1.

A plant that uses process costing has 8,000 units in

beginning work in process, 15,000 more started, and 5,000
units in the ending work in process.
Using this information, answer the following questions on a
separate sheet of paper. Label each answer carefully and
show all of your work.
a. How many units are there to account for?
b. How many units are transferred using the average cost
method?
c. How many units are transferred using the first-in, first-
out method?
d. How many units were both started and completed during the
period?

a)
Units to account for
Units in beginning inventory 8,000
Units started 15,000
Total units to account for 23,000

b)

Units transferred = units to account for units in ending inventory

= 23,000-5,000 = 18,000 units

c)

Units transferred remain the same at 18,000 units

d)

Units transferred are 18,000

Units from beginning inventory = 8,000
Units started and completed = 18,000-8,000=10,000

2. The Spangle Company uses the process cost system and

average costing. The following prediction data are for the
month of July:
Prepare a cost of production summary for the month.
Production Costs
Work in process, beginning of month
Materials $2,500
Labor 1,200
Factory overhead 1,100 $4,800
 Costs incurred during the month
Materials $13,500
Labor 9,200
Factory overhead 8,500 31,200
$36,000
Production Report Units
In process, beginning of month 500
Finished and transferred during month 3,800
Work in process, end of month 400
Stage of completion 50%

Production Cost Report Average Cost

Method
For the Month of
Quantity Schedule
Physical
Quantities Units Equivalent Units

Material Labor Overhead

Units to be accounted for

Work in Process, Beginning 500

Started into Production 3,700

Total Units 4,200

Units Accounted for

Transferred Out 3,800 3,800 3,800 3,800

WIP, Ending 400 200 200 200

Total Units 4,200 4,000 4,000 4,000

Cost per Equivalent Unit

Unit Costs Material Labor Overhead Total

WIP 2,500 1,200 1,100 4,800

Costs in Month 13,500 9,200 8,500 31,200

Total Cost 16,000 10,400 9,600 36,000

Equivalent Units 4,000 4,000 4,000

Unit Costs 4.00 2.60 2.40 9.00

Cost Reconciliation Schedule
Costs to be accounted for

WIP, Beginning 4,800

Started into Production 31,200

Total Costs 36,000

Costs Accounted for

Transferred out 34,200

Work in process, Ending

Material 800

Labor 520

Overhead 480

Total WIP 1,800

Total costs 36,000

3. The following data is for a production company:

Beginning inventory 1,000 units, three-fourths completed

Finished and transferred 16,000 units

Work in process, end of month 2,000 units, one-half
completed
Assume that materials, labor, and factory overhead are added
evenly throughout the process.
On a separate sheet of paper, complete the following
problems. Label each answer carefully
and show all your work.

a. Using the average cost method, compute the equivalent

production.
b. Using the first-in, first-out method, compute the
equivalent production.
c. During the month, Department B received 10,000 units from
Department A with a unit cost of $10; 2,000 of these units
were lost during production in Department B.
Determine the adjusted cost of these units.
d. During the month, Department 2 received 8,000 from
Department 1 with a unit cost of $15. Department 2 added
materials that increased the number of units by 50%.
Determine the adjusted cost of these units.
a)

Quantity Schedule
Physical
Quantities Units Equivalent Units
Overhea
Material Labor d
Units to be accounted for
1,00
Work in Process, Beginning 0
17,00
Started into Production 0
18,00
Total Units 0
Units Accounted for
16,00 16,00 16,00 16,0
Transferred Out 0 0 0 00
2,00 1,00 1,00 1,0
WIP, Ending 0 0 0 00
18,00 17,00 17,00 17,0
Total Units 0 0 0 00

b)

Quantity Schedule
Units to be Accounted for
1,00
Beginning Work in Process 0
17,00
Started into Production 0
18,00
Total Units in Production 0
Units Accounted for
Material Labor Overhead
Transferred Out
1,00 25 25 25
From Beginning WIP 0 0 0 0
15,00 15,0 15,0 15,00
Started and Completed 0 00 00 0
2,00 1,00 1,00 1,00
Ending WIP 0 0 0 0
18,00 16,2 16,2 16,25
Equivalent Units 0 50 50 0
c)

Total cost = 10,000 units X $10 = $100,000

Units available = 10,000-2,000=8,000
Adjusted cost = 100,000/8,000 = $12.5 per unit

d)

