Exercise 4 Processcosting

Exercise 4-8 (30 minutes)
Weighted-Average Method
1. For the sake of brevity, only the portion of the quantity schedule from which the
equivalent units are computed is shown below.
Units accounted for as follows:

Transferred to the next process
Work in process, June 30
(materials 50% complete,
conversion 25% complete)
Total units accounted for
2.
Cost to be accounted for:
Work in process, June 1
Cost added by the department
Total cost to be accounted for (a)
Equivalent units (b)
Quantit
y
Schedul
e
Equivalent Units
(EU)
Conversio
Materials
n
300,000
300,000
300,000
40,000
340,000
20,000
320,000
10,000
310,000
Total
Cost
Material
s
Conversio
n
$ 71,50
0
$ 56,60
0
$ 14,900
599,500
$671,00
0
385,000
$441,60
0
320,000
Whole
Unit
214,500
$229,400
310,000
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Solutions Manual, Chapter 4
Cost per equivalent unit (a) (b)

$1.38 +
$0.74 =
$2.12


Total
Cost accounted for as follows:
Transferred to the next
process:
300,000 units at $2.12 each
Work in process, June 30:
Materials, at $1.38 per EU
Conversion, at $0.74 per EU
Total work in process
Total cost accounted for
Cost
Equivalent Units
(EU)
Material Conversio
s
n
$636,00
0 300,000
300,000
27,600 20,000
7,400
35,000
$671,00
0
10,000


1.
Quantit
y
Schedul
e
Gallons to be accounted
for:
Work in process, May
1 (materials 80%
complete, labor and
overhead 75%
complete)
80,000
Started into
production
760,000
Total gallons accounted
for
840,000
Equivalent Units
Material
Overhea
s
Labor
d
Gallons accounted for as

follows:
Transferred to the
next department
790,000 790,000 790,000 790,000
Work in process, May
31 (materials 60%
complete, labor and
overhead 20%
complete)
50,000 30,000 10,000
10,000
Total gallons accounted
for
840,000 820,000 800,000 800,000

Exercise 4-10 (continued)

2.
Cost to be accounted
for:
Total
Costs
Material
s
Labor
$ 146,60
$
Work in process, May 1
0 $ 68,600
30,000
Cost added during the
1,869,20
month
0 907,200
370,000
Total cost to be
$2,015,80 $975,80
$400,00
accounted for (a)
0
0
0
Equivalent units (b)
820,000
800,000
Cost per equivalent
unit (a) (b)
$1.19 +
$0.50 +
Overhea
d
Whole
Unit
$ 48,000
592,000
$640,00
0
800,000
$0.80 =
$2.49

Problem 4-11 (30 minutes)

1. The computation of equivalent units would be:
Quantit
y
Equivalent Units (EU)
Schedul Material
Overhea
e
s
Labor
d
Units accounted for as

follows:
department
35,600
Work in process, April 30
labor and overhead 60%
complete)
7,400
Total units and equivalent
units of production
43,000
35,600 35,600 35,600
5,920
4,440
4,440
41,520 40,040 40,040
2. The cost reconciliation follows:

Total
Cost
Cost accounted for as

follows:
department: 35,600 units $103,24
$2.90 per unit
0
Work in process, April 30:
Materials, at $0.50 per EU
2,960
Labor, at $1.10 per EU
4,884
Overhead, at $1.30 per EU
5,772
Total work in process
13,616
$116,85
Total cost
6

Material
Overhea
s
Labor
d
35,600 35,600
5,920
35,600
4,440
4,440


1. The equivalent units for the month would be:
Quantit
y
Schedul
e
Equivalent Units
(EU)
Material Conversio
s
n

Transferred to next department 92,000
92,000
Work in process, May 30
(materials 75% complete;
14,000
10,500
Total units and equivalent units
of production
106,000 102,500
2.
Total
Cost
Work in process, May $ 16,40
1
0
Cost added during
the month
431,200
$447,60
Total cost (a)
0
Equivalent units of
production (b)
Cost per EU (a) (b)
Material
s
Conversio
n
$ 5,900
194,20
0
$200,10
0
$ 10,500
102,500
$1.95+
92,000
7,000
99,000
Whol
e Unit
237,000
$247,500
99,000
$2.50=
$4.45
3. Total units transferred.............................................

92,000
Less units in the beginning inventory......................
6,000
Units started and completed during
May.......................................................................
86,000
4. No, the manager should not be rewarded for good cost control.
The reason for the Mixing Departments low unit cost for May is
traceable to the fact that costs of the prior month have been
averaged in with Mays costs in computing the lower, $1.95 per
unit figure. This is a major criticism of the weighted-average
method in that the figures computed for product costing
purposes cant be used to evaluate cost control or measure

performance for the current period.


Quantity Schedule and Equivalent Units
Units to be accounted for:

(materials 85% complete;
Started into production
Total units

Transferred to bottling:
Total units and equivalent units
of production
5
Quantit
y
Schedul
e
7,000
88,000
95,000
Equivalent Units
(EU)
Material Conversio
s
n
82,000
82,000
82,000
13,000
7,800
2,600
95,000
89,800
84,600

Problem 4-13 (continued)

Costs per Equivalent Unit
Total
Cost
Materials
Cost to be accounted for:

Work in process, April 1..........................................
$14,800 $ 6,800
Cost added during April..........................................
249,730 105,450
Total cost (a)...........................................................
$264,530 $112,250
Equivalent units of production (b)
$ 8,000
144,280
$152,280
89,800
Cost per EU (a) (b)

Cost Reconciliation
Conversio
n
84,600
$1.25 +
Total
Cost
$1.80

Conversio
Materials
n
Cost accounted for as follows:

Transferred to bottling:
82,000 units $3.05 per unit..............................
$250,100
82,000
Work in process, April 30:
Materials, at $1.25 per EU....................................
9,750
7,800
Conversion, at $1.80 per EU................................
4,680
Total work in process..............................................
14,430
Total cost................................................................
$264,530
82,000
2,600

10

Exercise 4 Processcosting

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Exercise 4-8 (30 minutes)

Units accounted for as follows:

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Cost per equivalent unit (a) (b)

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Exercise 4-9 (20 minutes)

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Exercise 4-10 (30 minutes)

Gallons accounted for as

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Exercise 4-10 (continued)

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Problem 4-11 (30 minutes)

Units accounted for as

35,600 35,600 35,600

41,520 40,040 40,040

2. The cost reconciliation follows:

Cost accounted for as

Equivalent Units (EU)

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Problem 4-12 (45 minutes)

Units accounted for as follows:

3. Total units transferred.............................................

purposes cant be used to evaluate cost control or measure

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Problem 4-13 (60 minutes)

Units to be accounted for:

Units accounted for as follows:

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Problem 4-13 (continued)

Cost to be accounted for:

Cost per EU (a) (b)

Equivalent Units (EU)

Cost accounted for as follows:

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