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Process Costing- Practice Sheet

DEPARTMENT OF ACCOUNTING & INFORMATION SYSTEM DEPARTMENT OF ACCOUNTING & INFORMATION SYSTEM FACULTY OF BUSINESS ADMINISTRATION FACULTY OF BUSINESS ADMINISTRATION JAGANNATH UNIVERSITY JAGANNATH UNIVERSITY

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Practice test 1
The assembly department of Reynolds Electronics begins its process with a circuit board adds some components, performs a test (rejected units at this point are discarded), adds further components, tests the product again (rejected units at this point are returned for rework) and finally adds a cabinet to complete the product. The department began the period with 12,000 units in process 60% completed. An additional 73,000 units were placed into production. The firm ended the period with 8,000 units in process 90% complete. The first inspection (spoilage) occurs when the units are considered 20% complete. Normally, management expects 10% of the units inspected to be discarded. During the current period, 9,000 units were discarded. The second inspection (rework) occurs when the units are 75% complete. Rejected units are returned to be 50% complete point in the process. Management allows for 15% of the units inspected being normal rework. During the period, 95,000 units were inspected for rework. The cost of beginning work-in-process was $50,000 for circuit boards and $70,000 for conversion costs. The costs incurred during the period for circuit boards were $3, 75,000 and conversion costs were $7, 06,625. Required: Using the weighted average costing and FIFO costing Method: (a) Draw a process line for the above case. (b) How many units are completed and transferred out during the period? (c) What percentage of additional work need to be done during rework? (d) What percentage of circuit boards costs incurred during rework? (e) What percentage of labor costs incurred during rework? (f) How many units are inspected during the period? (g) How many units are normal reworks? (h) How many units are normal spoilage? (i) How many units are abnormal rework (abnormal gain)? (j) How many units are abnormal spoilage. (k) How many EU have been worked for spoilage in terms of circuit boards? (l) How many EU have been worked for spoilage in terms of Cc? (m) How many EU have been worked for rework in terms of circuit boards? (n) How many EU have been worked for rework in terms of Cc? (o) Determine the cost of normal rework. (p) Determine the cost of normal spoilage. (q) How many EU of BWIP have been completed last period in terms of circuit boards? (r) How many EU of BWIP have been completed last period in terms of Cc? (s) Determine the cost of goods completed and transferred out during the period (t) Determine the cost of ending work-in-process. (u) Prepare the process account.

Practice test 2
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Selkirk Company makes super-premium cake mixes that goes through two processing departments, Blending and Packaging. Materials are added at the beginning of the blending process and conversion costs are incurred uniformly throughout the process. The following activity was recorded in the Blending Department during July: Units Work in Process 7/1/10 (40% completed) Units started in production Costs for July Work in Process 7/31/10 (60% completed) Required: (a) Prepare a quantity schedule for the process under FIFO costing method. (b) Calculate cost per equivalent unit for each cost components under FIFO costing method. (c) Prepare a cost report for Selkirk Company under FIFO average costing method. 6,000 54,000 10,000 Direct Material Costs $ 1,70,100 $14,51,900 Conversion Costs $ 27,400 $15,07,000

Practice test 3 ABC Company makes super-premium cake mixes that goes through two processing departments, Blending and Packaging. Materials are added at the beginning of the blending process and conversion costs are incurred uniformly throughout the process. The following activity was recorded in the Blending Department during July: Units Work in Process 7/1/12 (50% completed) Units started in production Costs for July Work in Process 7/31/12 (70% completed) Required: (d) Prepare a quantity schedule for the process under weighted costing method. (e) Calculate cost per equivalent unit for each cost components under weighted costing method. (f) Prepare a cost report for Selkirk Company under weighted average costing method. 10,000 50,000 20,000 Direct Material Costs $ 2,70,000 $24,50,000 Conversion Costs $ 87,000 $25,00,000

Practice test 4 XYZ Products manufactures an industrial cleaning compound that goes through three processing departments Grinding, Mixing and Cooking. All raw materials are introduced in the process of Mixing Department when process reached 45% level of work. Labors are paid when the work has been completed by 60% and overheads are incurred uniformly throughout the process. The work in process Taccount for the Mixing Department for a recent month is given below: Work-in-Process (Mixing Department)

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$ Inventory, May 1 (10,000 units 80% completed): May costs added (65,000 units introduced in the process): Direct materials Direct labor Manufacturing overhead Total 34,585 Completed and transferred to Cooking Department (70,000 units) Inventory, May 31 (6,000 units, 80% completed)

$ ?

162,500 111,600 109,650 418,335

418,335

The May 1 work in process inventory consists of $36,000 in materials, $40,000 in labor and $7,000 in overhead costs. The company uses the weighted method to account for units and costs. Required: Prepare a production report for Mixing Department for the month. Practice test 5 Jan Jose of northern Monroe state in Newport makes a unique syrup using cane sugar and local herbs. The syrup is sold in small bottles and is prized as a flavoring for drinks and for use in desserts. The bottles are sold for $35 each. The first stage in the production process is carried out in the Mixing Department, which removes foreign matter from the raw materials and mixes them in the proper proportions in large vats. The company uses the FIFO method in its process costing system. Materials in the department needs to be introduced in several stages, 40% of the total materials are introduced when production has been started, 60% of the total materials are introduced when production has been completed by 70% and the rest 30% of the total material should be introduced at 80% process level. Labor will be paid when work has been done by 40% and overhead costs are incurred uniformly throughout the process. The company uses FIFO method of costing. The following activity was recorded in the Mixing Department during July: Units 30,000 120,000 50,000 DM $25,000 $3,50,000 DL $2,00,000 MOH $15,000 $344,000

Work in Process 7/1/12 (40% completed) Units started in production Costs for July Work in Process 7/31/12 (70% completed)

Required: Prepare a production report for the Mixing Department for the month. Practice test 6 Next Products, Inc. manufactures a cooking compound that goes through three processing stages prior to completion. Information on work in the first department, cooking, is given below for May: Production data:

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Units in process, May 1; 100% complete as to materials and 80% complete as to conversion. 7,500

Units started into production during May Good units completed and transferred out during May Units in process, May 31; 100% complete as to materials and 25% complete as to conversion

67,500 55,500

12,000

Cost data: Work in process inventory, May 1: Materials cost Conversion cost Cost added during May: Materials cost Conversion cost $67,500 60,000 $7,500 6,000

Materials are added at beginning of the cooking process, whereas labor and overhead costs are incurred uniformly. Spoiled units are detected upon inspection at the end of the process (normal spoilage is 5% of units inspected) and are disposed of at zero net disposal value. All completed work is transferred to the next department. The company uses the weighted-average method and FIFO costing method. Required: Prepare a quantity schedule and a computation of equivalent units; Compute the costs per equivalent unit for the month; and prepare cost reconciliation. Practice test 7 The Sporting Bag Company manufactures golf bags in a two-department process: Assembly and Finishing. The Assembly Department uses weighted average costing; the cost driver for overhead in this department is unrelated to direct labor. The Finishing Department adds the hardware to the assembled bags and uses weighted-average method. Overhead is applied to the bags in this department on a direct labor basis. During June, the following production data and costs have been gathered: Assembly Department: Units Beginning work in process