Cost received = 8,000X15 = $120,000

Units in Department 2 = 8,000 X1.5 = 12,000
Adjusted cost = 120,000/12,000=$10 per unit

4. Cost of production summary, three departments; change in

unit cost from prior department; departmental cost work
sheet; journal entries; manufacturing statement

Taguchi Manufacturing Co. uses the process cost system. The

following information for the month of December was obtained
from the companys books and from the production reports
submitted by the department heads:

Production
Report Mixing Blending Bottl
ing
Units in process, beginning of period 2 ,
500 1,500 3,000
Started in process during month
12,500 - -
Received from prior department -
13,000 10,000
Finished and transferred 13,000
10,000 11,000
Finished and on hand &nbs
p; - 500 -
Units in process, end of period
2,000 4,000 2,000
Stage of completion &
nbsp; 4/5

Production Costs
 Work in progress, beginning of period:
Cost in Mixing.
$3,075 $6,150
Materials $1,470
Labor. 650
Factory Overhead 565
Cost in
Blending.. $3,66
0
Materials. 240
Labor.. 905
Factory Overhead.. 750
Cost in Bottling.
Materials..
900
Labor 3,1
00
Factory
Overhead.. 3,080
Costs incurred during month:
Materials.. &nb
sp; 15,000 2,500 1,500
Labor 4,750 &
nbsp; 8,000 6,500
Factory
Overhead.. 5,240 6,100
7,000
Total $27,675
$21,570 $31,890

Required:
1. Prepare cost of production summaries for the Mixing,
Blending and Bottling Departments.
2. Prepare a departmental cost work sheet.
3. Draft the journal entries required to record the months
operations.
4. Prepare a statement of cost of goods manufactured for
December.

1.
Taguchi Manufacturing Co.
Cost of Production SummaryMixing
For the Month Ended December 31, 20--

Cost of work in process, beginning of month:

 Materials................................................................................... $ 1,470
Labor......................................................................................... 650
Factory overhead..................................................................... 565 $
2,685
Cost of production for month:
Materials................................................................................... $ 15,000
Labor......................................................................................... 4,750
Factory overhead..................................................................... 5,240
24,990
Total costs to be accounted for......................................... $
27,675

Unit output for month:

Finished and transferred to Blending during month............
13,000
Equivalent units of work in process, end of month
(2,000 units, one-fourth completed).................................
500
Total equivalent production.............................................
13,500

Unit cost for month:

Materials ($1,470 + $15,000) 13,500.................................... $
1.22
Labor ($650 + $4,750) 13,500...............................................
.40
Factory overhead ($565 + $5,240) 13,500...........................
.43
Total.................................................................................... $
2.05

Inventory costs:
Costs of goods finished and transferred to Blending
during month (13,000 $2.05)......................................... $
26,650
Cost of work in process, end of month:
Materials (2,000 1/4 $1.22)......................................... $ 610
Labor (2,000 1/4 $0.40)............................................... 200
Factory overhead (2,000 1/4 $0.43)........................... 215
1,025
Total production costs accounted for............................................. $
27,675
 Taguchi Manufacturing Co.
Cost of Production SummaryBlending
For the Month Ended December 31, 20--

Cost of work in process, beginning of month:

Cost in Mixing.......................................................................... $ 3,075
Cost in Blending:
Materials................................................................ $ 240
Labor...................................................................... 905
Factory overhead.................................................. 750 1,895 $
4,970
Cost of goods received from Mixing during month......................
26,650

Cost of production for month:

Materials................................................................................... $ 2,500
Labor ....................................................................................... 8,000
Factory overhead..................................................................... 6,100
16,600

Total costs to be accounted for........................................................ $

48,220

Unit output for month:

Finished and transferred to Bottling during month.............
10,000
Finished and on hand...............................................................
500
Equivalent units of work in process, end of month
(4,000 units, four-fifths completed).................................
3,200
Total equivalent production............................................................
13,700

Unit cost for month:

Materials ($240 + $2,500) 13,700......................................... $
0.20
Labor ($905 + $8,000) 13,700...............................................
.65
Factory overhead ($750 + $6,100) 13,700...........................
.50

