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HILTON SELECT SOLUTIONS CHAPTER 4

EXERCISE 4-18 (15 MINUTES)

1. 5,500 equivalent units (refer to (a) in the following table)

2. 4,140 equivalent units (refer to (b) in the following table)

CALCULATION OF EQUIVALENT UNITS: ANDROMEDA GLASS COMPANY


Weighted-Average Method
Percentage
of Equivalent Units
Completion with
Physical Respect to Direct
Units Conversion Material Conversion
Work in process, August 1.... 2,000 60%
Units started during August. . 3,500
Total units to account for...... 5,500

Units completed and


transferred out during August 3,800 100% 3,800 3,800
Work in process, August 31. . 1,700 20% 1,700 340
Total units accounted for...... 5,500 _____ ____
Total equivalent units........... (1) (2) 4,140
5,500
EXERCISE 4-19 (30 MINUTES)

All three of these companies manufacture large amounts of relatively homogeneous


products (i.e., lumber and paper). Therefore, process costing is an appropriate
product-costing system.

EXERCISE 4-20 (15 MINUTES)

CALCULATION OF COST PER EQUIVALENT UNIT: DULUTH GLASS COMPANY


Weighted-Average Method
Direct
Material Conversion Total
Work in process, February 1.............. $  $ 40,300 $ 83,500

43,200    
Costs incurred during February......... 135,000 190,000 325,000
Total costs to account for.................. $178,200 $230,300 $408,500

Equivalent units................................ 16,500     47,000
Costs per equivalent unit................... $10.80* $4.90 † $15.70   

*$10.80 = $178,200 ÷ 16,500



$4.90 =   $230,300 ÷ 47,000
EXERCISE 4-21 (15 MINUTES)

CALCULATION OF COST PER EQUIVALENT UNIT: MONTANA LUMBER COMPANY


Weighted-Average Method
Direct
Material Conversion Total
Work in process, June 1...................... $  74,900 $167,000 $   241,900    
Costs incurred during June..................  380,700  625,000 1,005,700   
Total costs to account for..................... $455,600 $792,000 $1,247,600
Equivalent units................................... 6,700 1,600
Costs per equivalent unit..................... $68* $495 † $563   

*$68 = $455,600 ÷ 6,700



$495 = $792,000 ÷ 1,600
EXERCISE 4-22 (25 MINUTES)

TUSCALOOSA PAPERBOARD COMPANY


Weighted-Average Method
Direct
Material Conversion Total
Work in process, March 1................... $ 10,900 $ 28,950 $ 39,850
Costs incurred during March............... 112,700 160,200 272,900
Total costs to account for.................... $123,600 $189,150 $312,750
Equivalent units................................. 103,000 97,000
Costs per equivalent unit.................... $1.20 $1.95 $3.15

1. Cost of goods completed and


transferred out during March:

numberofunits toalcostper 
89,000$3.1 $280,350
5

    ....................................................

transfer dout equivalentunit


2. Cost remaining in March 31 work
in process:

Direct material (14,000*$1.20) $   16,800


Conversion (8,000*$1.95). . . .   15,600
Total........................................   32,400
Total costs accounted for.............. $312,750

*Equivalent units in March 31 work in process:

Direct
Material Conversion
Total equivalent units (weighted average).................. 103,000    97,000
Units completed and transferred out......................... (89,000 ) (89,000 )
Equivalent units in ending work in process................ 14,000 8,000
EXERCISE 4-23 (25 MINUTES)

RALEIGH TEXTILES COMPANY


Weighted-Average Method
Direct
Material Conversion Total
Work in process, November 1.............. $  85,750 $ 16,900 $ 102,650
Costs incurred during November.......... 158,000 267,300 425,300
Total costs to account for..................... $243,750 $284,200 $527,950
Equivalent units................................... 62,500 49,000
Costs per equivalent unit..................... $3.90 $5.80 $9.70

1. Cost of goods completed and


transferred out during
November:

numberofunits toalcostper 
47,000$9.70 $455,900

    ..................................................

