CHAPTER 6 PROCESS COSTING

QUESTIONS FOR WRITING AND DISCUSSION
1. In sequential processing, products pass through a series of processes, one after another (i.e., in a given sequence). In parallel processing, products pass through two or more different sequences at the same time, merging eventually at the final process. 2. Process costing collects costs by process (department) for a given period of time. Unit costs are computed by dividing these costs by the department’s output measured for the same period of time. Job-order costing collects costs by job. Unit costs are computed by dividing the job’s costs by the units produced in the job. Process costing is typically used for industries where units are homogeneous and mass produced. Joborder costing is used for industries that produce heterogeneous products (often custom-made). 3. Equivalent units are the number of whole units that could have been produced, given the amount of materials, labor, and overhead used. Equivalent units are the measure of a period’s output, a necessary input for the computation of unit costs in a process-costing system. 4. In calculating this period’s unit cost, the weighted average method treats prior-period output and costs carried over to the current period as belonging to the current period. The FIFO method excludes any costs and output carried over from this period’s unit cost computation. 5. If the per-unit cost of the prior period is the same as the per-unit cost of the current period, there will be no difference between the results of the weighted average and FIFO methods. Additionally, if no beginning work-in-process inventory exists, both the FIFO and weighted average methods give the same results. 6. Separate equivalent units must be calculated for materials and conversion costs. 7. Transferred-in units represent partially completed units and are clearly a material 12. for the Receiving Department. To complete the product (or further process it), additional materials and conversion costs are added by the Receiving Department. 8. The cost flows for the process-costing and job-order costing systems are essentially the same. Process costing requires a work-inprocess account for each process. Costs flow from one work-in-process account to another until the final process is reached. 9. The work-in-process account of the Receiving Department is debited, and the work-in-process account of the Transferring Department is credited. The finished goods account is debited, and the work-in-process account of the final department is credited upon completion of the product. 10. The first step is the preparation of a physical flow schedule. This schedule identifies the physical units that must be accounted for and provides an accounting. The second step is the equivalent unit schedule. This schedule computes the equivalent whole output for the period. The schedule’s computations rely on information from the physical flow schedule. The next step is computation of the unit cost. To compute the unit cost, the manufacturing costs of the period for the process are divided by the period’s output. The output is obtained from the equivalent unit schedule. The fourth step uses the unit cost to value goods transferred out and those remaining in work in process. The final step checks to see if the costs assigned in step 4 equal the total costs to account for. A production report summarizes the activities and costs associated with a process for a given period. It shows the physical flow, the equivalent units, the unit cost, and the values of ending work in process and goods transferred out. The report serves the same function as a joborder cost sheet in a job-order costing system. The weighted average method uses the same unit cost for all goods transferred out.

11.

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The FIFO method divides goods transferred out into two categories: units started and

142

completed and units from beginning work in process. The period’s unit cost is used to value goods started and completed. The cost of goods transferred out from beginning work in process is obtained by (1) assigning them all costs carried over from the prior period and (2) using the current period’s unit cost to value the equivalent units completed this period. 13. Automation simply reduces computations and paperwork. It also usually means more accurate and rapid calculations.

14.

Firms adopting JIT reduce inventories to insignificant levels. As a result, work-inprocess inventories are close to zero, and equivalent units of production need not be calculated. In essence, unit cost is total cost for the period divided by output. Service firms generally do not have work-inprocess inventories, and so equivalent units of production are not needed. An important factor in process costing for services is determining just what constitutes a unit of output.

15.

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EXERCISES 6–1
1. 2. 3. 4. 5. b c c e d

6–2
1. Cutting Sewing Department $5,400 150 750 Packaging Department $ 900 1,800 3,600 6,300 $6,300 $12,600 6,300 6,300 12,600 12,600 14,625 14,625 12,600 $14,625 Department $ 225 900 900

Direct materials Direct labor Applied overhead Transferred-in cost: From cutting From sewing Total manufacturing cost

2. a. Work in Process—Sewing.................. Work in Process—Cutting........... b. Work in Process—Packaging............. Work in Process—Sewing........... c. Finished Goods.................................... Work in Process—Packaging...... 3. Unit cost = $14,625/600 = $24.38* per pair *Rounded

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Equivalent units of production: Units completed Add: Units in ending work in process: (16.200 60.000 16.600 Cost of ending work-in-process inventory = $2.200 = 43.200 × 100%) (16.200 × 25%) Equivalent units of output Materials 43. 2. 3.360 = $2.008 6–4 1.800 Units started and completed: 43.000 60.200 60.850 Conversion 43.000 4.000 = 16.608/2.000 = 2.000 – 16.800 Physical flow schedule: Units in beginning work in process Units started during the period Total units to account for Units started and completed Units completed from beginning work in process Units in ending work in process Total units accounted for 4.000 16.800 16.000 145 .30 = 360 Total equivalent units = 360 + 2. Units transferred out: 27.6–3 1. 3.800 27.050 47. Equivalent units of production: Ending work in process = 1.000 + 33.800 – 27.80 × 360 = $1.800 27.000 = $5.360 2.000 33. Unit cost = $6.200 × 0.80 Cost of goods transferred out = $2.80 × 2.

000 Cost of goods transferred out: $1. Units in beginning work in process are embedded in units completed.50 × 12. Cost of ending work in process: Materials ($1.000) Total cost $ 0 6.6–5 1. 146 .000 The schedule of equivalent units using the weighted average method does not give sufficient information to reconstruct the complete physical flow schedule.000 $ 6.000 50.000 = $54.000 2.000 20.80 × 30.000 Units accounted for: Units completed Units in ending WIP Total units 30. Physical flow schedule: Units to account for: Units in beginning WIP ? Units started ? Total units 50.30 × 0) Conversion ($0.

480 0 3.200 + 2.680 Conversion 2.880 = 4.880 3.480 b. Department 2: a.720 Conversion 3.480 – 3.080 – 600 = 3.480 1.480 *Total units = Beginning WIP + Units transferred in = 1.6–6 1.600 × 50% Equivalent units of output 2.880 147 .800 4.880 *Total units = Beginning WIP + Units started = 0 + 6. Department 1: a. Units completed Add: Units in ending work in process: 600 × 0% 600 × 40% Equivalent units of output Materials 3. Units completed Add: Units in ending work in process: 3.480 Materials 2. Units transferred to Department 2 = Total units* – Ending WIP = 6.080 b.480 = 6.600 × 100% 3.480 240 3.600 = 2. Units transferred out = Total units* – Ending WIP = 4.600 6.

