Solution manual cost and managerial accounting 3rd by barfield process costing

Chapter 6
Process Costing
Questions
1.

A company that produces homogeneous goods in mass quantities
is likely to use a process costing system. The company can
either have a single department or multiple departments.

2.

In any costing system, the assignment of costs to units of
product is essentially an averaging process because total
costs incurred must be applied to the units that have been
produced. This is done by dividing cost by production, which
produces an "average" cost per unit.

3.

Job order costing and process costing are similar in that they
are both methods of assigning costs to products. Also, the
methods use similar product accounts (raw materials, work in
process, finished goods, cost of goods sold) to capture the
costs associated with production and use similar cost pools
(DM, DL, OH).
Job order costing and process costing differ in the way
in which costs are gathered. In a job order costing system,
costs are accumulated by department and by job; in a process
costing system, costs are accumulated by production
departments for the products that flow through those
departments. In process costing, production must be

determined on the basis of equivalent units to properly
allocate the costs associated with each cost component to the
work that was completed during the period and to the work that
is still in process at the end of the period. Equivalent
units of production are unnecessary in job order costing.

4.

Equivalent units of production is an approach to put partially
completed and wholly completed units on a comparable basis.
Without use of equivalent units, partially completed and fully
completed units would be combined as if they were homogeneous
measures of output. This would result in meaningless data
since fully and partially completed units are different
outputs.

137


138
5.

Chapter 6
Process Costing
The only difference between weighted average and FIFO
equivalent units of production is in the treatment of the work
that was completed on beginning inventory in the prior period.
Under weighted average, the work performed on beginning
inventory in the prior period is combined with the work
performed during the current period. Under FIFO, the work

performed on beginning inventory during the prior period is
held out separately and not commingled with the work performed
during the current period.
The FIFO method more accurately portrays the actual
physical flow of units through the manufacturing process,
because it is most likely that the units in beginning
inventory will be the first units to be completed during the
current period - thus a first-in, first-out flow.

6.

It is necessary to prepare separate equivalent units of
production schedules for each cost component because each
component will most likely have a different degree of
completion at the end of the period. This is because all
production components are not placed into production
simultaneously.
If the cost components do have the same degree of
completion, then it is not necessary to prepare separate EUP
schedules. This is often the case with labor and overhead
which may be combined into an EUP schedule labeled
"Conversion."

7.

The units "started and completed" in a period are calculated
as the total units completed during the period minus the units
that were in the beginning inventory. This figure can be used
in both the weighted average and FIFO methods shown in the
chapter. (There are, however, other methods of computing EUP

in which the units started and completed are not shown
separately.) This calculation is not necessary for the
weighted average method because work performed on the current
period’s beginning inventory in the prior period need not be
separated from work performed to complete the beginning
inventory in the current period. This calculation is
necessary for the FIFO method because work in the prior period
cannot be commingled with work performed in the current
period.

8.

Whole units are used in steps 1 and 2 - the units to account
for and the units accounted for. Equivalent units are used in
steps 3, 5, and 6 - the computation of EUP, the determination
of cost per EUP, and the assignment of cost to inventories at
the end of the period. The only step in which neither is used
is step 4. In this step, total costs are computed and no
physical measurement is required.


9.

a.

b.

Chapter 6
139
Process Costing

Under weighted average, costs are assigned to ending
inventory by multiplying the cost per EUP for each cost
component times the EUP calculated for that component;
these costs are then totaled. Costs are assigned to the
units completed/transferred out by multiplying the total
cost per EUP times the number of units that have been
completed/transferred out during the period.
The cost assigned to ending inventory is handled the same
way for FIFO as for weighted average. In determining the
cost of the units completed/transferred out, however, the
cost of completing the beginning inventory must first be
determined by multiplying the equivalent units of
production performed this period for each cost component
times the cost per EUP for each cost component. The cost
of completing the beginning inventory is then added to
the original beginning inventory cost to find the total
cost of producing the beginning inventory units. The
cost of the units started and completed in the current
period is found by multiplying the total cost per EUP
times the number of units started and completed this
period. Adding the total cost of producing beginning
inventory to the cost of the units started and completed
will give the total cost transferred out of the
department during the period.

10.

The cost of production report is prepared for each department
or each process and accounts for the costs that have been
incurred during the period. It assigns these costs either to

the ending WIP or to the goods that have been transferred out
to either the next downstream department or to the finished
goods inventory. These reports assist accountants in making
entries regarding inventory amounts, cost of goods
manufactured, and cost of goods sold.

11.

The computation is correct, fast, and easy. However, the risk
of making such a computation is that a mistake in computing
the cost of the ending work in process will result in an
incorrect cost of goods transferred out.

12.

Multiple computations are required under FIFO because the
beginning WIP inventory is valued at a different unit cost for
each cost pool than the current period’s unit costs. This
difference requires separate lines for the cost of the
beginning inventory when the period began, the cost of
completing that beginning inventory, and the cost of goods
started and completed during the current period.


