',999 units O ;9B complete
'81,8
17-43 )9 min.! Equivale!-ui! 3&>0u!a!i&"# 'e32>a%<i(# e!2i3"*
'. #he reported monthly cost per equivalent unit of either direct materials or conversion costs
is lower when the plant manager overestimates the percentage of completion of ending work in
processC the overestimate increases the denominator and, thus, decreases the cost per equivalent
unit. #he plant manager has two motivations to report lower cost per equivalent unit numbers% '!
to get a bonus and )! to be recogni(ed in the company newsletter.
). /hile the plant controller has responsibility for preparing the accounting reports for the
plant, in most cases, the plant controller reports directly to the plant manager. If this reporting
relationship e"ists, 6a3or may create a conflict of interest situation for the plant controller. Only if
the plant controller reports directly to the corporate controller, and indirectly to the plant manager,
should 6a3or show the letters to the plant controller without simultaneously showing them to the
plant manager.
+. #he plant controller2s ethical responsibilities to 6a3or and to Peisure &uits are the same.
#hese include%
Competence: #he plant controller is e"pected to have the competence to make equivalent unit
computations. #his competence does not always e"tend to making estimates of the percentage
of completion of a product. In Peisure &uits2s case, however, the products are probably easy to
understand and observe. Nence, a plant controller could obtain reasonably reliable evidence on
percentage of completion at a plant.
Objectivity: #he plant controller should not allow the possibility of the plant being written up
favorably in the company newsletter to influence the way equivalent unit costs are computed.
#he plant controller has a responsibility to communicate information fairly and ob3ectively.
,. 6a3or could seek evidence on possible manipulations as follows%
a. Nave plant controllers report detailed breakdowns on the stages of production and then
conduct end1of1month audits to verify the actual stages completed for ending work in
process.
b. E"amine trends in ending work in process. Divisions that report low amounts of ending work
in process relative to total production are not likely to be able to greatly affect equivalent
unit cost amounts by manipulating percentage of completion estimates. Divisions that
show si(able quantities of total production in ending work in process are more likely to
be able to manipulate equivalent cost computations by manipulating percentage of
completion estimates.
'81,<
17-44 ,- min.! T%a"7e%%e8-i 3&"!"# equivale! ui! 3&"!"# 6&%<i( 'a3<6a%8*
'. #he equivalent units of work done in the current period for each cost category are computed
in &olution E"hibit '81,,= using data on costs added in current period and cost per equivalent unit
of work done in current period.
T%a"7e%%e8- 4i%e3! C&ve%"i&
I C&"!" 9a!e%ial" C&"!"
*osts added in current period 7-<,-99 7-8,999 7-8,)99
Divided by cost per equivalent unit of work
done in current period 7;.-9 7+ 7- .)9
Equivalent units of work done
in current period ?,999 '?,999 '',999
).
process in work
ending in units Physical
added units
Physical
process in work
beginning in units Physical
out ed transferr and
completed units Physical
+ =
E '-,999 H ?,999 -,999 E '?,999
&olution E"hibit '81,,$ shows the equivalent units of work done in >une to complete
beginning work in process and the equivalent units of work done in >une to start and complete
,,999 units. 5ote that direct materials in beginning work in process is 9B complete because it is
added only when the process is <9B complete and the beginning /IP is only ;9B complete. /e
had calculated the total equivalent units of work done in the current period in requirement '%
transferred1in costs, ?,999C direct materials, '?,999C and conversion costs, '',999. #he missing
number is the equivalent units of each cost category in ending work in process see &olution
E"hibit '81,,$!.
#ransferred1in costs -,999
Direct materials 9
*onversion costs ',999
+. Percentage of completion for each cost category in ending work in process can be calculated
by dividing equivalent units in ending work in process for each cost category by physical units of
work in process -,999 units!.
#ransferred1in costs -,999 -,999 E '99B
Direct materials 9 -,999 E 9B
*onversion costs ',999 -,999 E )9B
,. &olution E"hibit '81,,= summari(es the total costs to account for, and assigns these costs to
units completed and transferred out and to units in ending work in process.
'81,?
17-44 *ont2d.!