Physical flow schedule: Units to account for: Units in beginning work in process Units started during the period Total units to account for Units accounted for: Units completed and transferred out: Started and completed From beginning work in process Units in ending work in process Total units accounted for 2.570.400 + $1.800 Costs to account for: Beginning work in process Incurred during June Total costs to account for Costs accounted for: Goods transferred out Goods in ending work in process Total costs accounted for 80.000 200.000 × $7.000 Cost of ending WIP = 8. Units completed Add: Units in ending WIP × Fraction complete (40.258.000 × $7.000 × 20%) Equivalent units of output Unit cost = ($374.400 $ 1.000 80.800 148 . 5.000 8.000 62.000 240.85 = $1.000 160.000 208. 4.800 $ 1.400)/208.000 3.632.85 Cost transferred out = 200.000 120.632.000 240.000 = $7.000 40.000 200.85 = $62.570.800 $ 1.258.400 1.6–7 1. $ 374.

85 × 8.000) Goods in ending WIP ($7.000 8.800 $ 374.632.000 62.570.000) Total costs accounted for $ 1.800 $ 7.6–8 Mixing Department Production Report For the Month of June 20XX (Weighted Average Method) Unit Information Physical flow: Units to account for: Units accounted for: Units in beginning WIP 80.570.800 $ 1.258.000 240.000 40.000 200.800 Total $ 1.400 $ 1.570.000 Units in ending WIP Total units to account for 240.000 Units completed Units started 160.800 $62.85 × 200.000 — $ 1.000 Total units accounted for Equivalent units: Units completed Units in ending work in process Total equivalent units 200.632.000 Ending Work in Process — $62.85 149 .000 208.000 Cost Information Costs to account for: Beginning work in process Incurred during June Total costs to account for Cost per equivalent unit Costs accounted for: Transferred Out Goods transferred out ($7.400 1.

330 $ 106. Department 1 Production Report (Weighted Average Method) Unit Information Physical flow: Units to account for: Units in beginning WIP Units started Total units to account for Equivalent Units: Units completed Units in ending WIP Total equivalent units *9.000 Conversion 33.500 × $0.500 9.38) + (7.600 Cost Information Costs to account for: Beginning WIP Incurred during period Total costs to account for Cost per equivalent unit Materials $ 0 16.600 × $2.500 43.100 0 43.000 Units accounted for: Units completed Units in ending WIP Total units accounted for 33.20) Total costs accounted for $ 86.340 $ 16.500 43.760 $ 106.420 $ 90. Inc.500 9.500 × 80% = 7.600* 41.58 Materials 33.430 20.340 $ 0.760 $ 2.420 $ 2.6–9 Gilroy.000 43.500 × $2.000 Costs accounted for: Goods transferred out (33.500 7.58) Ending WIP (9.20 Total $ 0 106.760 150 .38 Conversion $ 0 90.

Units completed Units in ending WIP: (5.500 $ 3.500 Materials 87.000c 0 24.25) c (1.200 6–11 Completed Ending WIP Equivalent units a A 16.500/92.000 × 100%) (5.500 (3.40 $ 4.000 – 9.900 D 60.000d 900e 31.500 3.500 87.000 – 0) d (40.000 e C 31.000 × $1.000 + 23.200a 1.000) (9.6–10 1.500 5.200 + 17.00 1.40 Cost of ending WIP (5.000 92.000f 2.200 f B 24.25) 151 .500 2.40 Units accounted for: Started and completed Units in ending WIP Total units Conversion 87.000 – 10.500g 62.680 + $76.500 Total units 92.000 × 0.500 = b. and b.500 5. Unit conversion cost: ($50.000b 17.000 90.40) Total costs accounted for 4.10) (30.500 = c.000 × 0.000 × 0. Unit materials cost: $277. Total unit cost Cost of units transferred out 87.000) b (4. $ 385.500 × $4.000) g (10.200 $ 404.000 × 60%) Equivalent units 3.000 + 40.020)/90.000 19. a.000 92. Units to account for: Units in beginning WIP 0 Units started 92.000 × $3.000 – 4.00) + (3. a.

**Beginning WIP for A: 3.200 × 0.000 10.75 = 22.000 × 0.000 *See solution to Exercise 6–11.000 960 16.000 152 .500 40.200 1.000 60.6–12 Completed* Add: Ending WIP* Less: Beginning WIP** Equivalent units A 16.000 900 0 31.000 70.000 0 400 23.000 × 0.500 6–13 1.240 B 24.000 20.900 D 60.000 80.30 = 960 Beginning WIP for B: 1.000 80. Physical flow schedule: Units to account for: Units in beginning work in process Units started during the period Total units to account for Units accounted for: Units completed and transferred out: Started and completed From beginning work in process Units in ending work in process (60% complete) Total units accounted for 10.40 = 400 Beginning WIP for C: 0 × 0 = 0 Beginning WIP for D: 30.000 2.500 22.600 C 31.000 50.

000)/80.560 5.000 ($49. Cost transferred out: 60.360 153 . 20. Unit materials cost Unit conversion cost Total unit cost 20.000 × $1.800 113.000 + $351.6–13 2.735 $ 481.800 Cost of ending WIP: Materials: 20.000 = 4.735)/72.000 = ($2.560 $ 481.000 × $6.360 $ 367.560 Total ending WIP cost $113.625 + $78.625 429.000 × $5.00 = $100.000 72.000 80.13 $6.000 × 100%.00 1. Costs to account for: Beginning WIP Incurred during August Total costs to account for Costs accounted for: Goods transferred out Goods in ending WIP Total costs accounted for $ 51.000 Units completed Add: Units in ending WIP × Fraction complete (20.13 = 13. Concluded Materials 60.000 Conversion 60.13 = $367.000 $5.000 Conversion: 12.000 × 60%) Equivalent units of output 3.13 12.

13 × 12.6–14 Bath Linens Department Production Report For the Month of August 20XX (Weighted Average Method) Unit Information Physical flow: Units to account for: Units in beginning WIP Units started Total units to account for Equivalent units: Units completed Units in ending work in process Total equivalent units Materials 60.000 80.13 Total $ 51.000) Conversion costs ($1.000 Cost Information Costs to account for: Beginning WIP Incurred during August Total costs to account for Cost per equivalent unit Costs accounted for: Transferred Out Goods transferred out ($6.00 Conversion $ 2.360 Materials $ 49.735 $ 481.000 20.800 100.000 72.000 60.000 20.000 70.000 351.625 78.000 $ 5.560 Total $367.000 12.000 13.560 $481.000) Total costs accounted for $367.360 $ 6.800 — — $367.000 Units accounted for: Units completed Units in ending WIP Total units accounted for 10.800 Ending Work in Process — $100.735 $ 81.13 154 .000) Goods in ending WIP: Materials ($5 × 20.560 $113.000 80.000 80.000 $ 400.000 Conversion 60.13 × 60.625 429.000 13.360 $ 1.