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(100% complete for material; 40% complete for labor; 30% complete for overhead) Units started Ending work in process (100% complete for material; 70% complete for labor; 90% complete for overhead) Assembly Department: Costs Material Beginning inventory Current Totals $ 3,755 100,320 $104,075 Direct Labor $ 690 63,606 $64,296 Overhead $ 250 27,681 $27,931 Total $ 4,695 191,607 $196,302

750 units 25,400 units 1,200 units

Finishing Department: Units Beginning work in process (100% complete for transferred-in; 75% complete for material; 50% complete for conversion) 300 units Units transferred in 25,950 units Ending work in process (100% complete for transferred-in; 80% complete for material; 75% complete for conversion) 600 units Finishing Department: Costs TransferredIn $ 2,176 188,570 $190,746 Direct Material $ 30 15,471 $15,501 Conversion $ 95 21,600 $21,695 Total $ 2,301 225,641 $227,942

Beginning inventory Current Totals Required:

(a) Prepare a cost of production report for the Assembly Department. (b) Prepare a cost of production report for the Finishing Department.

Practice test 8 Acer Co. Ltd. began the current period with 2,000 units, which were 60% complete. During the period, works on additional 1, 00,000 units were started. Materials are added at the start of the process while labor is added when units are 40% complete. Overhead costs are incurred uniformly. Units are inspected for rework when they are 50% complete. Rejected units are returned to 20% complete point for rework. Normal rework is 1% of the units inspected. Units are again inspected when they are 70% complete. Rejected units are thrown away as spoiled. Normal spoilage is 2% of the units inspected. There were 1,04,000 units inspected for rework and 1,600 units were rejected as spoilage. Ending work in process consists of 12,000 units, 80% complete. Costs attached to opening inventory were $75000 for material, $ 63,000 for labor and $1,50,000 for overheads; Current costs were material $12,25,000, labor $7,06,000 and $ 10,00,000 for overhead.

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Required: Using the weighted average costing method and FIFO costing method find out (a) (b) (c) (d) Cost of goods completed Cost of ending work in process Cost of abnormal rework and Cost of abnormal spoilage.

Practice test 9 PQS Company produces outdoor brooms. On April 30, 2012, the firm had 7,200 units in process that were 80% complete as to material, 50% complete as to direct labor, and 30% complete as to overhead. During May, 2, 80,000 brooms were started. Records indicate that 2, 84,000 units were transferred to Finished Goods Inventory in May. Ending units in process were 40% complete as to material, 25% complete as to direct labor, and 10% complete as to overhead. Required: (a) (b) (c) (d) (e) Calculate the physical units to account for in May. How many units were started and completed during May? Determine Mays EUP for each category using the weighted average method. Determine Mays EUP for each category using the FIFO method. Reconcile your answers to parts (c) and (d).

Practice test 10 The Northwest Coal Company mines and processes coal that is sold to four power plants in central Pennsylvania. The company employs a process costing system to assign production costs to the coal it processes. For the third week in March 2011, the firm had a beginning Work in Process Inventory of 1,00,000 tons of ore that were 100% complete as to material and 30% complete as to conversion costs. During the week, an additional 4, 00,000 tons of ore were started in process. At the end of the week, 70,000 tons remained in Work in Process Inventory and were 70% complete as to material and 60% complete as to conversion. For the third week in March: Required: (a) (b) (c) (d) Compute the total units to account for. Determine how many units were started and completed. Determine the equivalent units of production using the weighted average method. Determine the equivalent units of production using the FIFO method.

Practice test 11 Mimi (Mother is My Identity) Products manufactures an electronic language translator. The device can translate seven languages in either direction. Analysis of beginning Work in Process Inventory for February 2012 revealed the following:

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1,600 Units % Complete Material 55 Direct labor 60 Overhead 50 Total beginning WIP

Cost Incurred $ 18,000 13,000 16,000 $47,000

During February, Mimi Products started production of another 8,000 translators and incurred $95,000 for material, $23,000 for direct labor, and $65,000 for overhead. On February 29, the company had 800 units in process (70% complete as to material, 90% complete as to direct labor, and 80% complete as to overhead). Required: Prepare a cost of production report for February using the weighted average method and FIFO method Practice test 12 Melt Enterprises manufactures belt buckles in a single-step production process. To determine the proper valuations for inventory balances and Cost of Goods Sold, you have obtained the following information for August 2011: Whole Units Cost of Material Cost of Labor Beginning work in process 2,00,000 $ 2,00,000 $ 3,15,000 Units started during period 1,000,000 1,300,000 1,995,000 Units transferred to finished goods 9,00,000 Beginning inventory units were 100% complete as to material, but only 80% complete as to labor and overhead. The ending inventory units were 100% complete as to material and 50% complete as to conversion. Overhead is applied to production at the rate of 60% of direct labor cost. Required: (a) Prepare a schedule to compute equivalent units of production by cost component assuming the FIFO method. (b) Determine the unit production costs for material and conversion. (c) Calculate the costs assigned to completed units and ending inventory for August 2011. Practice test 13 The following information has been gathered from the records of Jacks Snacks for August 2011. The firm makes a variety of snacks; the information presented here is for a cashew and dried mango mix. Materials are added at the beginning of processing; overhead is applied on a direct labor basis. The mix is transferred to a second department for packaging. Jacks uses a weighted average process costing system. Beginning WIP inventory (50% complete as to conversion) Mix started in August Ending WIP inventory (80% complete as to conversion) Materials cost incurred in August 10,000 pounds 1,80,000 pounds 8,000 pounds $9,00,000

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Conversion costs incurred in August $200,000 Beginning inventory cost totaled $26,000. For August 2011, compute the following: Required: (a) (b) (c) (d) Equivalent units of production by cost component. Cost per equivalent unit by cost component. Cost of mix transferred to the packaging department in August. Cost of Augusts ending inventory.

Practice test 14 In a single-process production system, the Cleopatra Corporation produces press-on fingernails. For October 2012, the companys accounting records reflected the following: Beginning Work in Process Inventory (100% complete as to material; 40% complete as to direct labor; 70% complete as to overhead) Units started during the month Ending Work in Process Inventory (100% complete as to material; 30% complete as to direct labor; 60% complete as to overhead) Cost Component Material Direct labor Overhead Required: (a) For October, prepare a cost of production report assuming the company uses the weighted average method. (b) For October, prepare a cost of production report assuming the company uses the FIFO method. Practice test 15 You have just been hired as the cost accountant for Sun Valley Micro, a producer of personal computer cases. This position has been vacant for one month. John Amos, manager of the firms tax department, has performed some computations for last months information; however, he confesses to you that he doesnt remember a great deal about cost accounting. In the production process, materials are added at the beginning of production and overhead is applied to each product at the rate of 70 percent of direct labor cost. There was no Finished Goods Inventory at the beginning of July. A review of the firms inventory cost records provides you with the following information: Beginning Inventory $4,000 750 3,000 October $45,000 21,000 33,000 8,000 units 3,000 units 22,000 units

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Units Work in Process 7/1/12 (70% complete as to labor and overhead) Units started in production Costs for July Work in Process 7/31/12 (40% complete as to labor and overhead) 200,000 2,600,000