140
13.

Chapter 6
Process Costing
The only difference between process costing in a

multidepartment environment and a single department
environment is that there will be a cost component labeled
"Transferred In." The costs of previous departments must
follow the flow of goods into successor departments to
determine the full cost of production.

14.

The standard process costing and FIFO process costing
equivalent units of production are the same because standard
process costing requires a comparison of the actual cost of
the period to the standard cost of the period to compute
variances. Since it is only the costs of the current period
that are of concern to the cost accountant, the costs of the
prior period cannot be commingled with current costs. The
separation of prior and current period costs (and units) is
the FIFO method of process costing.

15.

Under a standard costing system, the Material, In-Process, and
Finished Goods Inventory accounts are accounted for at
standard costs. The actual costs of each process or each
department are also captured in a standard costing system and
variances can be computed as differences between the standard
and actual amounts for each cost component. The variances
provide information to management about the efficiency of
operations because the variances reflect differences between
expected (standard) and actual costs.

16.

A hybrid costing system is one in which process costing is
used to account for certain product costs and job order
costing is used to account for other product costs. Hybrid
costing is common in environments that have, for example,
material costs that vary substantially from one production run
to another (gold versus copper), but require all products to
flow through the same physical conversion processes. In this
example, the material would be accounted for on a job order
basis and the conversion would be accounted for using process
costing.

17.

No solution provided.

Exercises
18.

a.,b. Beginning inventory
260,000
Started
30,000
To account for
290,000

Beginning inventory
Started & completed
Ending inventory

Equivalent units

120,000

Completed and transferred

170,000

Ending inventory

290,000

Accounted for

Units
120,000
140,000
30,000

DM
120,000
140,000
30,000
290,000

CC
120,000
140,000
7,500
267,500

Chapter 6
Process Costing

141


Chapter 6
Process Costing

142
19.

a.,b

Beginning inventory
Started
To account for

120,000
170,000
290,000

Units
120,000
140,000
30,000

Beginning WIP completed

Started & completed
Ending inventory
Equivalent units
20.

a.

Completed & transferred
Ending inventory
Accounted for

Beginning inventory
Started
To account for

DM
0
140,000
30,000
170,000

260,000
30,000
290,000

CC
36,000
140,000
7,500
183,500

75,000
250,000
325,000

S&C = 325,000 – 75,000 – 30,000 = 220,000
Units
75,000
220,000
30,000

DM
75,000
220,000
30,000
325,000

DL
75,000
220,000
12,000
307,000

OH
75,000
220,000
18,000
313,000

Units

75,000
220,000
30,000

DM
0
220,000
30,000
250,000

DL
30,000
220,000
12,000
262,000

OH
18,750
220,000
18,000
256,750

Beginning inventory
Started & completed
Ending inventory
Equivalent units
b.
Beginning inventory
Started & completed
Ending inventory

Equivalent units
c.

21.

Equivalent units (WA)
EUPs - Beginning WIP
Equivalent units (FIFO)

325,000
(75,000)
250,000

307,000 313,000
(45,000) (56,250)
262,000 256,750

Material
Direct Labor
Beginning inventory
$14,920
$ 36,200
Current period
78,880
79,800*
Total costs
$93,800
$116,000
Divided by EUP
26,800

24,400
Cost per EUP
$3.50
$4.75
*Direct Labor = Conversion Cost - Overhead
= $122,400 - $42,600 = $79,800

22.
EUPs - (WA)
EUPs - Beginning WIP
EUPs - (FIFO)

Material
26,800
(3,600)
23,200

Current period cost
Divided by EUP
Cost per EUP

$78,880
23,200
$3.40

Direct Labor
24,400
(4,000)
20,400
$79,800

20,400
$3.91

Overhead
$ 9,900
42,600
$52,500
21,000
$2.50

Overhead
21,000
(3,960)
17,040
$42,600
17,040
$2.50


23.

a.
Beginning WIP
Current period
Total
b.

c.

d.

Chapter 6
Process Costing
DM
DL
$ 4,900 $ 1,580
13,500
8,680
$18,400 $10,260

143
OH
$ 2,505
21,120
$23,625

Total
$ 8,985
43,300
$52,285

Total costs
EUPs - (WA)
Cost per EUP

$18,400
40,000
$0.46

$10,260

38,000
$0.27

$23,625
37,500
$0.63

$52,285

Current costs
EUPs - (FIFO)
Cost per EUP

$13,500
30,000
$0.45

$ 8,680
31,000
$0.28

$21,120
33,000
$0.64

$43,300

EUPs - (WA)
EUPs - (FIFO)
EUPs - Beginning WIP

Percent complete

24.
Beginning inventory
Units started
Units to account for

40,000
30,000
10,000
100%
Units
5,800
22,500
28,300

38,000
31,000
7,000
70%

$1.36

$1.37

37,500
33,000
4,500
45%

Completed & transferred
Ending inventory
Accounted for

25,700
2,600
28,300

S&C = 25,700 – 5,800 = 19,900
Beginning WIP
Started & completed
EI
EUPs -(WA)