000) 110.000 30.73 6–16 1.000 (40.000 = $0.000 90. Units transferred out Units in ending WIP Equivalent units *(30.000 155 .22 + $0.000 150.16 Unit conversion cost: ($3.000 18.000 30.6–15 1.000 540.000 150. Physical flow schedule: Units to account for: Units in beginning work in process (75% complete) Units started during August Total units to account for Units accounted for: Units completed and transferred out: Started and completed 270.500)/150.000 Units in ending work in process (25% complete) Total units accounted for 180.000 From beginning work in process 180. Units transferred out Units in ending WIP Less: Units in beginning WIP Units transferred in 120.900)/150.000 540.35 Total unit cost: $0. Unit transferred-in cost: ($2.000 × 60%) 3.000* 138.000 Materials 120.300)/138.000 Transferred In 120.000 450.000 30.500 + $22.16 + $0.000 = $0.22 Unit materials cost: ($1.000 Conversion 120.000 + $45.000 = $0.35 = $0.100 + $30.000 2.000 360.

250 1.45 Costs transferred out: Costs from beginning WIP Costs to complete beginning WIP (45.500 200.500 337.500 $ 1.45) Started and completed (270.500 × $4.501.500 = $4.875/337.500 Units started and completed Add: Units to complete beginning WIP (180.375 Costs accounted for: Transferred out Ending WIP Total $ 1.082.250 5.125 3. 4. $ 580.500 Added in August 1. Concluded 270.000 × $4.125 $ 2.000 22.45 = $100.201.000 45.875 Total $ 2.000 × 25%) Equivalent units of output FIFO unit cost = $1.000 × $4.375 156 . Costs to account for: Beginning WIP $ 580.982.6–16 2.982.501.000 × 25%) Add: Units ending WIP × Fraction completed (90.45) Total costs transferred out Cost of ending WIP = 22.082.250 100.

500 200.45) Goods in ending work in process (22.375 $ 580.000 45.000 540.125 $ Total 580.501.082.500 100.125 $100.500 Cost Information Costs to account for: Beginning work in process Incurred during August Total costs to account for Cost per equivalent unit Costs accounted for: Transferred Out Units in beginning work in process: From prior period From current period (45.000 × $4.45) Total costs accounted for $ 580.201.500 337.982.000 540.000 22.000 Physical Flow 270.500 200.875 $2.000 180.6–17 Nogaleen Company Blending Department Production Report For the Month of August 20XX (FIFO Method) Unit Information Physical flow: Units to account for: Units in beginning work in process Units started during August Total units to account for Units accounted for: Units started and completed Units completed from beginning work in process Units in ending work in process Total units accounted for 180.500 — $ 1.500 × $4.082.500 1.45 157 .45) Units started and completed (270.000 360.250 1.000 × $4.375 $ 4.250 1.000 Equivalent Units 270.201.250 Ending Work in Process — — — $100.000 90.125 $2.

750 6–19 1.75 per equivalent unit Cost of ending work in process: Materials: $5.000 + $25.000 14.000] + [($5.000)/8.000 12.000 14.00 × 6.75 × 3. Physical flow schedule: Units to account for: Units in beginning WIP Units started Total units to account for Units accounted for: Units completed: Started and completed Units in beginning WIP Units in ending WIP Total units accounted for 2.75 × 5.000 4. $30.000] = $5.250 $56. Unit cost = Unit material cost + Unit conversion cost = [($30.250 Cost of goods transferred out = $13.000)/11.000 + $65.000 8.000 26.000 = $68.000 Conversion: $8.6–18 1.00 + $8.000 2.75 = $13.000 158 .000 Total cost 2.

$ 24.000/10.000 + $96.000 × $15.000 × $9.600 $164.600 $124.00 + $9.60) Units in beginning work in process: Prior period costs Current cost to finish units (1.6–19 2.60 = $15.600 $ 33.60) Total cost 3.000 9. Concluded Unit cost = Unit material cost + Unit conversion cost = $72.60 Total cost Cost of goods transferred out: Units started and completed (8.000 × $6.000 = $6.60 per equivalent unit Cost of ending work in process: Materials: 4.000/12.400 159 .000 9.000 × $9.800 30.00 Conversion: 1.

800 + $552) April ($3.500 $0.000 × $0.500 = Total unit cost Cost transferred out: 18.000 2.000 = Unit conversion cost: ($552 + $8.498 $ 14. Physical flow schedule: Units to account for: Units in beginning WIP Units started Total *20. Costs accounted for: Transferred out EWIP Total $14.000 14.50 $0.6–20 1.78 6.698)/18.78 = $14.040 810 $14.000 = 14.000 500 (2.000* 20.850 160 .352 12.698) Total $ 2.000 × $0.800)/20.000 Units accounted for: Transferred out Units in ending WIP Total 18.800 + $8.000 2.800 + $3. Equivalent Units Materials Conversion 18.000 2.000 Unit materials cost: ($1.28) + (500 × $0.040 Cost of ending WIP: (2.50) = $810 Cost reconciliation: Costs to account for: BWIP ($1.000 18.000 – 6. Transferred out Ending WIP Total 3.000 18.000 × 25%) 20.28 0.000 20.850 4.

560)/101.560)/113.600) + ($5.600 113.600 Conversion 92.82 × 9.600) = $156.600) (3. 6.000 98.600) + ($5.040 + $35.82 ($573.50 ($468.600 (9.000 $4.600 $4.040/98.000 21.400 $5.000 × 90%) (24.000 × 20%) Equivalent units (FIFO) Unit cost: FIFO: WA: Materials 92.072 WA: ($4. 2. b d b b a c c e Supporting computations: Units completed Units in ending WIP (24.000 + $54. 5.50 × 21.000/104.000 × 60%) (16.000 $468.864 161 . 7.200) 104.99 × 9. 3.99 EWIP: FIFO: ($4.60 $573.600) = $153.60 × 21.600 101.000 × 40%) Equivalent units (WA) Less EU in BWIP (16. 8. 4.PROBLEMS 6–21 1.600 $5.400 9.