DM Cost $ 15,00,000 8,850,000

DL Cost $ 4,30,000

6,265,000

8,00,000

At the end of July, the cost of Finished Goods Inventory was determined to be $124,000. Required: (a) Prepare schedules for July 2012, to compute the following: 1. Equivalent units of production using the weighted average method. 2. Unit production costs for material, labor, and overhead. 3. Cost of Goods Sold. (b) Prepare the journal entries to record the July transfer of completed goods and the July cost of goods sold. Practice test 16 Foreign Defense, Inc. is a manufacturer of military equipment. Its Halifax plant manufactures the Interceptor missile under contract to the Canadian government and friendly countries. All Interceptors go through an identical manufacturing process. Every effort is made to ensure that all Interceptors are identical and meet many demanding performances specifications. The product-costing system at the Halifax plant has a single direct cost category (direct materials) and a single indirect cost category (conversion costs). Each Interceptor passes through two departments the Assembly Department and the Testing Department. Direct materials are added at the beginning of the process in Assembly. Conversion costs are added evenly throughout the two departments. When the Assembly Department finishes work on each Interceptor, it is immediately transferred to Testing. Foreign Defense uses the weighted-average method of process costing. Data for the Assembly Department for October 2009 are: Physical units Direct Conversion (missiles) Materials Costs 30 $5,60,000 $2,20,000 70 80 20 $2,000,000 $955,000

Work in process, October 1[Conversion completed 60%] Started during October 2009 Completed during October 2009 Work in process, October 31[Conversion completed 80%] Costs are added during October 2009

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Required: 1. 2. 3. 4. For each cost element, compute equivalent units of work done in October 2009 in the Assembly Department. Show physical units in the first column. For each cost element, calculate cost per equivalent unit of beginning work in process and of work done in October 2009. Summarize the total Assembly Department costs for October 2009, and assign these costs to units completed (and transferred out) and to units in ending work in process using the FIFO method. Prepare a set of summarized journal entries for all October 2009 transactions affecting Work in Process-Assembly. Set up at T-account for Work in Process-Assembly, and post the entries to it.

Practice test 17 [Continuing practice test of 15] Foreign Defense, Inc., as you know, manufactures the Interceptor missile at its Halifax plant. It has two departments-Assembly Department and Testing Department. This problem focuses on the Testing Department. Direct materials are added at the end of the Testing Department. Conversion costs are added evenly during the Testing Departments process. As each unit is completed in Testing, it is immediately transferred to Finished Goods. Global Defense uses the weighted-average method of process costing. Data for the Testing Department for October 2009 are: Physical units Transferred Direct Conversion (missiles) in costs Materials Costs Work in process, October 1[Conversion completed 70%] 30 $985,000 $0 $331,000 Started during October 2009 ? Completed during October 2009 100 Work in process, October 31[Conversion completed 60%] 15 Costs are added during October 2009 $3,192,000 $3,885,000 $1,581,000 Required: 1. 2. Prepare a Production Report for the Testing Department for October 2009. Prepare journal entries for October transfers from the Assembly Department to the Testing Department and from Testing to Finished Goods.

Practice test 18 Star Toys manufactures one type of wooden toy figure. It buys wood as its direct material for the Forming Department of its Fredericton plant. The toys are transferred to the Finishing Department, where they are hand-shaped and metal is added to them. In the Forming Department materials are added at the beginning of the process whereas, direct materials are added when conversion is completed 80% in the Finishing Department. A star toy uses the weighted-average method of process costing. Consider the following data for the Forming Department in April 2011: Physical units Direct Conversion (missiles) Materials Costs

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Work in process, April 1 [Conversion completed 40%] Started during April 2011 Completed during April 2011 Work in process, April 31 [Conversion completed 25%] Costs are added during April 2011 Required: 1. 2.

3000 22000 20000 5000

$75000

$21250

$700000

$425000

Summarize the total Forming Department costs for April 2011, and assign these costs to units completed (and transferred out) and to units in ending work in process using the FIFO method. Prepare a set of summarized journal entries for all April transactions affecting Work in ProcessForming. Set up a T-account for Work in Process-Forming, and post the entries to it.

Given the following information for the Finishing Department Physical units Transferred Direct Conversion (missiles) in costs Materials Costs Work in process, April 1[Conversion completed 60%] 5000 $177500 $0 $72500 Started during April 2009 20000 Completed during April 2009 21000 Work in process, April 31[Conversion completed 30%] 4000 Costs are added during April 2009 $1040000 $231000 $384000 3. 4. Summarize the total Finishing Department costs for April 2011, and assign these costs to units completed (and transferred out) and to units in ending work in process using the FIFO method. Prepare journal entries for April transfers from the Forming Department to the Finishing Department and from the Finishing Department to Finished Goods.

Practice test 19 Same, Inc., manufactures a cooking compound that goes through three processing stages prior to completion. Information on work in the first department, cooking, is given below for July: Production data: Units in process, July 1 (Materials 100% completed, conversion 50% completed) Units started into production during December Units completed and transferred out Units in process, July 31 (Materials 60% completed, conversion 45% completed) Cost data: Work in process inventory, July 1: Materials cost Conversion cost Cost added during July: Materials cost Conversion cost

20,000 4,40,000 4,10,000 ?

$11,50,000 1,38,000 71,72,000 86,71,000

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Materials are added at different stages during the cooking process, whereas labor and overhead costs are incurred uniformly. The company uses the weighted-average method. Required: Prepare a quantity schedule and a computation of equivalent units; Compute the costs per equivalent unit for the month; and prepare cost reconciliation. Practice test 20 Builder Products, Inc., manufactures a caulking compound that goes through three processing stages prior to completion. Information on work in the first department, cooking, is given below for December: Work-in-Process Account $ Balance B/d (15,000 units; full competed as to material and 4/5 completed as to conversion costs) Units started into production during December (1,10,000 units) Costs added during the year: Material Labor Overhead Units completed and transferred out (1,05,000 units) $1,92,000 $ ?

5,71,200 2,87,000 4,11,600 $14,61,800

Balance C/d ( ? units completed; 3/5 completed as to material and 1/5 completed as to conversion costs)

? $14,61,800

Costs details from last month record for the beginning work-in-process are given below: Materials cost Labor cost Overhead cost : $80,000 : $40,000 : $60,000

Materials are added at several stages during the cooking process, whereas labor and overhead costs are incurred uniformly. The company uses the FIFO method. Required: Prepare a quantity schedule and a computation of equivalent units; Compute the costs per equivalent unit for the month; and prepare cost reconciliation. Practice test 21 Paradise Products, Inc., manufactures a cooking compound that goes through three processing stages prior to completion. Information on work in the first department, cooking, is given below for December: Production data: Units in process, December 1; 80% complete as to materials and 60% complete as to conversion. 28,000

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Units started into production during December Units completed and transferred out Units in process, December 31; 80% complete as to materials and 40% complete as to conversion Cost data: Work in process inventory, December 1: Materials cost Conversion cost Cost added during December: Materials cost Conversion cost Materials are added at several stages during the cooking process, whereas incurred uniformly. The company uses the FIFO method. Required:

4,32,000 ? 40,000

$2,15,000 3,25,000 12,12,000 28,68,000 labor and overhead costs are

Prepare a quantity schedule and a computation of equivalent units; Compute the costs per equivalent unit for the month; and prepare cost reconciliation. Practice test 22 Brady Products, Inc., manufactures a caulking compound that goes through three processing stages prior to completion. Information on work in the first department, Pressuring, is given below for March:

Production data: Units in process, March 01 (4/5 completed) Units started into production during March Units completed and transferred out Units in process, March 31 (1/5 completed) Cost data: Work-in-process inventory, March 01 Material Labor Manufacturing overhead Cost added during March Material Labor Manufacturing overhead

25,000 2,00,000 80% of total inputs ?