transfer dout equivalentunit


2. Cost remaining in November 30
work in process:

Direct material (15,500*$3.90) $60,450

Conversion (2,000*$5.80).... 11,600


Total.......................................   72,050
Total costs accounted for............. $527,950

*Equivalent units in November 30 work in process:

Direct
Material Conversion
Total equivalent units (weighted average)................... 62,500    49,000
Units completed and transferred out........................... (47,000 ) (47,000 )   
Equivalent units in ending work in process.................  15,500      2,000      

3. The electronic version of the Solutions Manual “ BUILD A SPREADSHEET


SOLUTIONS” is available on your Instructors CD and on the Hilton, 8e website:
www.mhhe.com/hilton8e.
Exercise 4-24 (45 minutes)

1. Diagram of production process:


Work-in-Process Inventory:
Preparation Department

Batch P25 Batch S33

Accumulated Conversion costs:


by Direct-labor
department Manufacturing
overhead
Work-in-Process Inventory:
Finishing Department

Batch P25 Batch S33

Accumulated Direct-
by material
batch costs

Work-in-Process Inventory:
Packaging Department

Batch P25

Finished-Goods Inventory
EXERCISE 4-24 (CONTINUED)

2. The product cost for each basketball is computed as follows:

Professional
Scholastic
Direct material:..........................................................
Batch P25 ($42,000 ÷ 2,000)................................. $21.00 -0-     
Batch S33 ($45,000 ÷ 4,000)................................. -0- $11.25     

Conversion: Preparation Department......................... 7.50 7.50     

Conversion: Finishing Department............................ 6.00 6.00     
*Conversion: Packaging Department..........................    .50    -0-      

Total product cost..................................................... $35.00 $24.75     

*The two production departments each worked on a total of 6,000 balls, but the
Packaging Department handled only the 2,000 professional balls.

3. Journal entries:

Work-in-Process Inventory: Preparation Department ....... 39,500*


Raw-Material Inventory......................................... 39,500

*$39,500 = $42,000 of direct material


for batch P25 – $2,500 of packaging material

Work-in-Process Inventory: Preparation Department ....... 45,000*


Raw-Material Inventory......................................... 45,000

*Direct-material cost for batch S33.

Work-in-Process Inventory: Preparation Department ....... 45,000*


Applied Conversion Costs..................................... 45,000

*$45,000 = 6,000 units$7.50 per unit

Work-in-Process Inventory: Finishing Department.......... 129,500*


Work-in-Process Inventory: Preparation Department 129,500

*$129,500 = $39,500 + $45,000 + $45,000


EXERCISE 4-24 (CONTINUED)

Work-in-Process Inventory: Finishing Department.......... 36,000*


Applied Conversion Costs..................................... 36,000

*$36,000 = 6,000 units$6.00 per unit

Work-in-Process Inventory: Packaging Department........ 66,500*


Finished-Goods Inventory.............................................. 99,000 †
Work-in-Process Inventory: Finishing Department. . 165,500

*$66,500 = $39,500 + (2,000$7.50) +


(2,000$6.00).
These are the costs accumulated for batch P25 only.

$99,000 = $45,000 + (4,000$7.50) +
(4,000$6.00).
These are the costs accumulated for batch S33 only.

Work-in-Process Inventory: Packaging Department........ 3,500


Raw-Material Inventory......................................... 2,500*
Applied Conversion Costs..................................... 1,000 †

*Cost of packaging material for batch P25.



