CHAPTER 17 PROCESS COSTING 17-16 (25 min.) Equivalent units, zero e!innin! inventor"# 1.

Direct materials cost per unit ($750,000 10,000) Conversion cost per unit ($798,000 10,000) Assem l! Department cost per unit $ 75.00 79.80 $15".80

2a. #olution $%&i it 17'1(A calculates t&e e)uivalent units o* +irect materials an+ conversion costs in t&e Assem l! Department o* ,i&on, -nc. in .e ruar! 2009. #olution $%&i it 17'1(/ computes e)uivalent unit costs. 2 . Direct materials cost per unit Conversion cost per unit Assem l! Department cost per unit $ 75 8" $159

0. 1&e +i**erence in t&e Assem l! Department cost per unit calculate+ in re)uirements 1 an+ 2 arises ecause t&e costs incurre+ in 2anuar! an+ .e ruar! are t&e same ut *e3er e)uivalent units o* 3or4 are +one in .e ruar! relative to 2anuar!. -n 2anuar!, all 10,000 units intro+uce+ are *ull! complete+ resultin5 in 10,000 e)uivalent units o* 3or4 +one 3it& respect to +irect materials an+ conversion costs. -n .e ruar!, o* t&e 10,000 units intro+uce+, 10,000 e)uivalent units o* 3or4 is +one 3it& respect to +irect materials ut onl! 9,500 e)uivalent units o* 3or4 is +one 3it& respect to conversion costs. 1&e Assem l! Department cost per unit is, t&ere*ore, &i5&er. SO$%TION E&HI'IT 17-16A #teps 1 an+ 26 #ummari7e 8utput in 9&!sical :nits an+ Compute 8utput in $)uivalent :nits; Assem l! Department o* ,i&on, -nc. *or .e ruar! 2009. (Ste) 1+ P,"si-al %nits 0 10,000 10,000 9,000 1,000 10,000 10,000 9,500 (Ste) *+ Equivalent %nits .ire-t Conversion 3aterials Costs

/lo0 o1 Pro2u-tion <or4 in process, e5innin5 (5iven) #tarte+ +urin5 current perio+ (5iven) 1o account *or Complete+ an+ trans*erre+ out +urin5 current perio+ <or4 in process, en+in5= (5iven) 1,000 100>; 1,000 50> Accounte+ *or <or4 +one in current perio+

9,000 1,000

9,000 500

=De5ree o* completion in t&is +epartment6 +irect materials, 100>; conversion costs, 50>.

17'1

SO$%TION E&HI'IT 17-16' Compute Cost per $)uivalent :nit, Assem l! Department o* ,i&on, -nc. *or .e ruar! 2009. Total Pro2u-tion Costs $1,5"8,000 .ire-t 3aterials $750,000 10,000 $ 75 Conversion Costs $798,000 $ 9,500 8"

(Ste) 4) Costs a++e+ +urin5 .e ruar! Divi+e ! e)uivalent units o* 3or4 +one in current perio+ (#olution $%&i it 17'l(A) Cost per e)uivalent unit

17-17 (20 min.) 5ournal entries (-ontinuation o1 17-16+# 1. <or4 in 9rocess??Assem l! Accounts 9a!a le 1o recor+ $750,000 o* +irect materials purc&ase+ an+ use+ in pro+uction +urin5 .e ruar! 2009 <or4 in 9rocess??Assem l! @arious accounts 1o recor+ $798,000 o* conversion costs *or .e ruar! 2009; e%amples inclu+e ener5!, manu*acturin5 supplies, all manu*acturin5 la or, an+ plant +epreciation <or4 in 9rocess??1estin5 <or4 in 9rocess??Assem l! 1o recor+ 9,000 units complete+ an+ trans*erre+ *rom Assem l! to 1estin5 +urin5 .e ruar! 2009 at $159 9,000 units A $1,"01,000 750,000 750,000

2.

798,000 798,000

0.

1,"01,000 1,"01,000

9ostin5s to t&e <or4 in 9rocess??Assem l! account *ollo3. 6or7 in Pro-ess 88 Asse9 l" .e)art9ent /e5innin5 inventor!, .e . 1 0 0. 1rans*erre+ out to 1. Direct materials 750,000 <or4 in 9rocess??1estin5 2. Conversion costs 798,000 $n+in5 inventor!, .e . 28 117,000