$66,000 40,000 68,000 $5,70,000 2,87,000 4,11,000

Materials are introduced at the start of cooking process, whereas labor and overhead costs are incurred uniformly. The company uses the weighted-average method. Required: Prepare a production cost report for the month.

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Practice test 23 Deplored Aluminum Inc., manufactures a cooking compound that goes through three processing stages prior to completion. Information on work in the first department, Molding, is given below for December: Production data: Units in process, December 1 (2/5th completed) Units started into production during December Units completed and transferred out Units in process, December 31 (3/5th completed) Cost data: Work in process inventory, December 1: Materials cost Conversion cost Cost added during December: Materials cost Conversion cost

1,500 19,500 ? 2,250

$2,82,000 68,000 32,17,000 22,77,000

Materials are added at the beginning during the cooking process, whereas labor and overhead costs are incurred uniformly. The company uses the FIFO method. Required: (a) Prepare a quantity schedule and a computation of equivalent units. (b) Compute the costs per equivalent unit for the month. (c) Using the data from (a) and (b) above, prepare cost reconciliation.

Practice test 24 Builder Products, Inc., manufactures a caulking compound that goes through three processing stages prior to completion. Information on work in the first department, Shaping, is given below for November: Units Production data: Work in process, November 1 Started into production Completed and transfer out Work in process, November 30 Cost data: Work in process, November 1 Cost added during November: Materials cost Conversion cost 22,000 4,28,000 ? 30,000 Fraction completed Material Conversion Nil 2/7

100%

3/5

$4,500 322,500 206,500

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Materials are added at several stages during the cooking process, whereas labor and overhead costs are incurred uniformly. The company uses the FIFO method. Required: 1. 2. 3. Prepare a quantity schedule and a computation of equivalent units. Compute the costs per equivalent unit for the month. Using the data from (1) and (2) above, prepare cost reconciliation.

Practice test 25 The Mosley Co. Ltd. has two departments and uses a weighted-average process costing system. The following information pertains to department 2 for the month of April 2009. Materials are added at the beginning of the process. Based on the following data prepare a cost of production report for Department 2: a) At March 31, 2009, the work in process inventory in department 2 consisted of 6,000 units which were 50% complete and had been charged $50,000 for department 1 costs, $14,000 for direct materials, and $24,000 for conversion costs in department 2 in the previous period. b) During April, 22,000 units were received from department 1 at a cost of $224,000. c) Department 2 costs during April were $42,000 for materials and $156,000 for conversion costs. d) 16,000 units were completed and transferred to finished goods. e) At the end of April, 10,000 units were still in process in department 2. They were estimated to be 40% complete. In department 2, it is expected that 5% of good output will be spoiled. Inspection takes place at the end of the process. Practice test 26 The Lerado Company uses a process costing system to account for the costs of three production departments (departments I, II, and III). Department II receives units from department I and applies conversion costs evenly throughout the process. When the units are 90% complete, they are inspected and all materials are then added to the good units. department II for the month of November 2009: (a) 2,000 units were in process at the beginning of November 2009. They were estimated to be 40% complete. Costs associated with these units were as follows: Department I costs <<<<<<<<<<<<<<<<.....$10,000 Department II costs (all CC) <<<<<<<<<<<<.......2,000 (b) During November 2009, 35,000 units were received from Dept. 1 at a cost of $210,000. (c) Actual costs incurred by department II during November 2009 were: Materials <<<<<<<<<<<<<<<<<<<<<. $12,000 Conversion costs <<<<<<<<<<<<<<<<...<. 100,000 The following is additional information related to

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(d) During November 2009, 32,000 units were completed and transferred to department III. (e) At the end of November 2009, there were 4,000 units in process, which were estimated to be 60% complete. (f) Assume normal spoilage on 32,000 good units produced, is 1,000 units. Required: Prepare a cost of production report for department II for November 2009 using the weighted-average method, Note: Calculations of unit costs should be rounded to five decimals places. Practice test 27 The Mie forth Co. Ltd. operates under a FIFO process cost system. It has two departments, 1 and 2. In department 2, materials are added at the end of the process, following inspection. Normal spoilage is considered to be 2% of good output. Labor and overhead costs are assumed to apply evenly throughout the process. Inventory at the beginning of the period was one-half complete; ending inventory is twothirds complete. Following are the costs and unit production statistics for the period:

Beginning inventory<<<<<<<<<<<<<<<.. 4,000 units Received from department 1..<<<<<<<<<<<< 16,000 units Completed and transferred to finished goods storeroom<<<.<<<<<<<<<<... 14,000 units Ending inventory<<<<<<<<<<<<<<<<<. 3,000 units

Costs Beginning inventory Current costs

Transferred form Department 1 $6,100 23,900

Materials $7,000

Labor $1,400 12,000

Overhead $550 5,050

Required: Prepare cost of production report for department 2. Practice test 28 Based on the following process line prepare a cost of production report under (a) Weighted average method (b) FIFO method

Units Started 1,30,000 units Direct Material (30%) Direct Material 18,000 (70%) units 60,000 units EWIP Units Completed

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BWIP 24,000 units

Inspection Point

Cost added during the period: DM = $196,350; Cc = $414,300 Practice test 29 Based on the following process line prepare a cost of production report under (a) Weighted average method (b) FIFO method US 44,000 units EWIP Inspection 5,000 units point 2,000 units BWIP Units Completed 39,000 units

0%
DM 50%

20% 30% 40%


DM 30%

60%

75%

90%
DM 20%

100%

Last period costs: TIC = $35,000; DM = $11,200 Cc


3/4th of the defective units identified at the inspection point can be reworked and the other 1/4th should be treated as spoiled units

Cc = $8,880

Note: Total output [F/G+EWIP] is 44,000 units whereas total input was 46,000 units. Therefore, total spoiled units are 2,000 which is 1/4th of total defective units. So total defective units were 8,000 units which indicate 6,000 of the defective units were reworked.

Normal Rework: 3% of units inspected Normal Spoilage: 5% of units inspected Spoiled units can be sold in the market at a salvage value of $2 per unit

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Cost added during the period: TIC = $3,72,500; DM = $1,51,550; Cc = $1,89,570 Practice test 30 Draw a process line for the following case: Materials are added at the beginning of the process, labor are paid when conversion is done by 80% and overhead incurred uniformly throughout the process. BWIP 18,000 units (60% completed); units started during the period 1,20,000; units completed during the period 1,26,000 and EWIP 12,000 units (70% completed).