#hermo1assembly Department of Penno" Plastics for >une )99,
/S!e0 11
/S!e0 21
Equivale! ,i!"
5l&6 &7 P%&8u3!i&
P2)"i3al
,i!"
T%a"7e%%e8-
i C&"!"
4i%e3!
9a!e%ial"
C&ve%"i&
C&"!"
#o account for
'-,999
?,999
),,999
J
'-,999 '99B '99B!C '-,999 '99B 9B!C
'-,999 '99B ;9B!
'-,999
9 '-,999 ;,999
,,999 '99BC ,,999 '99BC ,,999 '99B
,,999
I
,,999 ,,999 ,,999
-,999 '99BC -,999 9BC -,999 )9B
-,999

-,999 9 ',999
$ccounted for ),,999
/ork done in current period only
from &olution E"hibit '81,,=! ?,999 '?,999 '',999
J
Degree of completion in this department% #ransferred1in costs, '99BC direct materials, 9BC
conversion costs, ;9B.
I
'?,999 physical units completed and transferred out minus '-,999 physical units completed and transferred out from
ADegree of completion in this department% transferred1in costs, '99BC direct materials, 9BC conversion costs, )9B.
'81-9
17-44 *ont2d.!
#hermo1assembly Department of Penno" Plastics for >une )99,
T&!al
P%&8u3!i&
C&"!"
T%a"7e%%e8
-i C&"!"
4i%e3!
9a!e%ial"
C&ve%"i&
C&"!"
7?9,999 H 79 H 7,-,999! 7'+-,999 *osts of work done before current period!
S!e0 3! *osts added in current period given! '8),899 7-<,-99 7-8,999 7-8,)99
current period ?,999 '?,999 '',999
*ost per equiv. unit of work done in current period 7 ; .-9 7 + 7 - .)9
S!e0 4! #otal costs to account for 7+98,899
*ompleted and transferred out '?,999 units!%
/ork in process, beginning '-,999 units!
7'+-,999
9
,-,999
9A 7;.-9
'-,999A 7+
&tarted and completed ,,999 units!
/ork in process, ending -,999 units!
Direct materials
*onversion costs
+',)99
)'',)99
-<,<99
)89,999
+),-99
9
-,)99
+8,899
7+98,899
;,999A 7-.)9
,,999
I
7;.-9! H ,,999
I
7+! H ,,999
I
7-.)9!
-,999
L
7;.-9
9
L
7+
',999
L
7-.)9
AEquivalent units used to complete beginning work in process from &olution E"hibit '81,,$, &tep ).
I
Equivalent units started and completed from &olution E"hibit '81,,$, &tep ).
L
Equivalent units in work in process, ending from &olution E"hibit '81,,$, &tep ).
C2a0!e% 17 I!e%e! EBe%3i"e
The Internet exercise is available to students only on the Prentice Hall Companion Website
!prenhall!com"horn#ren! $tudents can clic% on Cost &ccountin#' ((
th
ed!' and access the
Internet )xercise for the chapter' hich lin%s to the Web site of a company or or#ani*ation! The
Internet )xercise on the Web ill be updated periodically so that it is current ith the latest
information available on the subject or#ani*ation+s Web site! & printout copy of the Internet
exercise for this chapter as of early ,--, appears belo!
The solution to the Internet exercise' hich ill also be updated periodically' is available to
instructors from the Companion Website+s faculty vie! To access the solution' clic% on Cost
&ccountin#' ((
th
ed!' .aculty lin%' and then re#ister once to obtain your passord throu#h the
online form! &fter the initial re#istration' you ill have a personal lo#in I/ and passord to use
to lo# in! & printout of the solution to the Internet exercise for this chapter as of early ,--,
follos! The exercise and solution provide instructors ith an idea of the content of the Internet
exercise for this chapter!
'81-'
I!e%e! EBe%3i"e *ont2d.!
I!e%e! EBe%3i"e
In this e"ercise you will take a tour of the Qolden *heese *ompany of *alifornia, the world2s
largest fully integrated cheese plant. #o take the tour go to%
http%GGourworld.compuserve.comGhomepagesGgcccG.