000 56.000 Equivalent units: Units completed Units in ending WIP (10.912 162 .000 Units accounted for: Units completed Units in ending WIP Total units 69.200 × $6.152 $475.800 80.560 × $6.200 7.912 $ 6.760 69.912/76.000 80.6–22 Lister Company Assembly Department Production Report For the Month of February 20XX (Weighted Average Method) Unit Information Units to account for: Units in beginning WIP Units started Total units 24.760 333.560 76.760) Costs accounted for: Goods transferred out (69.20 $429.872 $475.040 46.200 10.800 × 70%) Total equivalent units Cost Information Costs to account for: Costs in beginning WIP Costs added by department Total costs to account for Cost per equivalent unit ($475.20) Total costs accounted for $142.20) Ending work in process (7.

800 × 70%) Total equivalent units Cost Information Costs to account for: Costs in beginning WIP Costs added by department Total costs to account for Cost per equivalent unit ($333.000 Units accounted for: Started and completed From beginning WIP From ending WIP Total units 45.200 × $5.000 56.3424) Total cost transferred out Goods in ending work in process (7.000 × 40%) Units in ending WIP (10.560 62.6–23 Lister Company Assembly Department Production Report For the Month of February 20XX (FIFO Method) Unit Information Units to account for: Units in beginning WIP Units started Total units 24.287 $ 435.523 40.389 $ 475.200 24.3424) Total costs accounted for 45.600 × $5.760 51.800 80.3424 $ 241.476 142.912 $ 5.000 10.912 163 .3424) Units in beginning work in process: From prior period From current period (9.200 9.600 7.000 Equivalent units: Started and completed To complete beginning WIP (24.560 × $5.152/62.152 $ 475.360 $ 142.760 333.000 80.360) Costs accounted for: Transferred out: Units started and completed (45.

000) + ($5.210.180.000 + $150.000 30.500.000 + $210.000 Units accounted for: Started and completed From BWIP From EWIP Total units Paraffin 500.780.000* 521.000 Total 260.040.000 Conversion 500.170.210.000/530.000 530.060.000 $2.000) + ($2.550.000 Costs accounted for: Transferred out Ending WIP Total accounted for $10.000/530.000) = $6 + $5 + $10 = $21 3.6–24 1. Equivalent unit schedule: Units completed Units in ending WIP Total equivalent units *(30.000 $ Unit cost = Unit paraffin cost + Unit pigment cost + Unit conversion cost = ($3.000 Pigment $ 100.000 August costs 10. Unit cost computation: Costs in BWIP Costs added Total costs Paraffin $ 120.000 530.000 × 70%) 2.000 × $10) = $180. a.000 510.000 30.000/521.000 $11.000 × $21 = $10.000 × $5) + (21. Physical flow schedule: Units to account for: Units in BWIP Units started Total units 20.500. Cost reconciliation: Costs to account for: Beginning WIP $ 260.000 = $540.000 Pigment 500.000 30.000 $11.000 10.000 $5.000 480.000 $3.650.180.000 b.000 540.000 530.000 164 .000 20.000 4.000 530.780.000 Cost of goods transferred out: 500.040.000 2.000 Conversion $ 40.000 21.000 3.000 Total to account for $11.040.000 × $6) + (30.000 5.650. Ending work in process = (30.

195 $ 10.530 $15.970 Incurred during January 70.320 ÷ Equivalent units Cost per equivalent unit 24.000 $ 3.555) — Conversion (1.02 Total $210.000 × $10.660 $225.000 20.530 EWIP — $10.635 21.000 21.555 Materials $ 0 40.000 3.000 22.420 10.420 165 .000 24.000 $ 1.350 Total costs to account for $85.000 Equivalent Units Transferred Materials Conversion 21.885 $99.6–25 Keating Company Department C Production Report For the Month of January 20XX (Weighted Average Method) Unit Information Units to account for: Units in beginning WIP Units started Total units to account for Units accounted for: Physical Flow Units completed 21.000 4.000 × $3.53) — Total costs accounted for $210.420 Ending work in process: Transferred in (3.000 Total units accounted for 24.000 Cost Information Transferred Costs to account for: In Beginning WIP $14.000 Units in ending WIP 3.730 87.615 Costs accounted for: Transferred Out Goods transferred out (21.760 $ 26.000 × $4.530 $225.615 22.000 — 1.000 21.935 Conversion Total $11.665 4.000 21.665 4.000 24.000 $ 4.02) $210.635 $40.900 198.

000 180.400 33.186 Conversion Total $ 14.6–26 Grace Sauces.000 180.859 2.500 216.909) Units in beginning WIP: From prior period Current period (9.800 Cost Information Costs to account for: Transferred In Materials Beginning WIP $ 45.432 3.500 148.000 × $0.443) Units in ending WIP: Transferred in (31.443 EWIP — — — $40.970 $ 1.800 $ 0.500 148. Transferred Out $283.500 Total costs to account for $276.906 Total $283.040 $402.432 72.640 336.000 Units accounted for: Units transferred out Units in ending WIP Units accounted for 184.000 31.000 $ 1.500 × $0.320 5.000 163.28 180.600 $ 6.876* 166 .500 6.500 31.540 $ 87.432 Incurred during quarter 230.186) Conversion (6.000 Units started and completed Units in BWIP (to complete) Units in EWIP Total units accounted for Equivalent Units Transferred In Materials Conversion 148.443) Total costs accounted for *Difference due to rounding.487 66.000 $39.000 $ 0.28) Materials (31.432 3.932 Equivalent units Cost incurred during quarter ÷ Equivalent units 180.500 × $1.791 $402.500 31. Inc. Mixing Department Production Report For the First Quarter 20XX (FIFO Method) Unit Information Units to account for: Units in beginning WIP Units started Units to account for 36.987 40.300 × $0.791 $48.500 × $1.400 $ 66.300 180.972 163.000 216.859 2.500 — — 9.487 66.909 Costs accounted for: Started/complete (148.320 5.987 — — — $353.