Canisters
5,800
19,900
2,600
28,300

Other
Materials
5,800
19,900
780
26,480

DL
5,800
19,900

650
26,350

OH
5,800
19,900
260
25,960

Costs to account for:
Canisters
Beginning WIP
$10,382
Current
40,558
Total costs
$50,940

Other
Materials
DL
$ 5,008 $ 4,063
20,148
61,812
$25,156 $65,875

OH
Total
$ 1,038 $ 20,491
46,988 169,506

$48,026 $189,997

Cost per EUP:

Other
Materials
DL
$25,156 $65,875
26,480
26,350
$0.95
$2.50

OH
Total
$48,026 $189,997
25,960
$1.85
$7.10

Total costs
EUPs
Cost per EUP

Canisters
$50,940
28,300
$1.80

Chapter 6
Process Costing

144
25.

a.
Beginning inventory
Units started
Units to account for

Units
1,000
3,800
4,800

Beginning inventory completed
Units started & completed
Total units completed
Ending inventory
Units accounted for

1,000
3,000
4,000
800
4,800
Material
300
3,000

320
3,620

Complete units in BI
Units started & completed
Equivalent units in EI
EUP (FIFO)
b.
Current costs
EUP (FIFO)
Cost per EUP
26.

27.

Materials
$66,970
3,620
$18.50

Conversion
$29,040
3,630
$8.00

Conversion
150
3,000
480
3,630

Total
$96,010
$26.50

a.

260,000 × ($3.75 + $4.50 + $5.10) = 260,000 × $13.35
= $3,471,000

b.

DM: $3.75 × (37,000 × 100%)
DL: $4.50 × (37,000 × 80%)
OH: $5.10 × (37,000 × 95%)
Total

c.

Cost of goods transferred
Ending WIP
Total

a.

Because RM are added at the start of processing, all
units in BI are fully complete as to RM. Thus, the
number of units is equal to the number of EUP.
Materials: 27,000 ÷ 27,000 = 100%
Packaging: 0 ÷ 27,000 =
0%

Labor: 14,850 ÷ 27,000 =
55%
Overhead: 18,900 ÷ 27,000 =
70%

$138,750
133,200
179,265
$451,215

$3,471,000
451,215
$3,922,215


Chapter 6
Process Costing
b.

Beginning WIP
Materials
Labor
Overhead

$344,520
95,931
72,954

Complete Beginning
Packaging $1.50

Labor
$6.42
Overhead
$3.87
Total

28.

145

WIP
(27,000 × 100%)
(27,000 × 45%)
(27,000 × 30%)

$513,405
$ 40,500
78,003
31,347

149,850
$663,255

c.

S&C = 185,000 – 27,000 = 158,000
Total EUP cost = $12.75 + $1.50 + $6.42 + $3.87 = $24.54
Cost of units S&C = 158,000 × $24.54 = $3,877,320

d.

Materials ($12.75 × 16,000 × 100%)
Labor ($6.42 × 16,000 × 20%)
Overhead ($3.87 × 16,000 × 35%)
Total

a.

Beginning WIP
Started
Units to account for

500
1,400
1,900

Beginning WIP
Started & completed
Ending WIP
Units accounted for

500
1,250
150
1,900

Beginning WIP
Started & completed
Ending inventory
EUP

Material
200
1,250
30
1,480

Material = $10,656 ÷ 1,480 =
Conversion = $3,751 ÷ 1,705 =
Total cost per FIFO EUP
b.
Beginning WIP
Transferred out
Ending inventory
EUP
Material =

$204,000
20,544
21,672
$246,216

Conversion
350
1,250
105
1,705
$7.20
2.20
$9.40

Material
500
1,250
30
1,780

Conversion
500
1,250
105
1,855

$2,071 + $10,656 = $12,727;
$12,727 ÷ 1,780 = $7.15
Conversion = $404 + $2,510 + $1,241 = $4,155;
$4,155 ÷ 1,855 =
2.24
Total cost per WA EUP
$9.39


Chapter 6
Process Costing

146
c.

29.

a.

Transferred out:
Costs in BI ($2,071 + $404)
$2,475
Cost to complete BI
200 × $7.20
1,440
350 × $2.20
770
Started & completed (1,250 × $9.40)
Total cost transferred
Fabrication:
Beginning inventory
Started
Units to account for

5,000
40,000
45,000

$ 4,685
12,690
$17,375

Completed & transferred
Ending inventory
Units accounted for

38,200

6,800
45,000

S&C = 38,200 – 5,000 = 33,200
Units
Beginning WIP
5,000
S&C
33,200
Ending inventory
6,800
Units accounted for 45,000
Assembly:
Beginning inventory
Started
Units to account for

2,000
38,200
40,200

Material
5,000
33,200
6,800
45,000

Conversion
5,000
33,200

5,440
43,640

Completed & transferred
Ending inventory
Units accounted for

34,100
6,100
40,200

S&C = 34,100 – 2,000 = 32,100
Units Trans in Material Conversion
Beginning WIP
2,000
2,000
2,000
2,000
S&C
32,100 32,100
32,100
32,100
Ending inventory
6,100
6,100
6,100
4,575
Units accounted for 40,200 40,200
40,200
38,675

b.