1,"01,000

17'2

17-1: (25 min.) ;ero e!innin! inventor", 9aterials intro2u-e2 in 9i22le o1 )ro-ess# 1. #olution $%&i it 17'18A s&o3s e)uivalent units o* 3or4 +one in t&e current perio+ o* C&emical 9, 50,000; C&emical B, 05,000; Conversion costs, "5,000. 2. #olution $%&i it 17'18/ summari7es t&e total Ci%in5 Department costs *or 2ul! 2009, calculates cost per e)uivalent unit o* 3or4 +one in t&e current perio+ *or C&emical 9, C&emical B, an+ Conversion costs, an+ assi5ns t&ese costs to units complete+ (an+ trans*erre+ out) an+ to units in en+in5 3or4 in process. SO$%TION E&HI'IT 17-1:A #teps 1 an+ 26 #ummari7e 8utput in 9&!sical :nits an+ Compute 8utput in $)uivalent :nits; Ci%in5 Department o* Doar! C&emicals *or 2ul! 2009. (Ste) 1+ /lo0 o1 Pro2u-tion <or4 in process, e5innin5 (5iven) #tarte+ +urin5 current perio+ (5iven) 1o account *or Complete+ an+ trans*erre+ out +urin5 current perio+ <or4 in process, en+in5= (5iven) 15,000 100>; 15,000 0>; 15,000 (( 2E0> Accounte+ *or <or4 +one in current perio+ onl! P,"si-al %nits 0 50,000 50,000 05,000 15,000 C,e9i-al P (Ste) *+ Equivalent %nits C,e9i-al < Conversion Costs

05,000

05,000

05,000

15,000 50,000 50,000

0 05,000

10,000 "5,000

=De5ree o* completion in t&is +epartment6 C&emical 9, 100>; C&emical B, 0>; conversion costs, (( 2E0>.

17'0

SO$%TION E&HI'IT 17-1:' #teps 0, ", an+ 56 #ummari7e 1otal Costs to Account .or, Compute Cost per $)uivalent :nit, an+ Assi5n 1otal Costs to :nits Complete+ an+ to :nits in $n+in5 <or4 in 9rocess; Ci%in5 Department o* Doar! C&emicals *or 2ul! 2009.
Total Pro2u-tion Costs (Ste) 4) Costs a++e+ +urin5 2ul! 1otal costs to account *or (Ste) =+ Costs a++e+ in current perio+ Divi+e ! e)uivalent units o* 3or4 +one in current perio+ (#olution $%&i it 17'l8A) Cost per e)uivalent unit (Ste) >+ Assi5nment o* costs6 Complete+ an+ trans*erre+ out (05,000 units) <or4 in process, en+in5 (15,000 units) 1otal costs accounte+ *or
$"55,000 $"55,000

C,e9i-al P
$250,000 $250,000 $250,000

C,e9i-al <
$70,000 $70,000 $70,000

Conversion Costs
$105,000 $105,000 $105,000

50,000 5

05,000 2

"5,000 $ 0

$050,000 105,000 $"55,000

(05,000= $5) F (05,000= $2) F (05,000= $0) (15,000G $5) F $250,000 F (0G $2) $70,000 F (10,000G $0) F $105,000

=$)uivalent units complete+ an+ trans*erre+ out *rom #olution $%&i it 17'18A, #tep 2. G $)uivalent units in en+in5 3or4 in process *rom #olution $%&i it 17'18A, #tep 2.

17-1? (15 min.) 6ei!,te2-avera!e 9et,o2, equivalent units# :n+er t&e 3ei5&te+'avera5e met&o+, e)uivalent units are calculate+ as t&e e)uivalent units o* 3or4 +one to +ate. #olution $%&i it 17'19 s&o3s e)uivalent units o* 3or4 +one to +ate *or t&e Assem l! Division o* .enton <atc&es, -nc., *or +irect materials an+ conversion costs. SO$%TION E&HI'IT 17-1? #teps 1 an+ 26 #ummari7e 8utput in 9&!sical :nits an+ Compute 8utput in $)uivalent :nits; <ei5&te+'Avera5e Cet&o+ o* 9rocess Costin5, Assem l! Division o* .enton <atc&es, -nc., *or Ca! 2009. (Ste) *+ (Ste) 1+ Equivalent %nits P,"si-al .ire-t Conversion /lo0 o1 Pro2u-tion %nits 3aterials Costs <or4 in process e5innin5 (5iven) 80 #tarte+ +urin5 current perio+ (5iven) 500 1o account *or 580 Complete+ an+ trans*erre+ out +urin5 current perio+ "(0 "(0 "(0 <or4 in process, en+in5= (120 (0>; 120 00>) 120 72 0( Accounte+ *or 580 HHH HHH <or4 +one to +ate 502 "9(
=De5ree o* completion in t&is +epartment6 +irect materials, (0>; conversion costs, 00>.

