Chapter 2

PROBLEM 413B Comprehensive Problem Weighted-Average Method [LO2, LO3, LO4, LO5]

CHECK FIGURE

(1) Conversion: 426,600 equivalent units;

(3) Ending work in process: $1,008,000.

The Barrington Company manufactures a high-quality plastic pipe that goes through three processing stagesprior to completion.

Information on work in the first department, Cutting, is given below for May:

Production data:

Pounds in process, May 1: materials 100% complete; conversion 90% complete73,000

Pounds started into production during May 380,000

Pounds completed and transferred to the next department?

Pounds in process, May 31: materials 80% complete; conversion 20% complete33,000

Cost data:

Work in process inventory, May 1:

Materials cost $111,600

Conversion cost $55,800

Cost added during May:

Materials cost $580,320

Conversion cost $306,810

The company uses the weighted-average method.

Required:

1.Compute the equivalent units of production.

2.Compute the costs per equivalent unit for the month.

3.Determine the cost of ending work in process inventory and of the units transferred out to the nextdepartment.

4.Prepare a cost reconciliation report for the month.

PROBLEM 414B Comprehensive ProblemWeighted-Average Method [LO2, LO3, LO4, LO5]

CHECK FIGURE

(3) Ending work in process: $69,300Firenze, Inc., manufactures a product that goes through two departments prior to completiontheMixing Department followed by the Packaging Department. The following information is available aboutwork in the first department, the Mixing Department, during June.Percent Completed

UnitsMaterialsConversion

Work in process, beginning 80,000 70%40%

Started into production392,500

Completed and transferred out 382,500

Work in process, ending 90,000 75%25%

Work in process, beginning $31,500 $11,300

Cost added during June $337,500 $239,800

Required:

Assume that the company uses the weighted-average method.

1.Determine the equivalent units for June for the Mixing Department.

2.Compute the costs per equivalent unit for June for the Mixing Department.

3.Determine the total cost of ending work in process inventory and the total cost of units transferred tothe Packaging Department.

4.Prepare a cost reconciliation report for the Mixing Department for June.

PROBLEM 415B Analysis of Work in Process T-accountWeighted-Average Method [LO1 , LO2,LO3, LO4]

CHECK FIGURE

(3) Cost of units completed and transferred out: $1,028,450Hooghly Products manufactures a silicone paste wax that goes through three processing departmentsCracking,Blending, and Packing. All raw materials are introduced at the start of work in the Cracking Department.The Work in Process T-account for the Cracking Department for a recent month is given below:Work in ProcessCracking Department

Inventory, May 1307,000 Completed and transferred

Materials709,250 to the Blending Department?

Conversion280,600

Inventory, May 31?

The May 1 work in process inventory consisted of 100,000 pounds with $219,000 in materials cost and $88,000 in conversion cost. The May 1 work in process inventory was 100% complete with respect to materials and 80% complete with respect to conversion. During May, 295,000 pounds were started into production. The May 31 inventory consisted of 88,000 pounds that were 100% complete with respect to materials and 70% complete with respect to conversion. The company uses the weighted-average method to account for units and costs.Required:

1.Determine the equivalent units of production for May.

2.Determine the costs per equivalent unit for May.

3.Determine the cost of the units completed and transferred to the Blending Departmentduring May

PROBLEM 416B Cost Flows [LO1]

CHECK FIGURE

(2) Manufacturing overhead: $117,000debit balance

Pure Botanicals, Inc. keeps one of its production facilities busy making a perfume called Lily of the Valley. The perfume goes through two processing departments: Blending and Bottling.

The following incomplete Work in Process account is provided for the Blending Department for March:Work in ProcessBlending

March 1 balance33,500 Completed and transferred

Materials154,600 to Bottling (760,000 ounces)?

Direct labor79,200

Overhead489,000

March 31 balance?

The $33,500 beginning inventory in the Blending Department consisted of the following elements: materials, $8,400; direct labor, $3,300; and overhead applied, $21,800.Costs incurred during March in the Bottling Department were: materials used, $45,000; direct labor, $17,200; and overhead cost applied to production, $110,000.Required:

1.Prepare journal entries to record the costs incurred in both the Blending Department and BottlingDepartment during March. Key your entries to items (a) through (g) below:

a.Raw materials were issued for use in production.

b.Direct labor costs were incurred.

c.Manufacturing overhead costs for the entire factory were incurred, $716,000. (Credit AccountsPayable and use a single Manufacturing Overhead control account for the entire factory.)

d.Manufacturing overhead was applied to production using a predetermined overhead rate.

e.Units that were complete with respect to processing in the Blending Department were transferredto the Bottling Department, $632,000.

f.Units that were complete with respect to processing in the Bottling Department were transferred toFinished Goods, $710,000.

g.Completed units were sold on account for $1,360,000. The cost of goods sold was $640,000.