Total.................................................................................... $
1.35
Inventory costs:
Costs of goods finished and transferred to Bottling
during month:
Cost in Mixing (10,000 $2.05).......................... $ 20,500
Cost in Blending (10,000 1.35).......................... 13,500
(10,000 $3.40).......................... $
34,000
Cost of goods finished and on hand:
Cost in Mixing (500 $2.05)..................................... $ 1,025
Cost in Blending (500 1.35)..................................... 675
(500 $3.40).....................................
1,700
Cost of work in process, end of month:
Cost in Mixing (4,000 $2.05)......................................... $ 8,200
Cost in Blending:
Materials (4,000 4/5 $0.20)....................... $ 640
Labor (4,000 4/5 $0.65)............................. 2,080
Factory overhead (4,000 4/5 $0.50)......... 1,600 4,320
12,520
Total production costs accounted for............................................. $
48,220
Taguchi Manufacturing Co.
Cost of Production SummaryBottling
For the Month Ended December 31, 20--
Cost of work in process, beginning of month:
Cost in Mixing.......................................................................... $ 6,150
Cost in Blending....................................................................... 3,660
$ 9,810
Cost in Bottling:
Materials....................................................................... $ 900
Labor ........................................................................... 3,100
Factory overhead......................................................... 3,080 7,080 $
16,890
Cost of goods received from Blending............................................
34,000
Cost of production for month:
Materials................................................................................... $ 1,500
Labor ....................................................................................... 6,500
Factory overhead..................................................................... 7,000
15,000
Total costs to be accounted for........................................................ $
65,890
Unit output for month:
Finished and transferred to finished goods...........................
11,000
Equivalent units of work in process, end of month
(2,000 units, one-half completed).....................................
1,000
Total equivalent production.............................................
12,000

Unit cost for month:

Cost from preceding department:*
Beginning inventory (3,000)...................... $ 9,810
Goods received during month (10,000)...................... 34,000
Average unit cost for goods (13,000)...................... $ 43,810 $
3.37

Cost in Bottling:
Materials ($900 + $1,500) 12,000.................................. $
0.20
Labor ($3,100 + $6,500) 12,000.....................................
.80
Factory overhead ($3,080 + $7,000) 12,000..................
.84
Total.................................................................................... $
1.84

Inventory costs:
Costs of goods finished and transferred:
Cost in Mixing and Blending (11,000 $3.37)........... $
37,070
Cost in Bottling (11,000 1.84)...........
20,240
(11,000 $5.21)........... $
57,310
Cost in work in process, end of month:
Cost in Mixing and Blending (2,000 $3.37)................. $ 6,740
Cost in Bottling:
Materials (2,000 1/2 $0.20)....................... $ 200
Labor (2,000 1/2 $0.80)............................. 800
Factory overhead (2,000 1/2 $0.84)......... 840 1,840
8,580
 Total production costs accounted for..................................... $
65,890

*Alternative calculation.

Detailed calculation of the average unit costs from other departments as follows:

Cost
from
Units Mixing
Blending
Units in process, beginning of month................................. 3,000 $ 6,150 $
3,660
Units received during month............................................... 10,000 20,500
13,500
Total....................................................................................... 13,000 $ 26,650 $
17,160
Unit cost................................................................................ $ 2.05 $
1.32

2.

Taguchi Manufacturing Co.

Departmental Cost Work Sheet
For the Month Ended December 31, 20--
Cost Units Units Amount Amount
per Unit Received Transf. or Charged Credited
Analysis Transf. in Dept. on Hand to Dept. to Dept.
Mixing:
Opening inventory in
process................. 2,500 $ 2,685
Started in process...... 12,500
Costs for month:
Materials............... $1.22 15,000
Labor.................... .40 4,750
Factory Overhead .43 5,240
Finished and trans-
ferred to Blending $2.05 13,000 $ 26,650
Closing work in
process.................. 2,000 1,025
Total...................... 15,000 15,000 $ 27,675 $ 27,675

Blending:
 Opening inventory in
process.................. 1,500 $ 4,970
Received during
month from 13,000 26,650
Mixing
Costs added during
month:
Materials............... 0.20 2,500
Labor.................... 0.65 8,000
Factory overhead 0.50 6,100
Finished and trans-
ferred to Bottling. $3.40 10,000 $ 34,000
Completed and on
hand...................... 500 1,700
Closing work in
process.................. 4,000 12,520
Total...................... 14,500 14,500 $ 48,220 $ 48,220

Cost Units Units Amount Amount

per Unit Received Transf. or Charged Credited
Analysis Transf. in Dept. on Hand to Dept. to Dept.