$1,000 = 2,000 units$.50 per unit

Finished-Goods Inventory.............................................. 70,000*


Work-in-Process Inventory: Packaging Department 70,000

*$70,000 = $66,500 + $3,500


SOLUTIONS TO PROBLEMS
PROBLEM 4-25 (45 MINUTES)

1. Physical flow of units:   Physical


  Units
Work in process, June 1............................................................... 40,000
Units started during June.............................................................. 190,000
Total units to account for.............................................................. 230,000

Units completed and transferred out during June........................... 180,000


Work in process, June 30.............................................................. 50,000
Total units accounted for............................................................... 230,000

2. Equivalent units:
Percentage
of
Completion
with Equivalent Units
Physical Respect to Direct
Units Conversion Material Conversion
Work in process, June 1........ 40,000   38%
Units started during June...... 190,000 

Total units to account for....... 230,000 

Units completed and


transferred 180,000  100% 180,00 180,000   
out during June.................   0
Work in process, June 30......   55%    27,500   
50,000   50,000
Total units accounted for....... 230,000 

Total equivalent units............ 230,00 207,500   
0

3. Costs per equivalent unit:


Direct
Material Conversion   Total
Work in process, June 1............ $110,500 $ 22,375 $132,875
Costs incurred during June........ 430,000 320,000 750,000
Total costs to account for........... $540,500 $342,375 $882,875
Equivalent units......................... 230,000 207,500
Costs per equivalent unit........... $2.35 $1.65 $4.00
PROBLEM 4-25 (CONTINUED)

4. Cost of goods completed and transferred out during June:

numberofunits toalcostper 
180,000$4.0 $720,000
0

    ...................................................

transfer dout equivalentunit


Cost remaining in June 30 work-in-process inventory:

Direct material:

number of  cost per  50,000$2.3 $117,500

  
5

equivalent  equivalent 
 u ni t s o f   un i t o f 
...................................................

  
direct material direct material
Conversion:
number of  cost per  27,500$1.6   45,375

  
5

e quivalent  equivalent 

 u n i ts o f   u n i t o f 
..........................................................

  
 c o n v er s i o n   c o n v er s i o n 
Total cost of June 30 work in process.............................................. $162,875

Check: Cost of goods completed and transferred out ........................ $720,000


Cost of June 30 work-in-process inventory............................ 162,875
Total costs accounted for..................................................... $882,875
PROBLEM 4-30 (35 MINUTES)

1. Direct material cost was $1,390,000:

JR1163........................... $ 225,000
JY1065........................... 710,000
DC0766.......................... 455,000
Total......................... $1,390,000

Texarkana Corporation’s total direct-labor payroll amounted to $134,274 for


6,394 hours of work ($134,274 ÷ $21 per hour). Thus, conversion cost was
$575,460:

Direct labor………………………………. $134,274


……..
Overhead applied (6,394 hours x $69) 441,186
……..
Total……………………………………… $575,460
…..

2. Goods completed during April cost $2,002,000 (26,000 units x $77) as the
following calculations show:

Percentage
Of
Completion Equivalent Units
With
Physical Respect to Direct
Units Conversion Material
Conversion

Work in process, April 3,000 80%


1……………….
Units started during 27,000
April……………..
Total units to account 30,000
for……………..

Units completed and transferred


out during 26,000 100% 26,000 26,000
April……………………..
Work in process, April 4,000 45% 4,000 1,800
30……………..
Total units accounted 30,000
for……………...
Total equivalent 30,000 27,800
units…………………..
PROBLEM 4-30 (CONTINUED)

Direct
Material Conversion Total

Work in process, April $ $ 63,940 $


1…………………… 230,000 293,940
Costs incurred during 1,390,00 575,460 1,965,46
April………………. 0 0
Total costs to account $1,620,00 $639,400 $2,259,40
for…………………. 0 0
Equivalent 30,000 27,800
units……………………………...
Cost per equivalent $54 a $23 b $77 c
unit……………………
a
$1,620,000 ÷ 30,000 = $54
b
$639,400 ÷ 27,800 = $23
c
$54 + $23 = $77

3. The cost of the ending work-in-process inventory is $257,400:

Direct material (4,000 x $54) $216,00


…….. 0
Conversion cost (1,800 x $23) 41,40
….. 0
Total………………………… $257,40
…. 0

4. (a) No material would be added during May. All material is introduced at the
start of the manufacturing process, and these units were begun in April.

(b) Since the work-in-process inventory is 45% complete at the end of April,
55% of the conversion would be done in May.