919) Ending work in process: Transferred in (31.500 184.540 $ 86.958 $403.000 $ 1.000 216.056 $48.000 216.056 — — — 2.000 Units accounted for: Units transferred out Units in ending WIP Units accounted for 184.873 $354.600 Incurred during quarter 230.014* 167 .500 × $1.000 190.919 Total $354.000 180.432 33.000 ÷ Equivalent units Cost per equivalent unit 216.300 216.500 184.932 216.500 × $1.000 Units completed Units in ending WIP Total units accounted for Equivalent Units Transferred In Materials Conversion 184.500 216.278) Materials (31.500 31.456 EWIP — $40.400 $ 66. Transferred Out $354.828 Costs accounted for: Goods transferred out (184.432 72.056 40. Mixing Department Production Report For the First Quarter 20XX (Weighted Average Method) Unit Information Units to account for: Units in beginning WIP Units started Units to account for 36.278 Materials $ 6.640 336.300 × $0.456) 2.257 5.800 $ 0.873 Total costs accounted for *Difference due to rounding.500 31.828 $ 1.185 Conversion Total $ 14. Inc.800 Cost Information Costs to account for: Transferred In Beginning WIP $ 45.257 5.040 $402.400 Total costs to account for $ 276.500 × $0.6–27 Grace Sauces.000 $ 0.185) Conversion (6.500 6.972 190.500 31.500 $ 39.

000 30.000 1. Equivalent unit calculation: Units completed Add: Equivalent units in ending WIP Total equivalent units c.120 Total $ 16. Physical flow schedule: Units in beginning WIP Units started in November Total units to account for Units completed and transferred out: Started and completed From beginning WIP Units in ending WIP Total units accounted for Costs charged to the department: Beginning WIP Incurred during November Total costs b.000 168 .600 29.000 Conversion 28.120/29.600 Materials $10.900 153.000 30.800 Conversion $ 6.71 Materials 28. Department A a.000 57.000 2.6–28 1.220 $102.26 + $3.000 2.800/30.000 5.000 + $102.000 30.900 95.920 5.600 = $2.020 $169.000 23.45 = $5.000 25. Unit cost calculation: Unit cost = Unit material cost + Unit conversion cost = $67.800 $67.

. Conversion (1..........000 × $2..220* 159.. A............... and e..... A.............. Work in Process—Dept........ 2........020 $ 169.26)....920 57.............220 95........ Costs to account for: Beginning work in process.....................880 $4....... Costs incurred during November.... 169 ......800 95................................. Materials Inventory......900 153.....000 × $5.880 159..... Cost reconciliation: Total costs accounted for: Goods transferred out (28............71).....920 $ 16............ Work in Process—Dept.......45)..... Total costs accounted for.040 $ 169..... 57......520 10.............520 5.................... A. Journal entries: Work in Process—Dept.6–28 Continued d.... Costs in ending WIP: Materials (2..... Conversion Costs—Dept...800 $ 159........... Some firms now combine overhead and direct labor costs into one category............ A..... B......600 × $3...... Total costs to account for....................... a control account for conversion costs is used.......... This practice is developing because direct labor is becoming a small percentage of total manufacturing costs................880 *When conversion costs are not broken into labor and overhead components...... Work in Process—Dept...

000 Conversion 33.880 $ 205.800 128.000 36.320 159.200/36. Total costs b.500 34.000 0 33.000 Units completed Add: Equivalent units in EWIP Total equivalent units c.000) + ($144.000 3.200 Total $ 62.000 3.000 28.500) + ($205. Equivalent unit calculation: Materials 33.120 325.000) = $1.000 25. Continued Department B a.000 36.950/33.000 8.900 Transferred In $ 45.70 = $11.000 1.900/34.05 170 .15 + $4. Unit cost calculation: Unit cost = Unit material cost + Unit conversion cost + Unit transferred in cost = ($37.950 $37.20 + $5.500 Transferred In 33.050 8.000 Beginning WIP Incurred in Nov.000 36.950 Conversion $ 16.6–28 3.930 $ 388.100 $ 144. Physical flow schedule: Units in beginning WIP Units started in November (transferred in) Total units to account for Units completed and transferred out: Started and completed From beginning WIP Units in ending WIP Total units accounted for Costs charged to the department: Materials $ 0 37.

...880 37............................ Work in Process—Dept.................050 159....... 159...............100 23.....05).300 17.................. 171 ....950 128..................... Costs incurred during November. Total costs accounted for....... B....000 × $5.......... Journal entries for Department B: Work in Process—Dept.............. Costs to account for: Beginning work in process....050 $ 62......... B................ Work in Process—Dept.... This practice is developing because direct labor is becoming a small percentage of total manufacturing costs.. and e....930 $ 388................ Work in Process—Dept................... Total costs to account for......400 $ 388..... Cost reconciliation: Total costs accounted for: Goods transferred out (33......500 × $4....................6–28 Concluded d..100 128...000 × $11..100* 364..650 *Because conversion costs are not broken into labor and overhead components............................... Finished Goods.....650 364........ B.................650 $ 0 6....... Total costs in ending WIP....... a control account for conversion costs is used. B.... Conversion (1...20)..... Work in Process—Dept........ Costs in ending WIP: Materials......... Transferred in (3... Conversion Costs—Dept......... B....... Some firms are now combining overhead and direct labor costs into one category.....880 $ 364......120 325....... Materials Inventory........................................... A...........70).....950 37..............

Equivalent unit calculation: Units started and completed Equivalent units in beginning WIP Equivalent units in ending WIP Total equivalent units c.800 Conversion $ 6. Unit cost calculation: Unit cost = Unit material cost + Unit conversion cost = ($57.000 57.900 153.000 30.220/27. Department A a.920 5.000 3.600 27.000 Conversion 23.45 = $5.000 25.900 95.000 172 .000 — 2.220 $102.312 + $3.000 5.000 25.600 Materials $10.800/25.6–29 1.000 30.600) = $2.762 Materials 23.000 2.000 1.000) + ($95.800 $67.020 $169.120 Total $ 16. Physical flow schedule: Units in beginning WIP Units started in November Total units to account for Units completed and transferred out: Started and completed From beginning WIP Units in ending WIP Total units accounted for Costs charged to the department: Beginning WIP Incurred during November Total costs b.000 23.

............... Total cost of units transferred out. Current cost to finish units (3...........................220 95.920 *Because conversion costs are not broken into labor and overhead components......... 57...000 × $5....... Journal entries: Work in Process—Dept................900 10...020 $ 169................ 2..........................350 $ 159..526 16......900 153............. A..... B... Conversion Costs—Dept..............920 $ 16........800 95...520 10........... Costs in ending WIP: Materials (2. Conversion (1................000 × $3.....624 5......776 159.....312)........... Work in Process—Dept....... A... 173 .................................. A...............762) Cost of units in beginning WIP: Prior-period costs. Total costs to account for.... Costs incurred............... Total costs accounted for.................45).... Cost reconciliation: Cost of units started and completed (23...........45)...........800 57.....776 $ 132.......... and e........... Materials Inventory............ Costs to account for: Beginning WIP..... Total costs in ending WIP..................... Work in Process—Dept......................600 × $3... Work in Process—Dept................220* 159..000 × $2.......................... a control account for conversion costs is used........... This practice is developing because direct labor is becoming a small percentage of total manufacturing costs....144 $ 169...6–29 Continued d..... Some firms are now combining overhead and direct labor costs into one category...................... A.......776 $4..