'a. *lick on the U/elcomeV link. /hat are the primary products of the Qolden *heese
*ompanyW
'b. /hat are the secondary products of the manufacturing processW
'c. $re there any residual waste byproductsW
'd. /hat 3ournal entry is made to record the transfer of milk into the production processW
)a. *lick on the UProcess &chematic.V /hat is the first product transferred out of the cheese
production processW /hat 3ournal entry is made to record this transferW
)b. /hat is the second product transferred out of the cheese production processW /hat 3ournal
entry is made to record this transferW
+a. /hey cream is either sold as a finished product or processed further. /hat 3ournal entries
are made to record the transfer for final saleW
+b. /hat 3ournal entry is made to record the transfer of whey cream for further processingW
,. =riefly describe the U*heddaringV and U=lockingV steps in the cheese production process.
-. /hat proportion of milk solids is converted into cheeseW /hat happens to the restW
S&lu!i& !& I!e%e! EBe%3i"e
'a. #he Qolden *heese *ompany produces a variety of cheese products, including speciali(ed
whey and protein concentrate products used in baby foods and nutritional supplements!.
'b. Even the residual milk sugar is fermented and distilled into ethyl alcohol that is used as a
fuel additive.
'c. $ll the components of the milk are utili(ed. #he residual milk sugar is fermented and
distilled into ethyl alcohol, which is used as a fuel additive. Memaining milk solids are
concentrated into an animal feed. Only water is left after all the products and byproducts
are e"tracted, and the water is used in cleaning the plant.
'd. /ork in Process 4 *heese XXX
6aterials Inventory 4 6ilk XXX
)a. &weet cream is the first byproduct transferred out of the cheese production process into the
whey cream production process. #he 3ournal entry to record the transfer is%
/ork in Process 4 /hey *ream XXX
/ork in Process 4 *heese XXX
)b. #he second product transferred out of the cheese production process is sweet whey. #he
3ournal entry to record the transfer is
/ork in Process 4 *heese XXX
'81-)
I!e%e! EBe%3i"e *ont2d.!
+a. #he following 3ournal entry is used to record whey cream transferred to finished goods.
0inished Qoods 4 /hey *ream XXX
+b. #he 3ournal entry to record the transfer of whey cream to whey protein concentrate
processing is
/ork in Process 4 /hey Protein *oncentrate XXX
,. $fter curds and whey are separated, the curds go through a UcheddaringV process. In the
cheddaring process curds are blown into the cheddar1master tower where they are stacked for two
hours. #his increases lactic acid production, which controls curd moisture and leads to proper curd
te"ture. 5e"t, the curd is blown into blockformers where the curd is pressed into ,,1pound
blocks, and cooled to -9 degrees. #hen the cheese is transferred to the shredding process where it
is weighed and cut for sale.
-. $ppro"imately half of the solids in milk are converted to cheeseC the remaining solids, and
virtually all of the liquid, are drained from the cheese curd as whey.
C2a0!e% 17 Ci8e& Ca"e
The video case can be discussed usin# only the case riteup in the chapter! &lternatively'
instructors can have students vie the videotape of the company that is the subject of the case!
The videotape can be obtained by contactin# your Prentice Hall representative! The case
0uestions challen#e students to apply the concepts learned in the chapter to a specific business
situation!
NANT,CDET NECTARSE PROCESS COSTING
'* In a process1costing system, the unit cost of a product or service is obtained by assigning
total costs to many identical or similar units, in this case, single1serve 3uice beverage bottles.
).
4i%e3! 9a!e%ial I!e> S!a(e i P%&8u3!i& P%&3e""
Maw ingredients for 3uices water, cane sugar, fruit
3uice concentrates, etc.!
=eginning
=ottles and caps 6iddle
Pabels, cardboard trays, shrink1wrap End
+. *onversion costs include labor associated with the production line, depreciation on
production equipment, plant utilities, plant maintenance costs, and plant property ta"es.
,. In the process described for the manufacture of 5antucket 5ectars 3uices, there is no
partially completed inventory, as the product is mi"ed and bottled within a few hours each
production day. $ccordingly, the calculation of equivalent units in this case makes little sense. $s
there is no partially completed ending inventory, there will be no difference between the cost of
the units transferred out under the weighted average or 0I0O methods.
'81-+
'81-,

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CHAPTER 17

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