5. Given that the ending work-in-process inventory is at the 45% stage of


completion, these units would not have reached the 75% point in April where
TH55 is added. Therefore, there would be zero equivalent units with respect to
part TH55 in the ending work-in-process inventory.
PROBLEM 4-31 (50 MINUTES)

The missing amounts are shown below. A completed production report follows.

Work in process, October 1 (in units)....................................................... 10,000


Units completed and transferred out during October................................. 75,000
Total equivalent units: conversion............................................................ 78,500

Work in process, October 1: conversion................................................... $   30,225


Costs incurred during October: direct material.......................................... 600,000
Cost per equivalent unit: conversion........................................................ 11.85
Cost of goods completed and transferred out during October .................... 1,556,250
Cost remaining in ending work-in-process inventory: direct material .......... 44,500

PRODUCTION REPORT: FANTASIA FLOUR MILLING COMPANY


Weighted-Average Method
Percentage
of
Completion
with Equivalent Units
Physical Respect to Direct
Units Conversion Material Conversion
Work in process, October 1....... 10,000 15%
Units started during October...... 70,000
Total units to account for........... 80,000

Units completed and transferred


out during October........... 75,000 100% 75,000 75,000
Work in process, October 31...... 5,000 70% 5,000 3,500
Total units accounted for........... 80,000 _____ _____
Total equivalent units................. 80,000 78,500
PROBLEM 4-31 (CONTINUED)

Direct
Material Conversion Total
Work in process, October 1....... $112,000 $  30,225 $  142,225
Costs incurred during October. . .  600,000  900,000  1,500,000
Total costs to account for........... $712,000 $930,225 $1,642,225
Equivalent units........................ 80,000 78,500
Costs per equivalent unit........... $8.90* $11.85 † $20.75**

*$8.90 = $712,000 ÷ 80,000



$11.85 = $930,225 ÷ 78,500
**$20.75 = $8.90 + $11.85
PROBLEM 4-31 (CONTINUED)

Cost of goods completed and transferred out during October:

 n u mbe r o f un it s   t o al c o s t p e r 
   ........................................................ 75,000$20.75 $1,556,250

t ransfer dout  equivalentunit


Cost remaining in October 31 work-in-process inventory:

Direct material:

 n um ber of   c os t per 
  
 e q u i va l e n t   e q u i v a l e n t 

 u ni ts of   uni t of 
.......................................................... 5,000$8.90 $44,500

  
directmaterial directmaterial
  
Conversion:
 number of   cos t per 
  
 e quiva le nt   eq uiva le nt 

 u n its o f   u n it o f 
............................................................... 3,500$11.85  41,475

  
 c o n v e r s i o n  c o n v e r s i o n
  
Total cost of October 31 work-in-process............................................... $85,975

Check: Cost of goods completed and transferred out . . . $1,556,250


Cost of October 31 work-in-process inventory. .    85,975
Total costs accounted for................................. $1,642,225
PROBLEM 4-36 (35 MINUTES)

1. Conversion cost per unit in department I:

direct labor  manufacturing overhead



units produced *
$76,000 $460,000

5,500  2,000  2,500
 $53.60per uni t

*Note that all of the products sold after processing in departments I, II, or III were
produced orginally in department I.

2. Conversion cost per unit in department II:


direct labor  manufacturing overhead

units produced *
$44,000 $136,000

2,000 2,500
 $40.00per unit

*Note that all of the products sold after processing in departments II and III were
colored in department II.

3. Cost of a clear glass sheet:


direct material per conversion cost per
= unit in department I + unit in department I
$900,000
  $53.60
10,000
 $143.60per sheet
PROBLEM 4-36 (CONTINUED)

4. Cost of an unetched, colored glass sheet:


cost per clear direct material conversion cost per
= glass sheet + per unit in department + unit in department II
II
$144,000
 $143.60  $40.00
4,500
 $215.60per sheet

5. Cost of an etched, colored glass sheet:


cost per unetched conversion cost per
= colored glass sheet + unit in department III
$76,000 $147,500
 $215.60
2,500
 $305.00per sheet

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