Fabrication
Beginning inventory
Started & completed
Ending inventory
Units accounted for

Units
5,000
33,200
6,800
45,000

Material
0
33,200
6,800
40,000

Conversion
2,750
33,200
5,440
41,390

Assembly:
Beginning inventory
Started & completed
Ending inventory

Units accounted for
30.

a.

Units Trans in Material
2,000
0
2,000
32,100 32,100
32,100
6,100 6,100
6,100
40,200 38,200
40,200

18,000 × 100% × $0.13 =
18,000 × 45% × $0.13 =
Total cost in BI

$2,340
1,053
$3,393

Conversion
1,700
32,100
4,575
38,375

b.

c.

Chapter 6
Process Costing
14,400 × 100% × $0.13 = $1,872.00
14,400 × 65% × $0.13 =
1,216.80
Total cost in EI
$3,088.80
Beginning inventory
Started
Units to account for

18,000
130,000
148,000

Total units
Units in EI
Units transferred out

148,000
(14,400)
133,600

147

Cost transferred out = 133,600 × $0.26 = $34,736
d.

S&C = 133,600 – 18,000 = 115,600
Materials
To complete BI (units)
0
Started & completed
115,600
Ending inventory
14,400
Equivalent units (FIFO) 130,000
Multiply by unit cost
× 0.13
Standard cost of period $16,900
Actual cost of period
(18,400)
Variance
$(1,500)U

31.

a.

Labor
9,900
115,600
9,360
134,860
×

0.02
$2,697.20
(2,698.00)
$
(0.80)U

Units to account for:
Beginning inventory
Started
Total

6,500
154,000
160,500

Beginning WIP
Started & completed
Ending WIP
Units accounted for

6,500
141,500
12,500
160,500

Beginning WIP
Started and completed
Ending inventory
EUP (FIFO)

Materials Packaging
0
6,500
141,500
141,500
12,500
0
154,000
148,000

OH
9,900
115,600
9,360
134,860
×
0.11
$14,834.60
(15,200.00)
$ (365.40)U

Conversion
1,950
141,500
7,500
150,950

b.

Cost of goods completed: 148,000 × $0.60 = $88,800

c.

Cost of ending work in process:
Material
(12,500 × $0.35)
Labor
(7,500 × $0.07)
Overhead
(7,500 × $0.13)
Total

$4,375
525
975
$5,875


148
32.

a.

Chapter 6
Process Costing
Units to account for:
Beginning inventory
Started
Total

Started and completed
Ending inventory
EUP (FIFO)

0
1,500
1,500

Completed & transferred 1,200
Ending inventory
300
Units accounted for
1,500

Material
1,200
300
1,500

Labor
1,200
75
1,275

Overhead
1,200
105
1,305

Cost of goods transferred to finished goods:

Direct material:
Dacron 250 × $10
$2,500
Denim
400 × $8
3,200
Cotton 550 × $12
6,600
$12,300
Direct labor 1,200 × $12
14,400
Overhead (1,200 × $9)
10,800
Total
$37,500
b.

Cost of ending work in process:
Direct materials:
Dacron
50 × $10
$ 500
Denim
100 × $8
800
Cotton 150 × $12
1,800
Direct labor (300 × .25) × $12
Overhead (300 × .35) × $9
Total

$3,100
900
945
$4,945

Problems
33.

a.

Beginning inventory
Units started
Units to account for

3,600
187,000
190,600

b.

Units completed
Beginning inventory
Started & completed

184,200
(3,600)
180,600

c.

EI = 190,600 – 184,200 = 6,400
Beginning inventory
Started & completed
Ending inventory
EUP (WA)

Material
3,600
180,600
2,560
186,760

Labor
3,600
180,600
1,600
185,800

Overhead
3,600
180,600
640
184,840

Beginning inventory
Started & completed
Ending inventory
EUP (WA)

Material
1,080
180,600
2,560
184,240

Labor
2,160
180,600
1,600
184,360

Overhead
2,520
180,600
640
183,760

Material

Labor

Overhead

d.

e.


Chapter 6

Process Costing
EUP weighted average
186,760
Equivalent units in BI
(2,520)
EUP (FIFO)
184,240
34.

35.

149
185,800 184,840
(1,440) (1,080)
184,360 183,760

a.

Total units to account for:
Beginning inventory
Units started
Total

b.

Total units to account for:
Units in ending inventory
Units transferred out
Less units in beginning inventory
Units started & completed (tons)

c.

Weighted average:
Beginning inventory
Started & completed
Ending inventory
EUP

Material
60,000
265,000
24,500
349,500

Conversion
60,000
265,000
21,000
346,000

d.