500 Transferred In 25.000 + $128.100/30.000 28. Unit cost calculation: Unit cost = Unit material cost + Unit conversion cost + Unit transferred in cost = $37.000 0 3.950/33.000 25.950 b.000 4.000 36. Physical flow schedule: Units in beginning WIP Units started in November (transferred in) Total units to account for Units completed and transferred out: Started and completed From beginning WIP Units in ending WIP Total units accounted for Costs charged to the department: Materials Beginning WIP $ 0 Incurred during Nov.000 28.000 8. 37.826 $ 387.000 Units started and completed Equivalent units in BWIP Equivalent units in EWIP Total equivalent units c.000 = $1.900 Transferred In $ 45.800 128.946 8.000 0 33.20 + $5.000 Conversion 25.000 3. Continued Department B a.096 Total $ 62.120 325.000 Conversion $ 16.100 $ 144.776/28.000 8.000 1.950 Total costs $37.15 + $4.706 = $11.500 + $159.776 $ 205.000 36.056 174 .320 159. Equivalent unit calculation: Materials 25.500 30.6–29 3.

418 $ $ 62.............. Costs incurred during November.118 Total costs in ending WIP....... Conversion Costs—Dept..500 × $4... Costs in ending WIP: Conversion (1...520 23... B....... 17.......946* *Difference due to rounding..........000 × $1.950 128.300 Transferred in (3.....20).......706)......000 × $4................520 d..15)..... Materials Inventory........... Cost reconciliation: Cost of units started and completed (25...... Total costs to account for.............. Work in Process—Dept...............056) Cost of units in beginning WIP: Prior-period costs.........120 9.......... B.......938* Costs to account for: Beginning work in process..............776 159.........826 $ *As before..............800 $ 364.................................... B. Work in Process—Dept................ B.................................. 175 ............. Total costs accounted for....776 37.... and e.... Current cost to finish units: Materials (8..... 159....... A..........950 37........520 364...100* 364... Work in Process—Dept...............000 × $5..............6–29 Concluded $ 276.................. Conversion (4.... 387.....................100 128.20)...........000 × $11..... Total costs of goods transferred out......... Work in Process—Dept..... Journal entries for Department B: Work in Process—Dept......400 62.............200 16.....120 325.......... Finished Goods........ $ 6. B......................... a control account for conversion cost is used to combine overhead and direct labor cost into one category.......... 387.....

30 Transferred Out $17.30) Conversion (10 × $98.122 486 980 $18.00 Ending Work in Process — $ 486 980 $1.636 $3.700 150 $ 98.588 Physical Flow 140 20 160 10 150 160 Equivalent Units Materials Conversion 140 140 20 10* 160 150 *Conversion is labor plus 200 percent of labor (overhead).122 — — $17.588 Total $ 1.122 Conversion* $ 846 13. 176 .888 160 $24.30) Ending work in process: Materials (20 × $24.098 17.30 Total $17.490 $18.854 $ 14.466 $122.6–30 Benson Pharmaceuticals Picking Department Production Report For the Month of March 20XX (Weighted Average Method) Unit Information Units to account for: Units in beginning WIP Units started Total units to account for Units accounted for: Units completed Units in ending WIP Total units accounted for *(20 × 50%) Cost Information Costs to account for: Beginning WIP Incurred during March Total costs to account for ÷ Equivalent units Cost per equivalent unit Costs accounted for: Goods transferred out (140 × $122.00) Total costs accounted for Materials $ 252 3.

400 × $0.192 — — — $23.000 × $0.000 $ 0.0075 Conversion* $ 50 4.400 $ 0.400 Cost Information Costs to account for: Beginning WIP Incurred during March Total costs to account for ÷ Equivalent units Cost per equivalent unit Trans.000 6.000 $ 0.0233) Total costs accounted for Transferred Out $23.000 208. In $ 140 17. 177 .555 $23.122 $ 17.1115 Total $23.0075) Conversion (2.262 214.000 214.000 × 40%) Physical Flow 208.000 4. In 208.000 210.400* 214.910 210.000 × $0.000 6.192 Ending Work in Process — $484 45 56 $585 *Conversion is labor plus 150 percent of labor (overhead).860 $ 4.0807 Materials $ 32 1.000 210.000 Trans.573 $ 1.777 Costs accounted for: Goods transferred out (208.000 214.777 Total $ 222 23.000 2.000 214.000 Equivalent Units Materials Conversion 208.000 6.605 214.1115) Ending work in process: Trans.0233 $0.192 484 45 56 $23.0807) Materials (6. in (6.000 × $0.6–30 Concluded Benson Pharmaceuticals Encapsulating Department Production Report For the Month of March 20XX (Weighted Average Method) Unit Information Units to account for: Units in beginning WIP Units started Total units to account for Units accounted for: Units completed Units in ending WIP Total units accounted for *(6.

89) Ending work in process: Materials (20 × $24.098 569 — — $17.588 Physical Flow 130 10 20 160 10 150 160 Equivalent Units Materials Conversion 130 130 — 6* 20 10** 150 146 178 .154 $ 94.89) Total costs accounted for $24.854 $ 14.24 Transferred Out $15.434 $119.588 Materials $ 252 3.098 17.636 $ 3.89 Ending Work in Process — — — $ 485 949 $1.487 1.098 569 485 949 $18.24) Conversion (10 × $94. (130 × $119.13 Total $15.13) Units in beginning WIP: From prior period From current period (6 × $94.888 150 Conversion $ 846 13.6–31 Benson Pharmaceuticals Picking Department Production Report For the Month of March 20XX (FIFO Method) Unit Information Units to account for: Units in beginning WIP Units started Total units to account for Units accounted for: Units started and completed Units in BWIP (to complete) Units in EWIP Total units accounted for *(10 × 60%) **(20 × 50%) Cost Information Costs to account for: Beginning WIP Incurred during March Total costs to account for Equivalent units Cost incurred during March ÷ Equivalent units Costs accounted for: Units started and comp.700 146 Total $ 1.490 $ 18.487 1.