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Hints: Identify where to put Material, labor and overhead costs and also where is the standing of inputs (BWIP and units started) and outputs (units completed and EWIP). Practice test 31 Calculate number of equivalent units based on the following case: Materials are added at the beginning of the process and conversion costs incurred uniformly throughout the process. BWIP 6,000 units (70% completed); units started during the period 70,000; units completed during the period 64,000 and EWIP 12,000 units (40% completed). Units Ending Started WIP 35,000 0% 6,000 Materials 20% 70% Conversion Costs 3,000 32,000 100% WIP Completed Beginning Units

Quantity Schedule: Weighted Average Outputs Physical flow Equivalent units Materials Conversion FIFO Equivalent units Materials Conversion

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Units completed Ending WIP Total Outputs Total Woks Done Less: Last period works done Current period works done

Practice test 32 Calculate number of equivalent units based on the following case: Materials are added twice in the process. First 70% of the total materials are introduced at the start of the process and the rest 30% are introduced when conversion is done by 60%. Conversion costs incurred uniformly throughout the process. Inspection is done at 50% work level. Units Started 2, 50,000 units EWIP 30,000 units IP NS: 2% of total inputs

BWIP 25,000 units

Units

100%

Completed 2, 20,000 units

0%
DM [70% of total material]

30%

50%

60%

70%

DM [30% of total material] Cc

Quantity Schedule: Weighted Average Outputs Units completed Normal spoilage Abnormal spoilage Ending WIP Total Outputs Total Woks Done Physical flow Equivalent units Materials Conversion FIFO Equivalent units Materials Conversion

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Less: Last period works done Current period works done Practice test 33 Draw a process line and answer the required questions based on the following case: A process has started with 12,000 units of BWIP (80% completed) and new units added in the process during the period totaled 1,44,000. Out of these inputs, 8,000 units (20% completed) remained in the process as EWIP at the end of the period and 3,000 units are found as spoiled units. Materials in the process are added twice, first, 70% of the total materials are introduced at the start of the process and the remaining 25% are added when conversion is done by 60%. Conversion costs are incurred uniformly throughout the process. The process has been inspected twice, one to identify units subject to rework (at 70%) and another to identify spoiled units at 90% work level. At 70%, total 1, 40,000 units were inspected and the units subject to rework have been sent back to 60% work level to do the necessary work. The process expects 2% of units inspected under both the inspection points as normal loss.

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Answer the following questions based on the above case and process line: 1. How many units are completed and transferred out during the period? 2. What percentage of additional work need to be done during rework? 3. What percentage of DM costs incurred during rework? 4. What percentage of labor costs incurred during rework? 5. How many units are inspected at 90% level of inspection? 6. How many units are normal spoilage? 7. How many units are abnormal rework (abnormal gain)? 8. How many EU have been worked for spoilage in terms of DM? 9. How many EU have been worked for spoilage in terms of Cc? 10. How many EU have been worked for rework in terms of DM? 11. How many EU have been worked for rework in terms of Cc? 12. Cost of normal rework should be allocated among ________ (put tick)? : : : : : : : : : :

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13. Cost of normal spoilage should be allocated among _______ (put tick)? 14. How many EU of BWIP have been completed last period in terms of DM? 15. How many EU of BWIP have been completed last period in terms of Cc?

: : :

Here, EU refer Equivalent Units; DM refers to Direct Materials; and Cc refers to Conversion Costs.

Practice test 34 Calculate number of equivalent units based on the following case: Materials are added at the start of the process, labors are paid when conversion is done by 35% and overheads are incurred uniformly throughout the process. Inspection for rework is at 50% work level and the defective units are sent back to 30% level for the additional work. Inspection for spoilage is at 90% level and the company is expecting 5% of the units inspected as normal loss (both normal spoilage and normal rework). BWIP Units Started 70,000 units IP 4,000 units Rework 8,000 units 62,000 units EWIP Units Completed

0%
DM

20% 30% 35%


Direct Labor

50%
Number of units inspected: 76,000 Cc Quantity Schedule:

75%

90% 100%
IP

Spoilage Units inspected: ?

Weighted Average Outputs Units completed Normal Rework Abnormal rework (GAIN) Normal spoilage Abnormal spoilage Ending WIP Physical flow Equivalent units Materials Conversion

FIFO Equivalent units Materials Conversion

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Total Outputs Total Woks Done Less: Last period works done Current period works done Practice test 35 Calculate and allocate the normal rework cost based on the following case: BWIP Units Started 3,000 55,000 units units Rework IP 7,000 units 61,000 units EWIP Units Completed

0%
DM

20% 30% 35%


Direct Labor

50%
Number of units inspected: 60,000

75%

90% 100%
IP Spoilage NS = 1,000 AS = 440

Cc Normal rework and normal spoilage is 3% of units inspected Quantity Schedule

Physical Flow

Equivalent Units (EU) DM DL 1,200 Cost Data :$ $40 :$ $30 $25 MOH 240

Normal rework Cost of Normal rework: Direct material cost Direct labor cost Cost per unit

Manufacturing Overhead cost Total cost of normal rework Allocation of Normal rework to Units completed EWIP

: $______________ :$

:$ :$

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Normal spoilage Abnormal spoilage Total

:$ : $______________ :$

Practice test 36 Calculate and allocate the normal rework and normal spoilage cost based on the following case: BWIP Units Started 9,000 80,000 units units Rework IP 8,000 units 79,000 units EWIP Units Completed

0%
DM

20% 30% 35%


Direct Labor

50%
Number of units inspected: 92,000 Cc

75%

90% 100%
IP Spoilage

Normal rework and normal spoilage is 2% of units inspected Quantity Schedule

Physical Flow

Equivalent Units (EU) DM DL 1,780 1,620 MOH 356 1,458

Normal rework Normal spoilage Cost of Normal rework: Direct material cost Direct labor cost ManufacturingCost per unit Overhead cost Total cost of normal rework Allocation of Normal rework to Units completed EWIP Normal spoilage Abnormal spoilage Total 1,620

1,620

Cost Data :$ :$ $40 : $______________ $30 $25 :$ :$ :$ :$ : $______________ :$

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Cost of Normal Spoilage Direct material cost Direct labor cost Manufacturing Overhead cost (+) Share of normal rework Total cost of normal rework Allocation of Normal rework to Units completed EWIP Total Practice test 37