2.Post the journal entries from (1) above to T-accounts. The following account balances existed at thebeginning of March. (The beginning balance in the Blending Departments Work in Process accountis given above.)

Raw Materials $214,600

Work in ProcessBottling Department$41,000

Finished Goods $14,000

After posting the entries to the T-accounts, find the ending balances in the inventory accounts and theManufacturing Overhead account.

PROBLEM 417B Comprehensive Problem; Second Production DepartmentWeighted-AverageMethod [LO2, LO3, LO4, LO5]

CHECK FIGURE

(3) Ending work in process: $12,410Madison Meats Inc. produces sausages in three production departmentsMixing, Casing andCuring,and Packaging. In the Mixing Department, meats are prepared and ground and then mixed with spices.The spiced meat mixture is then transferred to the Casing and Curing Department, where the mixture isforce-fed into casings and then hung and cured in climate-controlled smoking chambers. In the PackagingDepartment, the cured sausages are sorted, packed, and labeled. The company uses the weighted-averagemethod in its process costing system. Data for April for the Casing and Curing Department follow:Percent Completed

UnitsMixingMaterialsConversion

Work in process inventory, April 15100%60% 50%

Work in process inventory, April 305100%20% 10%

MixingMaterialsConversion

Work in process inventory, April 1$12,270 $100 $1,435

Cost added during April$138,530 $11,185 $74,190

Mixing cost represents the costs of the spiced meat mixture transferred in from the Mixing Department.The spiced meat mixture is processed in the Casing and Curing Department in batches; each unit in theabove table is a batch, and one batch of spiced meat mixture produces a set amount of sausages that arepassed on to the Packaging Department. During April, 60 batches (i.e., units) were completed and transferredto the Packaging Department.

Required:

1.Determine the equivalent units for April for mixing, materials, and conversion. Do not round off yourcomputations.

2.Compute the costs per equivalent unit for April for mixing, materials, and conversion.

3.Determine the total cost of ending work in process inventory and the total cost of units transferred tothe Packaging Department in April.

4.Prepare a cost reconciliation report for the Casing and Curing Department for April.

PROBLEM 418B Interpreting a ReportWeighted-Average Method [LO2, LO3, LO4]

CHECK FIGURE

(2) Conversion: 45,700 equivalent units

Chester Computers, Ltd., located in Bristol, England, assembles a standardized personal computer fromparts it purchases from various suppliers. The production process consists of several steps, starting withassembly of the mother circuit board, which contains the central processing unit. This assembly takesplace in the CPU Assembly Department. The company recently hired a new accountant who prepared thefollowing report for the department for May using the weighted-average method:Units to be accounted for:

Work in process, May 1: materials 90% complete; conversion 80% complete 11,500

Started into production 38,000

Total units 49,500

Units accounted for as follows:

Transferred to next department 41,900

Work in process, May 31: materials 75% complete; conversion 50% complete 7,600

Total units 49,500

Cost Reconciliation

Cost to be accounted for:

Work in process, May 1 35,765

Cost added in the department 129,812

Total cost to be accounted for 165,577

Cost accounted for as follows:

Work in process, May 31 17,670

Transferred to next department 147,907

Total cost accounted for 165,577

The companys management would like some additional information about Mays operation in theCPU Assembly Department. (The currency in England is the pound, which is denoted by the symbol .)

Required:

1.How many units were started and completed during May?

2.What were the equivalent units for May for materials and conversion costs?

3. What were the costs per equivalent unit for May? The following additional data are availableconcerningthe departments costs:MaterialsConversionTotal

Work in process, May 1 23,46012,30535,765

Costs added during May 83,16446,648129,812

4.Verify the accountants ending work in process inventory figure (17,670) given in the report.

5.The new manager of the CPU Assembly Department was asked to estimate the incremental cost ofprocessing an additional 1,000 units through the department. He took the unit cost for an equivalentwhole unit you computed in (3) above and multiplied this figure by 1,000. Will this method yield avalid estimate of incremental cost? Explain.

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4-6Introduction to Managerial Accounting, 6th edition

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Chapter 4Alternate Problems4-1