000 — 6.400 Total $ 222 23.000 208.000 × $0.400 Cost Information Costs to account for: Trans.0233) 47 Ending work in process: Transferred in (6.950 222 47 490 45 56 $23.000 210.400 × $0.000 Equivalent Units Materials Conversion 204.6–31 Concluded Benson Pharmaceuticals Encapsulating Department Production Report For the Month of March 20XX (FIFO Method) Unit Information Units to account for: Units in beginning WIP Units started Total units to account for Units accounted for: Units started and completed Units in BWIP (to complete) Units in EWIP Total units accounted for *(4.000 210.294 Equivalent units Cost incurred during March ÷ Equivalent units $0.000 6.605 210.000 Trans.219 Transferred Out Ending Work in Process — — — $490 45 56 $591 179 .000 × 50%) Physical Flow 204. In Beginning WIP $ 140 Incurred during March 17.000 214.000 — 2.809 Costs accounted for: Units started and completed (204.000 4.810 210.000 × $0. In 204.587 $23.154 Total costs to account for $ 17.000 214.860 $ 4.000 2.000 Materials $ 32 1.000 Conversion $ 50 4.0233 $0.0233) — Total costs accounted for $23.000* 6.1125) $22.000 204.910 208.0817 $0.950 Units in BWIP from prior period 222 Current period (2.1125 Total $22.000 × $0.000 4.000 × $0.573 $ 1.0075) — Conversion (2.0817) — Materials (6.0075 $0.400 210.

500 + $5. 900 900 900 400 160 160 1. out EWIP 3.6–32 1.300 500 1.060 Molding — $ 5. Unit prior department cost Unit materials cost Unit conversion cost Total unit cost Assembly $11.06 2. Equivalent units: Molding Mat.300 1.05 $18.050 + $7.06 Molding: Unit materials cost: ($2.300 1. Conv.50 $11.46 1.500 2.050 0 1.300 Units accounted for: Transferred out Ending WIP 900 400 1. Molding Units to account for: Beginning WIP Started b.00 6.050 0 1.76 Trans.50 0. Assembly Units to account for: Beginning WIP Started c.050 1. Conv. 1.500 = $5.500 1. a.340 Assembly Tr.500 Units accounted for: Transferred out Ending WIP 1.060 1.300 200 40 1.050 Units accounted for: Transferred out Ending WIP 1.050 0 0 1.660)/1.10 $13.000)/1. Packaging Units to account for: Beginning WIP Started 150 900 1.000 1.00 Unit conversion cost: ($1. In 1.340 = $6.050 Packaging $13. In Mat.050 0 1. 1.300 200 1.50 Tr.65 3.300 1.050 Packaging Mat.50 180 .050 1. Conv.

Costs to account for: Molding Assembly Packaging Costs accounted for: Molding Assembly Packaging Trans.210.00 2.10 Packaging: Unit transferred-in cost: ($1.76) = $19.00 = Total $16.50)/1.698.65 Unit conversion cost: ($225 + $2.050 = $3.50 Unit materials cost: (0 + $487.603.50) = $1. Molding: Transferred out: (1.6–32 Concluded Assembly: Unit transferred-in cost: (0 + $14.60 19.754 Ending WIP: (400 × $11.060 = $1.60)/1.950)/1.00 181 .559. Out $14.00 19.00 + Current $12.849.603.260.166)/1.849.00 16.50) + (160 × $1.300 × $11.959 + $11.06 Unit materials cost: ($375 + $2.00 16.56) = $4.550.950.210.050 = $13.060 = $0.698.754)/1.00 + EWIP $1.050 = $2.50)/1.06) = $11.60 Packaging: Transferred out: (1.698 Ending WIP: 0 5.50) = $14.60 17.754.00 16.698.60 19.00 BWIP $3.00 = Total $16.300 = $11.00 4.05 4.977.950 Ending WIP: (200 × $5) + (40 × $6.660.00 0.46 Unit conversion cost: (0 + $1.260 Assembly: Transferred out: (900 × $13.050 × $18.407.60 0.603.139.00 11.

550.252.952. Conv.950/1.166/1.000 6.060 = = = $11.50/900 $2.060 $13. 900 0 400 1. Equivalent units: Molding Mat.60 3.000 800 350 40 1.149.054 $18.50/975 = = = 3.437 $11.060 900 0 160 1.000/1.660/1.55 $ 1.300 $487.190 Assembly Tr. In Mat.060 $1.407.6–33 1.754/900 $2.060 2.437) $ 9.437) Prior-period cost Complete beginning WIP (350 × $6.190 = = $ 5. Conv.300 900 0 160 1.257. Molding: Unit materials cost: Unit conversion cost: Total unit cost Assembly: Unit transferred-in cost: Unit materials cost: Unit conversion cost: Total unit cost Packaging: Unit transferred-in cost: Unit materials cost: Unit conversion cost: Total unit cost $5. 900 0 0 900 900 0 0 900 900 75 0 975 2.789 $14.95 $ 14.00 2.437) Total transferred out Ending WIP: (200 × $5) + (40 × $6.000 $7. Conv.60/1. In Mat.437 $11.100 $13.48 182 . Started and completed BWIP EWIP 800 0 200 1.460 1.675 3.500 0. Molding: Transferred out: Started and completed (800 × $11.977.060 Packaging Tr.

698.210.00 $ 4.00 Total $16.603.910.00 16.00 + Current $12.00 0.952.00 $ 11.550. 183 .698.6–33 Concluded Assembly: Transferred out: Started and completed (900 × $13.660.789) Prior period cost Complete beginning WIP (75 × $3.60 $ 16.603.60 17.60 0.603. Cost reconciliation: Costs to account for: Molding Assembly Packaging Costs accounted for: Molding Assembly Packaging Trans.15 + EWIP $1.00 2.559.139.754.00 BWIP $3.00 19.55 11.15* = *Difference due to rounding.50) + (160 × $1.00 $ 11.00 0.06) Prior-period cost Complete beginning WIP Total transferred out Ending WIP: (400 × $11.754.210.559.15 $ 0 = Total $16.00 0.698.257.56) Packaging: Transferred out: Started and completed (900 × $18.00 229.05 $ 19.00 16. Out $14.60 19.03* 16.60 19.10 2.754.48 4.054) Total transferred out Ending WIP: 4.849.849.698.