:$ :$ :$ : $______________ :$ :$ : $______________ :$

The W.L. Smith Machine shop specializes in manufacturing precision parts for jet aircraft. One of the firms major products is a bevel-shaped roller. The firm cuts high-quality stainless steel rods into 1-inch lengths and then lathes a bevel into the middle of the roller. The cutting and machining of the rollers are done on semiautomatic equipment. Although the equipment is capable of producing rollers to the close tolerances demanded by the firms customers. All units produced by the equipment are inspected for conformity to specified dimensions. Units cut to smaller than desired dimensions must be thrown away. Units cut larger than the specification can be machined by hand to the correct dimensions and than returned to the process. The last step in the process is to cut a slit into one end of those rollers meeting specifications. For the current period, the machining department began with 2,000 rollers in process. The units were complete with regard to materials but only 40% complete with regard to conversion costs. Work was begun on another 40,000 rollers during the period. The department ended the period with 1,500 rollers in process, 70% complete with regard to conversion costs and totally complete with regard to materials. The inspection of units is considered the point at which units are 85% complete with regard to conversion costs. Management normally expects 20% of the units inspected to fail to meet specifications. Half of these units can usually be reworked; other half must be discarded. During the period, 4,500 units were discarded and 4,200 units were reworked. The beginning work in process for this department was $4,600 for materials and $2,200 for conversion costs. During the period materials totaling $1, 30,000 were put into process, and conversion costs were $1, 67,000. It cost another $14,000 to operate the rework station. Required: Determine cost of goods completed the cost of ending work-in-process, and gain or loss from abnormal rework and spoilage. Practice test 38 Equivalent Units; Cost ReconciliationWeighted Average Method Martin Company manufactures a single product. The company uses the weighted-average method in its process costing system. Activity for June has just been completed. An incomplete production report for the first processing department follows: Quantity Schedule and Equivalent Units Quantity Schedule

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Units to be accounted for: Work in process, June 1 (materials 80% complete; labor and overhead 60% complete) ..................................................................................................................... 10,000 Started into production ................................................................................................. 64,000 Total units........................................................................................................................... 74,000 Equivalent units (EU) Materials Labor Overhead Units accounted for as follows: Transferred to the next department68,000 ............................................................................ ? ? ? Work in process, June 30 (materials 50% complete, labor and overhead 20% complete) ..................................................................................................................... 6,000 ? ? ? Total units........................................................................................................................... 74,000 ? ? ? Cost per Equivalent Unit Materials Labor Overhead Cost to be accounted for: Work in process, June 1 ................................................................................................ $ 11,900 $ 6,800 $ 2,100 $ 3,000 Cost added by the department .................................................................................... 107,270 53,550 22,120 31,600 Total cost (a) ....................................................................................................................... $119,170 $60,350 $24,220 $34,600 Equivalent units (b) ........................................................................................................... 71,000 69,200 69,200 Cost per EU, (a) (b) ......................................................................................................... = $1.70 $0.85 + $0.35 + $0.50 Cost Reconciliation Total Cost Cost accounted for as follows: ? ? Required: 1. Prepare a schedule showing how the equivalent units were computed for the first processing department. 1. Complete the Cost Reconciliation part of the production report for the first processing department. Practice test 39 Interpreting A Production ReportWeighted-Average Method Cooperative San Jos of southern Sonora State in Mexico makes a unique syrup using cane sugar and local herbs. The syrup is sold in small bottles and is prized as a flavoring for drinks and for use in desserts. The bottles are sold for $11.00 each. (The Mexican currency is the peso and is denoted by $.) The first stage in the production process is carried out in the Mixing Department, which removes foreign matter from the raw materials and mixes them in the proper proportions in large vats. The company uses the weightedaverage method in its process costing system. A hastily prepared report for the Mixing Department for April appears below: Total Cost Whole Unit

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Quantity Schedule Units to be accounted for: Work in process, April 1 (materials 100% complete; conversion 95% complete) ...................................................................... 11,000 Started into production ................................................................................................. 150,000 Total units ....................................................................................................................... 161,000 Units accounted for as follows: Transferred to the next department ............................................................................ 155,000 Work in process, April 30 (materials 100% complete, conversion 30% complete) ...................................................................... 6,000 Total units ....................................................................................................................... 161,000 Total Cost Cost to be accounted for: Work in process, April 1 ............................................................................................... $ 22,810 Cost added during the month ...................................................................................... 599,000 Total cost ......................................................................................................................... $621,810 Cost Reconciliation Cost accounted for as follows: Transferred to the next department ............................................................................ $604,500 Work in process, April 30 ............................................................................................. 17,310 Total cost ......................................................................................................................... $621,810 Co-operative San Jos has just been acquired by another company, and the management of the acquiring company wants some additional information about its operations. Required: 1. What were the equivalent units for the month? 2. What were the costs per equivalent unit for the month? The beginning inventory consisted of the following costs: materials, $19,450; and conversion cost, $3,360. The costs added during the month consisted of: materials, $375,000; and conversion cost, $224,000. 3. How many of the units transferred to the next department were started and completed during the month? 4. The manager of the Mixing Department, anxious to make a good impression on the new owner, stated, Materials prices jumped from about $1.80 per unit in October to $2.50 per unit in April, but due to good cost control I was able to hold our materials cost to less than $2.50 per unit for the month. Should this manager be rewarded for good cost control? Explain. Practice test 40 Production ReportWeighted-Average Method Sunspot Beverages, Ltd. of Fiji makes blended tropical fruit drinks in two stages. Fruit juices are extracted from fresh fruits and blended in the Blending Department. The blended juices are then bottled and packed for shipping in the Bottling Department. The following information pertains to the operations of the Blending Department for June. (The currency in Fiji is the Fijian dollar.) Percent Completed Units Materials Conversion

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Work in process, beginning ............................................................................................. 30,000 100% 80% Started into production .................................................................................................... 250,000 Completed and transferred out ....................................................................................... 260,000 Work in process, ending ................................................................................................... 20,000 100% 45% Cost in the beginning work in process inventory and cost added during June were as follows for the Blending Department: Materials Conversion Work in process, beginning ............................................................................................. $ 12,000 $10,800 Cost added during June ................................................................................................... 128,000 83,350 Required: Prepare a production report for the Blending Department for June assuming that the company uses the weighted-average method. Practice test 41 Step-By-Step Production ReportWeighted-Average Method Builder Products, Inc., manufactures a caulking compound that goes through three processing stages prior to completion. Information on work in the first department, Cooking, is given below for May: Production data: Units in process, May 1 (materials 95% complete; labor and overhead 65% complete) ................................................................................... 5,000 Units started into production during May ................................................................. 80,000 Units completed and transferred out .......................................................................... 70,000 Units in process, May 31 (materials 80% complete; labor and overhead 50% complete) ................................................................................... ? Cost data: Work in process inventory, May 1: Materials cost ............................................................................................................. $ 3,420 Labor cost ................................................................................................................... 3,710 Overhead cost ............................................................................................................ 2,760 Cost added during May: Materials cost ............................................................................................................. 57,260 Labor cost ................................................................................................................... 83,090 Overhead cost ............................................................................................................ 65,440 Materials are added at several stages during the cooking process, whereas labor and overhead costs are incurred uniformly. The company uses the weighted-average method. Required: Prepare a production report for the Cooking Department for May. Use the following three steps in preparing your report: 1. Prepare a quantity schedule and a computation of equivalent units. 2. Compute the costs per equivalent unit for the month. 3. Using the data from (1) and (2) above, prepare a cost reconciliation.