FIFO Method:
Complete beginning inventory
Started and completed
Ending inventory
EUP

Material

0
265,000
24,500
289,500

Conversion
42,000
265,000
21,000
328,000

a.

tons
60,000
300,000
360,000
360,000
35,000
325,000
60,000
265,000

Frankfurt Products
Cost of Production Report
For the Month of February 2003

Production Data
Units
800

3,800
4,600

Material

Beginning inventory
Units started
Units to account for

Labor

Overhead

Beginning inventory units
Units started & completed
Units completed
Ending inventory
Units accounted for (& EUP)

800
3,400
4,200
400
4,600

800
3,400

800
3,400

800
3,400

280
4,480

360
4,560

320
4,520

Cost Data
Material Labor
Cost in beginning inventory $ 8,900 $ 4,000
Current costs
89,660 18,800
Total cost to account for
$98,560 $22,800
Divided by EUP
4,480
4,560
Cost per EUP
$22
$5

Overhead
Total
$ 6,600 $ 19,500

65,720
174,180
$72,320 $193,680
4,520
$16
$43


Chapter 6
Process Costing

150

Cost Assignment
Transferred out:
4,200 units × $43
Ending inventory:
Material (280 × $22)
Labor (360 × $5)
Overhead (320 × $16)
Total cost accounted for
b.

Raw Material Inventory
Accounts Payable

$180,600
$6,160
1,800
5,120

13,080
$193,680

XXX
XXX

WIP Inventory
89,660
Raw Materials Inventory

89,660

WIP Inventory
Wages Payable

18,800

18,800

WIP Inventory
65,720
Manufacturing overhead
Manufacturing Overhead
Various accounts
Finished Goods Inv.
WIP Inventory

XXX
XXX

180,600
180,600

Cost of Goods Sold
XXX
Finished Goods Inventory
c.
Raw Material Inventory
Beg. bal.
XXX
To WIP 89,660
Purchases
XXX
End. bal.

65,720

->
->

XXX
Work in Process
Beg. bal.19,500
DM
89,660
DL & OH 84,520

Inventory
CGM
180,600

XXX
End. bal.13,080
Wages Payable
DL 18,800

Overhead
Actual XXX
Appl. 65,720

Finished Goods
Beg. bal. XXX| CGS
-->CGM
180,600|
End. bal. XXX

XXX


Chapter 6
Process Costing
36.

151

a.
Units
400,000
2,000,000
2,400,000

Beginning inventory
Units started
Units to account for

Beginning inventory in units
400,000
Units started & completed
1,400,000
Units completed
1,800,000
Ending inventory
600,000
Units accounted for (& EUP) 2,400,000

Material

Conversion

400,000
1,400,000

400,000
1,400,000

600,000
2,400,000

300,000
2,100,000

b.
Cost in beginning inventory
Current costs
Total cost to account for
Divided by EUP
Cost per EUP

Material
400,000
2,600,000
$3,000,000
2,400,000
$1.25
$

Labor
576,000
3,204,000
$3,780,000
2,100,000
$1.80

$

Overhead
345,600
1,922,400
$2,268,000
2,100,000

$1.08
$

OH = 60% of DL cost
Total cost to account for = $3,000,000 + $3,780,000 + $2,268,000
= $9,048,000
Total cost per EUP = $1.25 + $1.80 + $1.08 = $4.13
c.

Transferred out (1,800,000 × $4.13)
Ending inventory:
Material (600,000 × $1.25)
$750,000
Conversion (300,000 × $2.88)
864,000
Total cost accounted for

37. a.
(1)
BI units
Units S&C
Units completed during month
EI units
EUP
(2)
Total
BI costs
$ 1,115,500
Current
10,400,500

Total
$11,516,000
Divided by EUP
Cost per EUP
$9.10
OH = 70% of DL cost

1,614,000
$9,048,000

Materials
Labor
100,000
100,000
900,000
900,000
1,000,000 1,000,000
400,000
160,000
1,400,000 1,160,000

Materials
750,000
4,850,000
$5,600,000
1,400,000
$4.00
$

$7,434,000

Labor
215,000
3,265,000
$3,480,000
1,160,000
$3.00
$

Overhead
100,000
900,000
1,000,000
160,000
1,160,000

Overhead
$ 150,500
2,285,500
$2,436,000
1,160,000
$2.10


Chapter 6
Process Costing

152
(3)

Beginning FG
CGM (1,000,000 × $9.10)
Goods available for sale
Ending inventory
CGS
b.

$

0
9,100,000
$9,100,000
124,033
$8,975,967

Finished Goods Inventory
9,100,000
Work in Process Inventory

9,100,000

Cost of Goods Sold
8,975,967
Finished Goods Inventory

8,975,967
(CPA adapted)

38.

a.
Beginning inventory
Units started
Units to account for

Units
Materials
5,000
90,400
95,400

Beginning inventory in units
Units started & completed
Units completed
Ending inventory
Units accounted for (& EUP)
b.
Current cost
EUPs (FIFO)
Cost per EUP
c.