Bottling:
Opening inventory in
process.................. 3,000 $ 16,890
Received during
month from Blending 10,000 34,000
Costs added during
month:
Materials............... 0.20 1,500
Labor.................... 0.80 6,500
Factory overhead 0.84 7,000
Finished and trans-
ferred to stock...... $ 5.24 11,000 $ 57,310
Closing work in
process.................. 2,000 8,580
Adjusting due to
averaging costs
from prior
department........... (.03)
Total...................... $ 5.21 13,000 13,000 $ 65,890 $ 65,890

Summary:
 Materials:
Mixing................................................................................ $ 15,000
Blending............................................................................. 2,500
Bottling............................................................................... 1,500 $
19,000

Labor:
Mixing................................................................................ $ 4,750
Blending............................................................................. 8,000
Bottling............................................................................... 6,500
19,250

Factory overhead:
Mixing................................................................................ $ 5,240
Blending............................................................................. 6,100
Bottling............................................................................... 7,000
18,340

Total production costs for December............................................ $

56,590
Add work in process, beginning of month:
Mixing....................................................................................... $ 2,685
Blending.................................................................................... 4,970
Bottling...................................................................................... 16,890
24,545
Total.................................................................................................. $
81,135
Deduct work in process, end of month:
Mixing ....................................................................................... $ 1,025
Blending.................................................................................... 14,220
Bottling...................................................................................... 8,580
23,825
Cost of production, goods fully manufactured during
December......................................................................................... $
57,310

3. Work in ProcessMixing....................................................... 15,000

Work in ProcessBlending.................................................... 2,500
Work in ProcessBottling...................................................... 1,500
Materials............................................................................
19,000
Work in ProcessMixing....................................................... 4,750
Work in ProcessBlending.................................................... 8,000
Work in ProcessBottling...................................................... 6,500
 Payroll................................................................................
19,250
Work in ProcessMixing....................................................... 5,240
Work in ProcessBlending.................................................... 6,100
Work in ProcessBottling...................................................... 7,000
Factory Overhead.............................................................
18,340
Work in ProcessBlending.................................................... 26,650
Work in ProcessMixing................................................
26,650

Work in ProcessBottling.............................................................. 34,000

Work in ProcessBlending.............................................
34,000
Finished Goods......................................................................... 57,310
Work in ProcessBottling...............................................
57,310

4.
Taguchi Manufacturing Co.
Statement of Cost of Goods Manufactured
For the Month Ended December 31, 20--

Materials........................................................................................... $
19,000
Labor.................................................................................................
19,250
Factory overhead.............................................................................
18,340
Total................................................................................................... $
56,590
Add work in process inventories, December 1......................
24,545
Total.................................................................................... $
81,135
Less work in process inventories, December 31....................
23,825
Cost of goods manufactured during the month............................ $
57,310
 5. Average and FIFO cost methods; losses at the beginning
and end of processing.

Mt. Orab Manufacturing Co uses a process cost system. Its

manufacturing operation is carried on in two departments:
Machining and Finishing. The Machining Department uses the
average cost method and the Finishing Department uses the
FIFO cost method. Materials are added in both departments at
the beginning of the operations, but the added materials do
not increase the number of units being processed. Units are
lost in Machining Department throughout the production
process and inspection occurs at the end of the process. The
lost units have no scrap value and are considered to be a
normal loss.
Production statistics for July show the following data:

; Machinin
g Finishing

Units in process, July 1 (all material 40% of labor &

overhead) ... 20,000
Units in process, July 1 (all material 80% of labor &
overhead) ... 40,000
Units started in production
. 140,000
Units completed & transferred
100,000
Units transferred from Machining
. 100,000
Units completed & transferred to finished goods
.. 100,000
Units in process, July 31 (all material 60% of labor &
overhead).. 40,000
Units in process, July 31 (all material 40% of labor &
overhead).. 40,000
Units lost in production
.. 20,000
 Production Costs &nb
sp; Machining Finishing
Work in progress, July 1:
Materials ..
$40,000 $110,000
Labor
24,000
60,000
Factory overhead
8,000
40,000
Costs in Machining Department
.. 240,000
Costs incurred during month:
Materials ..
280,000 240,000
Labor
180,000 160,000
Factory overhead
60,000 80
,000

Required:
Prepare a cost of production summary for each department.
(Round to three decimal places)

Mt. Orab Manufacturing Company

Cost of Production SummaryFinishing Department
For the Month Ended July 31, 20--

Cost of work in process, beginning of month:

Cost in Machining Department.............................................. $240,000
Cost in Finishing Department:
Materials........................................................$ 110,000
Labor................................................................ 60,000
Factory overhead............................................ 40,000 210,000 $
450,000
Cost of goods received from Machining during month................
447,900
Cost of production for month:
Materials............................................................................ $ 240,000
Labor.................................................................................. 160,000
Factory overhead.............................................................. 80,000
480,000
 Total costs to be accounted for................................................ $
1,377,900*
Unit output for month:
Materials:
To complete beginning units in process...........................
0
Units started and fully manufactured
during month (100,000 - 40,000)................................
60,000
Ending units in process (40,000, all material)................
40,000
Total equivalent production.......................................
100,000
Labor and factory overhead:
To complete beginning units in process
(40,000, 20% to complete)..........................................
8,000
Units started and fully manufactured during month....
60,000
Ending units in process (40,000, 40% completed).........
16,000
Total equivalent production.......................................
84,000
Unit cost for month:
Materials ($240,000 100,000)............................................... $
2.400
Labor ($160,000 84,000).......................................................
1.905
Factory overhead ($80,000 84,000).....................................
0.952
Total.................................................................................... $
5.257

Inventory costs:
Cost of goods finished and transferred to finished goods during month:
Beginning units in process:
Prior month's cost....................................................... $ 450,000
Current cost to complete:
Labor (40,000 20% $1.905)............................ 15,240
Overhead (40,000 20% $0.952)..................... 7,616 $
472,856
 Units started and finished during month:
Cost in prior dept. (60,000 $4.479)......................... $ 268,740
Cost in Finishing Dept. (60,000 $5.257)................. 315,420
Total cost transferred (60,000 $9.736)..............
584,160
Cost of work in process, end of month:
Cost in prior dept. (40,000 units $4.479)...................... $ 179,160
Materials (40,000 units $2.400)..................................... 96,000
Labor (40,000 units 40% $1.905).............................. 30,480
Factory overhead (40,000 units 40% $0.952)........... 15,232
320,872
Total production costs accounted for $1,377,888*
*Rounding Difference

6.

Allocation of joint costs

Clark Manufacturing Co buys crypton for $0.80 a gallon. At the end of processing in
Department 1, crypton splits off into products A, B, and C. Product A is sold at the split-
off point with no further processing. Products B and C require further processing before
they can be sold. Product B s processed in Department 2, and Product C is processed in
Department 3. Following is a summary of costs and other related data for the year ended
December 31:

Dept. 1 Dept. 2 Dept. 3

Cost of crypton .. $76,000 - -
Direct labor
14,000 $51,000 $65,000
Factory overhead .. 10,000 26,500
49,000
Total . &n
bsp; $100,000 $77,500 $114,000

Product A Product B Product C

Gallons sold ....... 20,000 30,000
45,500
Gallons on hand at December 31 .. 10,000 - 15,000
Sales in dollars . $30,000
$96,000 $141,750

No inventories were on hand at the beginning of the year, and no crypton was on hand at
the end of the year. All gallons
on hand at the end of the year were complete as to processing. Clark uses the relative
sales value method of allocating joint costs.

Required:
1. Calculate the allocation of joint costs.
2. Calculate the total cost per unit for each production.

1.
Unit Ultimate Less Sales Percent Allocatio
Cost n
Units Selling Sales After Value at of Sales Of Joint
Produc Produced(a Price(b) Value Split-Off Split-Off Value Costs
t )

A 30,000 $1.50* $ 45,000 0 $ 45,000 32.5% $ 32,500

B 30,000 3.20** 96,000 $ 77,500 18,500 13.4 13,400
C 60,000 3.15*** 189,000 114,000 75,000 54.1 54,100
Total $ $ $138,500 100.0% $ 100,000
330,000 191,500

* $30,000/20,000 gals.
** $96,000/30,000 gals.
***$141,750/45,000 gals.

A B C
Beginning inventory................................... 0 0 0
Sold during year......................................... 20,000 30,000 45,000
On-hand, end-of-year................................. 10,000 0 15,000
Produced during year................................ 30,000 30,000 60,000

2. Unit cost of Product A = $32,500 / 30,000 gals. = $1.08 gal.

Unit Cost of Product B =$51,000 Direct labor + $26,500 Factory overhead +
$13,400 Joint costs = $90,900 / 30,000 gals. = $3.03 / gal.

Unit cost of Product C = $65,000 Direct labor + 49,000 Factory overhead +

54,100 Joint costs = $168,100 / 60,000 gals. = $2.80 / gal.