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Practice test 42 Weston Products manufactures an industrial cleaning compound that goes through three processing departmentsGrinding, Mixing, and Cooking. All raw materials are introduced at the start of work in the Grinding Department, with conversion costs being incurred evenly throughout the grinding process. The Work in Process T-account for the Grinding Department for a recent month is given below: Work in ProcessGrinding Department Inventory, May 1 (24,000 units, 3/4 Completed and transferred to processed) 47,750 mixing ( ? units) ? May costs added: Raw material (230,000 units)298,567 Labor and overhead 211,348 Inventory, May 31 (26,000 units, 1/4 processed) ? The May 1 work in process inventory consists of $31,633 in materials cost and $16,117 in labor and overhead cost. The company uses the weighted-average method to account for units and costs. Required: 1. Prepare a production report for the Grinding Department for the month. 2. What criticism can be made of the unit costs that you have computed on your production report? Practice test 43 You are employed by Spirit Company, a manufacturer of digital watches. The companys chief financial officer is trying to verify the accuracy of the ending work in process and finished goods inventories prior to closing the books for the year. You have been asked to assist in this verification. The year-end balances shown on Spirit Companys books are as follows: Units Costs Work in process, December 31 (labor and overhead 30% complete) ....................................................................................... 40,000 $82,500 Finished goods, December 31 .......................................................................................... 55,000 $186,000 Materials are added to production at the beginning of the manufacturing process, and overhead is applied to each product at the rate of 50% of direct labor cost. There was no finished goods inventory at the beginning of the year. A review of Spirit Companys inventory and cost records has disclosed the following data, all of which are accurate: Costs Units Materials Labor Work in process, January 1 (labor and overhead 90% complete) ............................................................................................... 35,000 $53,900 $29,610 Units started into production .......................................................................................... 119,000 Cost added during the year: Materials cost ................................................................................................................. $229,460 Labor cost........................................................................................................................ $93,870 Units completed during the year .................................................................................... 114,000 The company uses the weighted-average cost method. Required:

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1. Determine the equivalent units and costs per equivalent unit for materials, labor, and overhead for the year. 2. Determine the amount of cost that should be assigned to the ending work in process and finished goods inventories. 3. Prepare the necessary correcting journal entry to adjust the work in process and finished goods inventories to the correct balances as of December 31. 4. Determine the cost of goods sold for the year assuming there is no under- or over-applied overhead. Practice test 44 Comprehensive Process Costing ProblemWeighted-Average Method Lubricants, Inc., produces a special kind of grease that is widely used by racecar drivers. The grease is produced in two processes: refining and blending. Raw materials are introduced at various points in the Refining Department; labor and overhead costs are incurred evenly throughout the refining operation. The refined output is then transferred to the Blending Department. The following incomplete Work in Process account has been provided for the Refining Department for March: Work in Process Refining Department March 1 inventory (180,000 gallons; materials 100% complete; labor and Completed and transferred to overhead 45% complete) 281,970 Blending ( ? gallons) ? March costs added: Raw materials (900,000 gallons) 814,380 Direct labor 976,500 Overhead 347,430 March 31 inventory (120,000; materials 90% complete; labor and overhead 50% complete) ? The March 1 work in process inventory in the Refining Department consists of the following cost elements: raw materials, $157,500; direct labor, $94,500; and overhead, $29,970. Costs incurred during March in the Blending Department were: materials used, $340,000; direct labor, $410,000; and overhead cost applied to production, $270,000. The company accounts for units and costs using the weighted-average method. Required: 1. Prepare journal entries to record the costs incurred in both the Refining Department and Blending Department during March. Key your entries to the 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, $650,000. (Credit Accounts Payable.) d. Manufacturing overhead cost was applied to production using a predetermined overhead rate. e. Units that were complete as to processing in the Refining Department were transferred to the Blending Department, $2,236,800.

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f. Units that were complete as to processing in the Blending Department were transferred to Finished Goods, $3,190,000. g. Completed units were sold on account, $3,900,000. The Cost of Good Sold was $3,000,000. 2. Post the journal entries from (1) above to T-accounts. The following account balances existed at the beginning of March. (The beginning balance in the Refining Departments Work in Process account is given above.) Raw Materials ..................................................................................................................... $1,260,000 Work in ProcessBlending Department ........................................................................ 65,000 Finished Goods ................................................................................................................... 310,000 After posting the entries to the T-accounts, find the ending balance in the inventory accounts and the manufacturing overhead accounts. 3. Prepare a production report for the Refining Department for March. Practice test 45 Hilox, Inc., produces a hot sauce that goes through two departmentsCooking and Bottling. The company has recently hired a new assistant accountant, who has prepared the following summary of production and costs for the Cooking Department for May using the weighted-average method. Cooking Department costs: Work in process inventory, May 1: 43,000 quarts, materials 90% complete and labor and overhead 75% complete .................................................. $ 68,570 * Materials added during May ....................................................................................... 73,700 Labor added during May ............................................................................................. 33,580 Overhead applied during May .................................................................................... 16,150 Total departmental costs............................................................................................... $192,000 Cooking Department costs assigned to: Quarts completed and transferred to the Bottling Department: 100,000 quarts at ? per quart ............................................................................ $ ? Work in process inventory, May 31: 10,000 quarts, materials 50% complete and labor and overhead 20% complete .......................................... ? Total departmental costs assigned .............................................................................. $ ? *Consists of materials, $41,800; labor, $17,420; and overhead, $9,350. The new assistant accountant has determined the cost per quart transferred to be $1.920 as follows: Total departmental costs $192,000 = = $1.920 per quart Quarts completed and transferred 100,000 quarts However, the assistant accountant is unsure how to use this unit cost figure in assigning cost to the ending work in process inventory. In addition, the companys general ledger shows only $185,000 in cost transferred from the Cooking Department to the Bottling Department, which does not agree with the $192,000 figure above. The general ledger also shows the following costs incurred in the Bottling Department during May: materials used, $122,000; direct labor cost incurred, $61,000; and overhead cost applied to products, $35,000.

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Required: 1. Prepare journal entries as follows to record activity in the company during May. Key your entries to the letters (a) through (g) below. a. Raw materials were issued to the two departments for use in production. b. Direct labor costs were incurred in the two departments. c. Manufacturing overhead costs were incurred, $50,050. (Credit Accounts Payable.) The company maintains a single Manufacturing Overhead account for the entire plant. d. Manufacturing overhead cost was applied to production in each department using predetermined overhead rates. e. Units completed as to processing in the Cooking Department were transferred to the Bottling Department, $185,000. f. Units completed as to processing in the Bottling Department were transferred to Finished Goods, $410,000. g. Units were sold on account, $550,000. The Cost of Good Sold was $403,000. 2. Post the journal entries from (1) above to T-accounts. Balances in selected accounts on May 1 are given below:

Raw Materials..................................................................................................................... $217,000 Work in ProcessBottling Department ......................................................................... 42,000 Finished Goods .................................................................................................................. 7,000 After posting the entries to the T-accounts, find the ending balance in the inventory accounts and the Manufacturing Overhead accounts. 3. Prepare a production report for the Cooking Department for May. Practice test 46 ABC Home Paint Company produces exterior latex paint, which it sells in one- gallon containers. The company has two processing departments- Mixing and Finishing. White paint, which is used as a mixing for all the company paints, is mixed from raw ingredients in the Mixing Departments. Pigments are then added to the basic white paints, the pigments is squirted under pressured into one- gallon containers, and the containers labeled and packed for shipping in the finishing department. Information relating to the companys operations for April Follows: a. Raw Material was issued for the use in production: Mixing Department $8, 51,000; and Finishing Department $6, 29,000. b. Direct Labor costs were incurred: Mixing Department$3, 30,000; and Finishing Department $2, 70,000. c. Manufacturing Overhead cost was applied: Mixing Department$6, 65,000; and Finishing Department $4, 05,000. d. Basic white paint was transferred from the Mixing Department to Finishing Department $18, 50,000. e. Paint that has been prepared for shipping was transferred from the Finishing Department to finished goods $32, 00,000. Required: 1. Prepare the necessary Journal entries to record items (a) through (e) above. 2. Post the Journal entries from requirement (1) above to T Accounts. The balance in the Mixing Departments Work In Process account On April 1 was $1, 50,000; and the balance in the Finishing