39.

Total
$549,170
$6.05

5,000
86,400

91,400
4,000
95,400
Materials
$433,920
90,400
$4.80

0
86,400

3,000
86,400

4,000
90,400

2,800
92,200

Conversion
$115,250
92,200
$1.25

Beginning inventory costs
$24,875
Complete WIP
DM
$

0
CC (3,000 × $1.25)
3,750
3,750
Started & completed (86,400 × $6.05)
Costs transferred

d.

DM (4,000 × $4.80)
CC (2,800 × $1.25)
Total cost of EI

a.

Gallons transferred out
Gallons in ending WIP
Total gallons to account for
Less gallons in beginning WIP
Gallons started

Conversion

$19,200
3,500
$22,700
242,000
23,500
265,500
(36,000)

229,500

$ 28,625
522,720
$551,345


b.

Chapter 6
Process Costing
Material
Beginning WIP
0
Started & completed
206,000
Ending WIP
23,500
EUP - FIFO
229,500
Material
$1,131,435
229,500
$4.93

Current costs
EUP - FIFO
Cost per EUP

153

Labor
23,400
206,000
5,875
235,275

Overhead
14,400
206,000
7,050
227,450

Labor
$451,728
235,275
$1.92

Overhead
$773,330
227,450
$3.40

Beginning WIP
($180,000 + $26,100 + $70,300) $276,400
Completion of Beginning WIP
DM (0 × $4.93)
$
0
DL (23,400 × $1.92)
44,928

CC (14,400 × $3.40)
48,960
93,888
Total
$370,288
c.

Total cost per EUP = $4.93 + $1.92 + $3.40 = $10.25
Beginning WIP
Started & completed (206,000 × $10.25)
Total cost of goods completed

40.

d.

$2,481,788 ÷ 242,000 = $10.26

e.

DM
DL
OH

(23,500 × $4.93)
(5,875 × $1.92)
(7,050 × $3.40)
Total ending WIP

a.

$

370,288
2,111,500
$2,481,788

$115,855
11,280
23,970
$151,105

Cleopatra Corporation
Cost of Production Report
For the Month of October 2003

Production Data
Units
6,000
45,000
51,000

Material

Beginning inventory
Units started
Units to account for
Beginning inventory in units
Units started & completed
Units completed

Ending inventory
Units accounted for (& EUP)

6,000
35,000
41,000
10,000
51,000

6,000
35,000
41,000
10,000
51,000

Labor

Overhead

6,000
35,000
41,000
4,000
45,000

6,000
35,000
41,000
7,000
48,000

Chapter 6
Process Costing

154
Cost Data

Cost in beginning inventory
Current costs
Total cost to account for
Divided by EUP
Cost per EUP

Material
$ 4,980
45,000
$49,980
51,000
$0.98

Labor
450
21,600
$22,050
45,000
$0.49
$

Overhead

$ 3,180
33,300
$36,480
48,000
$0.76

Total cost to account for = $49,980 + $22,050 + $36,480
= $108,510
Total cost per EUP = $0.98 + $0.49 + $0.76 = $2.23
Cost Assignment
Transferred out:
41,000 × $2.23
Ending inventory:
Material (10,000 × $.98)
Direct labor (4,000 × $0.49)
Overhead (7,000 × $0.76)
Total cost accounted for
b.

$ 91,430
$ 9,800
1,960
5,320

17,080
$108,510

Cleopatra Corporation
Cost of Production Report
For the Month of October 2003

Production Data
Beginning inventory
Units started
Units to account for
Beginning inventory in units
Units started & completed
Units completed
Ending inventory
Units accounted for (& EUP)

Units
6,000
45,000
51,000
6,000
35,000
41,000
10,000
51,000

Material

0
35,000
35,000
10,000
45,000

Labor

4,200
35,000
39,200
4,000
43,200

Overhead

2,400
35,000
37,400
7,000
44,400

Cost Data
Material
Labor
Overhead
Current costs
$45,000
$21,600
$33,300
Divided by EUP
45,000
43,200
44,400
Cost per EUP
$1.00
$0.50

$0.75
Total cost to account for = $49,980 + $22,050 + $36,480
= $108,510
Total cost per EUP = $1.00 + $0.50 + $0.75 = $2.25


Chapter 6
Process Costing

155

Cost Assignment
Transferred out:
Beginning WIP
$ 8,610
Complete Beginning WIP
DL
(4,200 × $0.50)
2,100
OH
(2,400 × $0.75)
1,800
Started & completed(35,000 × $2.25)
Transferred out
Ending inventory:
Materials (10,000 × $1.00)
$10,000
Direct labor (4,000 × $0.50)
2,000
Overhead (7,000 × $0.75)

5,250
Total cost accounted for
41.