800b 900c 0 4.250 Cost Information Costs to account for: Beginning WIP Incurred in December Total cost Unit cost Costs accounted for: Goods transferred out Ending WIP: Prior department Materials Conversion Total costs accounted for Prior Dept.015i Conversion $ 210 4.300l — 450m $84.015j Total $68.800b 900 4.800b 450e 4.00 Materials $ 0g 57h $ 57 $ 0.900 $ 17.800 Units accounted for: Units completed Units in ending WIP Total units Conversion 3.457k — — — $68.700 Equivalent Units Prior Dept.457k 15.040 $4.097 $84.000f $ 79.250 $ 1.00 Total $12. $ 11.750 Explanation of superscripted numbers follows on the next page.207 $18.800b 3. Inc.900 68.457k Ending Work in Process — $15. Inspection Department Production Report For the Month of December 20XX (Weighted Average Method) Unit Information Units to account for: Units in beginning WIP Units transferred in from Assembly Total units to account for Physical Flow 3. 184 .700d 3.300l — 450m $15.6–34 Lean Jeans. Materials 3.000 4.110 72.700 700a 4.207 Transferred Out $68.

If 3.800 units are complete. there are 900 equivalent units for transferred-in costs.6–34 a b Concluded 4. $57 – $0 = $57 d e f $79.800) = $0.800 × $18.700 – 4. they must be 100 percent complete with respect to all cost categories.457 450 × $1. Therefore.015 3.300 k l m 185 .00 + $0.015 = $68. if there are 900 units in ending WIP.015 + $1. c All units transferred in must be 100 percent complete with respect to prior department costs.700 – 900 = 3.800 + 900 = 4.700 4.900 = $68.000 = 700 4. beginning work in process must be zero percent complete with respect to materials. 3.900 – $11.800.00 = $15.00 = $18.250 – 3.015 $17.00 = $450 900 × $17.800 = 450 Because materials are added at the end of the process.000 g h i j ($57/3.

She has the option of fighting back. Clearly. until a satisfactory resolution is achieved). Donna should not agree to falsify the production report. 4. then Donna should resign and submit an informative memo to a representative of the organization. Many students will likely respond that Donna should still resign (assuming that resolution is not likely). Donna has an ethical obligation to communicate information fairly and objectively. if Donna agrees to the proposal. 186 . If Gary decides that the course of action he is suggesting is not really in his or the company’s best interests. Falsification of the production report would be a violation of at least two major ethical standards: integrity and objectivity. however. students should realize that ethical behavior may often carry with it some very significant personal sacrifices. the ethical dilemma is complicated by two factors: Donna’s age and a low likelihood of resolution by appealing to higher-level authorities. and no action by Donna is needed. and it may mean possible forfeiture of retirement benefits. disclosing all information that would be needed for the loan officer to fairly assess the merits of the company’s request for a loan. Gary’s proposal requires Donna to falsify the equivalent unit calculation so that income and assets can be inflated and reported incorrectly. if necessary. then no ethical problem exists. Donna has an obligation to report Gary to a superior only if an actual ethical problem exists. Donna should attempt to resolve the conflict by appealing to Gary’s immediate supervisor (and on up. and at her age (with retirement benefits at stake). Falsification does not allow the organization to attain its legitimate and ethical objectives. In this situation. Another possibility is to encourage Donna to see a lawyer. 3. While Donna’s ultimate resignation is the right choice if resolution fails. It could be argued. Donna’s age may make it more difficult to find alternative employment (at least at the same level and pay). a good offense may be her best defense. If no satisfactory resolution is possible. Moreover. she would be taking action that would discredit her profession. recommending the ideal outcome. 2. that the costs of unethical behavior are even greater. Finally. If Gary insists on his idea of falsification of the division’s reports.MANAGERIAL DECISION CASES 6–35 1.

Thus.600 1.8 Equivalent unit calculation: Units completed Equivalent units in ending WIP Total equivalent units *(300 × 80%) Unit cost = Unit material cost + Unit conversion cost = ($114.740 0 1.000 $ 114.200 Materials $ 0 114.800 Conversion $ 0 82.200 Total $ 0 196.200 = $45.800 2.667 × 1.500 0 100 1.800 2. Because conversion activity is the same for both bows.800 Conversion 2.000 Materials 2. only the materials cost will differ.500 240* 2. Econo Model Physical flow schedule: Units in beginning WIP Units started Total units to account for Units completed and transferred out: Started and completed From beginning WIP Units in ending WIP Total units accounted for 187 0 2.000/2.71 2.600 .200 $ 196.200/2. the unit materials cost is computed and then added to the unit conversion cost obtained in Requirement 1.800) + ($82. Unit cost computation: Physical flow schedule: Units in beginning WIP Units started Total units to account for Units completed and transferred out: Started and completed From beginning WIP Units in ending WIP Total units accounted for Costs charged to the department: Beginning WIP Incurred during the period Total costs *$82.6–36 1.500 0 300 2.600 1.740) = $40.200* $ 82.71 + $30 = $70.500 300 2.

000 3.200 Materials $ 0 84.00 = $48. 188 .000 0 200 1.75 + $30.200 1.000 0 1.200 1.75 Deluxe Model Physical flow schedule: Units in beginning WIP Units started Total units to account for Units completed and transferred out: Started and completed From beginning WIP Units in ending WIP Total units accounted for Materials cost charged to the department: Beginning WIP Incurred during the period Total costs Equivalent unit calculation: Units completed Add: Equivalent units in ending WIP Total equivalent units Unit cost calculation: Unit cost = Unit material cost + Unit conversion cost = ($84.600 Materials $ 0 30.75 Materials 1.000/1.000 $ 30.000/1.000 200 1.200) + $30 = $70 + $30 = $100 Unit cost for Econo model: $ 48.200 Materials 1.00 = $18.600) + $30.000 $ 84.500 100 1.Materials cost charged to the department: Beginning WIP Incurred during the period Total costs Equivalent unit calculation: Units completed Add: Equivalent units in ending WIP Total equivalent units Unit cost calculation: Unit cost = Unit material cost + Unit conversion cost = ($30.

6–37 Answers will vary. 4. Process costing could be used for all departments other than the Pattern Department. This example illustrates the importance of an accurate costing system. This could easily be enough of a difference to make the marketing manager’s request for additional advertising dollars a sound one. The error is large. In the Pattern Department. while that of the Deluxe line was overstated by a little more than $29. The profitability of the Econo line was being understated by nearly $22.00 $ 70. and so Karen seems to be justified in her belief that a pure process-costing relationship is not appropriate. process-costing procedures can be used for conversion costs. producing an erroneous $51 difference in profitability under the current process-costing system.Unit cost for Deluxe model: Unit cost for both together: $100. RESEARCH ASSIGNMENT 189 . but the cost of materials should be tracked by batch.71 Using pure process costing understates the cost of the Deluxe model and overstates the cost of the Econo model. It is quite possible that Aaron was wrong in not granting the request—wrong because he was using inaccurate cost information.

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