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Departments Work in Process account was $70,000. After posting entries to the T Accounts , Find the ending balance in the each departments Work In Process account 3. Prepare a Production Report for the Mixing Department for April. The following additional information is available regarding production in the Mixing Department during April. Production Data: Units (gallons) in Process, April 1: Material 100% complete; Labor and Overhead 60% complete. 30,000. Units (gallons) Started into production during April 4, 20,000 Units (gallons) completed and transferred to the finishing department 3, 70,000 Units (gallons) in process, April 30: Material 50% complete Labor and Overhead 25% complete. 80,000 Costs Data: Work in Process inventory, April 1: Material $92,000 Labor 21,000 Overhead 37,000 --------------------Total costs of Work in Process $1,50,000 ============= Costs Added during April : Material $8,51,000 Labor 3,30,000 Overhead 6,65,,000 --------------------Total costs added during April $18,46,000 =========== Practice test 47 Berger Paint Company produces exterior latex paint, which it sells in one- gallon containers. The company has two processing departments- Mixing and Finishing. White paint, which is used as a mixing for all the company paints, is mixed from Raw ingredients in the Mixing Departments. Pigments are then added to the basic white paints, the pigments is squirted under pressured into one- gallon containers, and the containers labeled and packed for shipping in the finishing department. Information relating to the companys operations for April Follows: f. Raw Material was issued for the use in production: Mixing Department $17, 02,000; and Finishing Department $12, 58,000. g. Direct Labor costs were incurred: Mixing Department$6, 60,000; and Finishing Department $5, 40,000. h. Manufacturing Overhead cost was applied: Mixing Department$13, 30,000; and Finishing Department $8,10,000. i. Basic white paint was transferred from the Mixing Department to Finishing Department $37, 00,000. j. Paint that have been prepared for shipping was transferred from the Finishing Department to Finished goods $64, 00,000. Required: 1. Prepare the necessary Journal entries to record items (a) through (e) above.

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2.

3.

Post the Journal entries from requirement (1) above to T Accounts. The balance in the Mixing Departments Work In Process account On April 1 was $3, 00,000; and the balance in the Finishing Departments Work in Process account was $1,40,000. After posting entries to the T Accounts , Find the ending balance in the each departments Work In Process account Prepare a Production Report for the Mixing Department for April. The following additional information is available regarding production in the Mixing Department during April. Production Data: Units (gallons) in Process, April 1: Material 100% complete; Labor and Overhead 60% complete. 60,000. Units (gallons) Started into production during April 8, 40,000 Units (gallons) completed and transferred to the finishing department 7,4 0,000 Units (gallons) in process, April 30: Material 50% complete Labor and Overhead 25% complete. 1, 60,000 Costs Data: Work in Process inventory, April 1: Material $1, 84,000 Labor 42,000 Overhead 74,000 --------------------Total costs of Work in Process $3, 00,000 ============= Costs Added during April: Material Labor Overhead Total costs added during April $17, 02,000 6, 60,000 13, 30, 000 --------------------$36, 92,000 ===========

Practice test 48 Wang Manufacturing Company uses the weighted average method of process costing. All direct materials are added at the beginning of the process and conversion costs are added evenly during the process. Spoiled units are detected upon inspection at the end of the process and are disposed of at zero net disposal value The following information pertains to the Mixing Department for March 2009: Units Work in process, March 1 (100% complete, materials; (60% complete, conversion) .............................................. Started during March, 2009.................................................... Work in process, March 31 (100% complete, materials; (75% complete, conversion) ..............................................

30,000 50,000

32,000

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Good units completed and transferred out during March, 2009-------- 40,000 Normal Spoilage-----------------------------------------------6,000 units Abnormal spoilage---------------------------------------------2,000 units The costs of work in process at March 1 for the Mixing Department were as follows: Mixing Department Work in process, September 1: Materials ......................................................................... 2, 40,000 $ Conversion costs ............................................................ 1, 80,000 ---------------------------------------------------------------------------------------------Total ............................................................................ $3, 20,000 Costs added by the Mixing Department during March were as follows: Mixing Department Materials .................................................................... 4, 20,000 $ Conversion costs ............................................................ 5, 83,200 ---------------------------------------------------------------------------------------------Total costs added ................................................. $10, 03,200 Using the Weighted average costing method and FIFO Method Required: 1. 2. 3. For each cost category, compute equivalent units. Show physical units in the first column of your schedule. For each cost category , calculate cost per equivalent unit Summarize total costs to account for and assign these costs to completed and transferred out (including Normal Spoilage ) to Abnormal spoilage and to units in ending work in process.

Practice test 49 The Jones Company manufactures medicated shampoo. It passes through two processes: (1) mixing, where ingredients are added and blended together, and (2) packaging, where the shampoo is put into bottles and packed for shipment. The following information pertains to the Mixing Department for September 2009: Units (Pounds) Work in process, September 1 (80% complete, materials; (70% complete, labor and overhead) ............................... Started during September ...................................................... Work in process, September 30

10,000 120,000

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(60% complete, materials; (40% complete, labor and overhead) ...............................

12,000

The costs of work in process at September 1 for the Mixing Department were as follows: Mixing Department Work in process, September 1: Materials ......................................................................... Direct labor ..................................................................... Overhead ........................................................................ Total ............................................................................ $ 60,000 40,000 25,000 $125,000

Costs added by the Mixing Department during September were as follows: Mixing Department Materials .................................................................... Direct labor ................................................................ Overhead ................................................................... Total costs added ................................................. Using the weighted average costing method Required: Prepare a production report. Practice test 50 The following information is obtained in respect of Process 3 for the month of November: Work in process, November 1 1,000 units $ 880,000 520,500 208,600 $1,609,100

The costs of work in process at November were as follows: Work in process, November 1: Materials (1).................................................................... Materials (2) .................................................................. Direct labor ..................................................................... Overhead ........................................................................ Total ............................................................................

$ 3,900 $ 750 1,120 1180 $

Process 2 transfers: 6,000 units at$23,600; transfer to process 4: 4,700 units Direct materials add in process $5,200 Direct labor employed Production overhead absorbed Units scraped Degree of completion: Direct materials 100% $10,360 $15,410 300 units

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Direct labor Overhead

80% 60%

Work in process, November 30 (60% complete, materials; 50% complete, labor and overhead 40%) ------- 2,000 units. Normal loss: 5% of production; Units scrapped realized $2 each Required: 1. 2. 3. 4. Statement of Equivalent production Statement of cost Statement of Equivalent Process 3 account

THE END

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