$ 12,510
78,750
$ 91,260

17,250
$108,510

Bixby Company Curing Dept.
Cost of Production Report
For the Month Ended May 31, 2003

Production Data
Beginning inventory
Units started
Units to account for

Units
8,000
40,000
48,000

To complete BI
Started & completed
Ending inventory
Units accounted for

8,000
36,000
4,000
48,000

TI

DM

DL

0
36,000
4,000
40,000

1,600
36,000
2,800
40,400

OH

4,800
36,000
2,000
42,800

5,600
36,000

1,600
43,200

Cost Data
Cost in BI
Current costs
Total to acct. for

TI
$ 66,000
320,000
$386,000

DM
$ 24,960
161,600
$186,560

DL
$ 6,720
85,600
$92,320

OH
$ 3,580
43,200
$46,780

Current costs
Divided by EUP

$320,000
40,000

$161,600
40,400

$85,600
42,800

$43,200
43,200

$8

$4

$2

$1

Cost per EUP

Total
$101,260
610,400
$711,660

$15

Chapter 6
Process Costing

156

Cost Assignment
Transferred out:
Beginning inventory
To complete Beginning WIP
TI
$
0
DM (1,600 × $4)
6,400
DL (4,800 × $2)
9,600
OH (5,600 × $1)
5,600
S&C (36,000 × $15)
Ending inventory:
TI (4,000 × $8)
DM (2,800 × $4)
DL (2,000 × $2)
OH (1,600 × $1)
Total cost accounted for

$ 101,260

21,600

540,000

$662,860

$32,000
11,200
4,000
1,600

48,800
$711,660
(CPA adapted)

42.

a.

Best of the Season Corp. Cutting Dept.
Cost of Production Report
For the Month Ended October 31, 2003

Production Data
Beginning inventory
Units started
Units to account for
Beginning inventory in units
Units started & completed
Units completed
Ending inventory
Units accounted for (& EUP)

Units
8,000
36,000
44,000

Material

8,000
32,400
40,400
3,600
44,000

Conversion

8,000
32,400

8,000
32,400

3,600
44,000

2,520
42,920

Cost Data
Cost in beginning inventory

Current costs
Total cost to account for
Divided by EUP
Cost per EUP
Cost Assignment
Transferred out:
40,400 × $17.50
Ending inventory:
Material (3,600 × $9.50)
Conversion (2,520 × $8.00)
Total cost accounted for

Materials
$ 73,250
344,750
$418,000
44,000
$9.50

Conversion
$ 20,000
323,360
$343,360
42,920
$8.00

$707,000
$34,200
20,160

54,360
$761,360

Total
$ 93,250
668,110
$761,360
$17.50


Chapter 6
Process Costing
Best of the Season Corp. Boxing Dept.
Cost of Production Report
For the Month Ended October 31, 2003

b.

157

Production Data
Trans. In

Material

Beginning inventory
Units started
Units to account for

Units

2,500
40,400
42,900

Conversion

BI
Units S & C
Units completed
Ending inventory
Units accounted for

2,500
39,200
41,700
1,200
42,900

2,500
39,200

2,500
39,200

2,500
39,200

1,200
42,900

0
41,700

720
42,420

Cost Data
Cost in BI
Current costs
Total to acct. for
Divided by EUP
Cost per EUP

Trans. In
$ 41,605
707,000
$748,605
42,900
$17.45

Material
$
0
95,910
$95,910
41,700
$2.30

Conversion
Total

$ 2,100
$ 43,705
61,530
864,440
$63,630
$908,145
42,420
$1.50
$21.25

Cost Assignment
Transferred out (41,700 × $21.25)
Ending inventory:
Transferred in (1,200 × $17.45) $20,940
Conversion (720 × $1.50)
1,080
Total cost accounted for
43.

a.

Striping Dept.:
Beginning inventory
Current costs:
DM
DL
OH ($80,000 × 0.6)
Total
Less the ending inventory
Costs transferred to Adhesion

$886,125
22,020
$908,145
$ 20,000
90,000
80,000
48,000
$238,000
(17,000)
$221,000


Chapter 6
Process Costing

158
b.

Adhesion Dept.:
Beginning inventory
Transferred-in costs
Current costs
Total
Less ending inventory
Costs transferred out
*

**

$

70,000
221,000
209,000**
$500,000*
20,000
$480,000

Total = $480,000 + $20,000 = $500,000
Current costs = $500,000 - $70,000 - $221,000
= $209,000

Current costs = DM + DL + OH
$209,000 = $60,000 + DL + OH
$149,000 = DL + OH
$149,000 = DL + 0.6DL
$ 93,125 = DL
$ 55,875 = OH
c.

The cost of goods manufactured is equal to the cost of
goods transferred out of the Packaging Department.
Analyze the costs in the Packaging Dept.:
Beginning inv.
Costs transferred in (from part b)
Current costs:
DM
DL ($90,000 ÷ 0.6)
OH

Total
Less the ending inventory
Cost of goods manufactured

d.

$150,000
480,000
50,000**
150,000
(90,000)
$920,000*
90,000
$830,000

*

Total = $830,000 + $90,0000 = $920,000

*

DM = $920,000 - $150,000 - $480,000 - $150,000
- $90,000 = $50,000

WIP - Adhesion
WIP - Striping

221,000

WIP - Packaging

WIP - Adhesion

480,000

Finished Goods Inventory
WIP - Packaging

830,000

221,400
480,000

Cost of Goods Sold
720,000
Finished Goods Inventory

830,000
720,000


Chapter 6
Process Costing
44.

a.

159

Cutting Process

Beginning inventory
Units started
Units to account for

Units
1,300
4,800
6,100

Beginning inventory completed
Units started & completed
Total units completed
Ending inventory
Units accounted for (FIFO)

1,300
3,700
5,000
1,100
6,100

Material

Conversion

260
3,700

325
3,700

440
4,400

220
4,245

Pressure Process
Beginning inventory
Units started
Units to account for

Units
900
5,000
5,900

BI completed
Units S & C
Total units completed
Ending inventory
Units acct'd for (FIFO)

900
3,600
4,500
1,400
5,900

Trans. In

Material

Conversion

0
3,600

900
3,600

360
3,600

1,400
5,000

0
4,500

560
4,520

b.
Cutting Process
Cost in beginning inventory
Current costs
Total cost to account for

Material

$ 4,900
17,600
$22,500

Conversion
$ 3,175
12,735
$15,910

Total
$ 8,075
30,335
$38,410

Current cost
Divided by EUP
Cost per EUP

$17,600
4,400
$4

$12,735
4,245
$3

$30,335

c.
Cost transferred out of Cutting (FIFO):

Cost of BI
$ 8,075
Cost to complete BI
Material ($4 × 260)
1,040
Conversion ($3 × 325)
975
S&C ($7 × 3,700)
25,900
Total
$35,990
Ending WIP:
DM ($4 × 440)
$1,760
CC ($3 × 220)
660
2,420
Total
$38,410

$7


Chapter 6
Process Costing

160
d.

Cost per EUP:

Trans. In
Cost in BI
$ 6,415
Current costs
35,990
Total
$42,405
Current costs
Divided by EUP
Cost per EUP

$35,990
5,000
$7.20

Material
$
0
4,950
$4,950

Conversion
$ 1,674
11,300
$12,974

Total
$ 8,089
52,240
$60,329

$11,300
4,520
$2.50

$52,240

$4,950
4,500
$1.10

e.
Transferred out
Beginning inventory cost
$ 8,089
Cost to complete:
Material (900 × $1.10)
990
Conversion (360 × $2.50)
900
Total cost of beginning inv.
Units started and completed:
3,600 × $10.80
Total
Ending inventory:
Transferred in (1,400 × $7.20)
$10,080
Conversion (560 × $2.50)
1,400
Costs accounted for (off due to rounding)

f.
45.

$10.80

$ 9,979
38,880
$48,859
11,480
$60,339

CGS = CGM = $48,859

a.
Beginning inventory
Units started
Units to account for

Units
10,000
180,000
190,000

Beginning inventory completed 10,000
Units started & completed
150,000
Units completed
160,000
Ending inventory
30,000

Units accounted for (& EUP)
190,000

Material Conversion

0
150,000

3,000
150,000

30,000
180,000

18,000
171,000


Chapter 6
Process Costing
HealthySight Guard
Cost of Production Report
For the Month of May 2003

b.

161

Production Data
Material

Beginning inventory
Units started
Units to account for

Units
10,000
180,000
190,000

Conversion

Beginning inventory completed
Units started & completed
Units completed
Ending inventory
Units accounted for (& EUP)

10,000
150,000
160,000
30,000
190,000

0
150,000

3,000
150,000

30,000
180,000

18,000
171,000

Cost Data (all at standard)
BI

(10,000 × $4.50)
(7,000 × $12.50)
Current (180,000 × $4.50)
(171,000 × $12.50)
Total cost to account for

Material
$ 45,000

$

87,500

810,000
2,137,500
$2,225,000

$855,000

Cost Assignment
Transferred out (160,000 × $17)

Ending inventory:
Material (30,000 × $4.50)
Conversion (18,000 × $12.50)
Total costs assigned
c.

Conversion

Total
$
45,000
87,500
810,000
2,137,500
$3,080,000

$2,720,000
$135,000
225,000

360,000
$3,080,000

Total variance = Total actual costs - Total current costs
= $2,826,000 - $2,947,500
= $121,500 favorable

Material:
Current cost
Standard cost (180,000 × $4.50)

Direct material variance

781,000
(810,000)
$ (29,000)favorable

Conversion:
Current cost
Standard cost (171,000 × $12.50)
Conversion cost variance

$

Direct material variance
Conversion cost variance
Cost of Goods Sold

$2,045,000
(2,137,500)
$ (92,500)favorable
29,000
92,500
121,500