17'"

17-*@ (20 min.) 6ei!,te2-avera!e 9et,o2, assi!nin! -osts (-ontinuation o1 17-1?+# #olution $%&i it 17'20 summari7es total costs to account *or, calculates cost per e)uivalent unit o* 3or4 +one to +ate in t&e Assem l! Division o* .enton <atc&es, -nc., an+ assi5ns costs to units complete+ an+ to units in en+in5 3or4'in'process inventor!. SO$%TION E&HI'IT 17-*@ #teps 0, ", an+ 56 #ummari7e 1otal Costs to Account .or, Compute Cost per $)uivalent :nit, an+ Assi5n 1otal Costs to :nits Complete+ an+ to :nits in $n+in5 <or4 in 9rocess; <ei5&te+'Avera5e Cet&o+ o* 9rocess Costin5, Assem l! Division o* .enton <atc&es, -nc., *or Ca! 2009.
Total Pro2u-tion Costs $ 58","00 ",(12,000 $5,19(,"00 .ire-t 3aterials $ "90,0(0 0,220,000 $0,710,0(0 $0,710,0(0 $ $",58(,200 (10,200 $5,19(,"00 502 (,980 Conversion Costs $ 91,0"0 1,092,000 $1,"80,0"0 $1,"80,0"0 $ "9( 2,990

(Ste) 4)

<or4 in process, e5innin5 (5iven) Costs a++e+ in current perio+ (5iven) 1otal costs to account *or Costs incurre+ to +ate Divi+e ! e)uivalent units o* 3or4 +one to +ate (#olution $%&i it 17'19) Cost per e)uivalent unit o* 3or4 +one to +ate Assi5nment o* costs6 Complete+ an+ trans*erre+ out ("(0 units) <or4 in process, en+in5 (120 units) 1otal costs accounte+ *or

(Ste) =)

(Ste) >)

("(0= $(,980) F ("(0= $2,990) (72G $(,980) F (0(G $2,990) $0,710,0(0 F $1,"80,0"0

=
G

$)uivalent units complete+ an+ trans*erre+ out *rom #olution $%&i it 17'19, #tep 2. $)uivalent units in 3or4 in process, en+in5 *rom #olution $%&i it 17'19, #tep 2.

17'5

17-*1 (15 min.) /I/O 9et,o2, equivalent units# :n+er t&e .-.8 met&o+, e)uivalent units are calculate+ as t&e e)uivalent units o* 3or4 +one in t&e current perio+ onl!. #olution $%&i it 17'21 s&o3s e)uivalent units o* 3or4 +one in Ca! 2009 in t&e Assem l! Division o* .enton <atc&es, -nc., *or +irect materials an+ conversion costs. SO$%TION E&HI'IT 17-*1 #teps 1 an+ 26 #ummari7e 8utput in 9&!sical :nits an+ Compute 8utput in $)uivalent :nits; .-.8 Cet&o+ o* 9rocess Costin5, Assem l! Division o* .enton <atc&es, -nc., *or Ca! 2009. (Ste) *+ Equivalent %nits .ire-t Conversion 3aterials Costs (3or4 +one e*ore current perio+)

/lo0 o1 Pro2u-tion <or4 in process, e5innin5 (5iven) #tarte+ +urin5 current perio+ (5iven) 1o account *or Complete+ an+ trans*erre+ out +urin5 current perio+6 .rom e5innin5 3or4 in processI 80 (100> 90>); 80 (100> "0>) #tarte+ an+ complete+ 080 100>, 080 100> <or4 in process, en+in5= (5iven) 120 (0>; 120 00> Accounte+ *or <or4 +one in current perio+ onl!
I G

(Ste) 1+ P,"si-al %nits 80 500 580 80

8 080
G

"8 080 0( "("

080 120 HHH 580 72 "(0

De5ree o* completion in t&is +epartment6 +irect materials, 90>; conversion costs, "0>. "(0 p&!sical units complete+ an+ trans*erre+ out minus 80 p&!sical units complete+ an+ trans*erre+ out *rom e5innin5 3or4'in'process inventor!. =De5ree o* completion in t&is +epartment6 +irect materials, (0>; conversion costs, 00>.

17'(

17-** (20 min.) /I/O 9et,o2, assi!nin! -osts (-ontinuation o1 17-*1+# #olution $%&i it 17'22 summari7es total costs to account *or, calculates cost per e)uivalent unit o* 3or4 +one in Ca! 2009 in t&e Assem l! Division o* .enton <atc&es, -nc., an+ assi5ns total costs to units complete+ an+ to units in en+in5 3or4'in'process inventor!. SO$%TION E&HI'IT 17-** #teps 0, ", an+ 56 #ummari7e 1otal Costs to Account .or, Compute Cost per $)uivalent :nit, an+ Assi5n 1otal Costs to :nits Complete+ an+ to :nits in $n+in5 <or4 in 9rocess; .-.8 Cet&o+ o* 9rocess Costin5, Assem l! Division o* .enton <atc&es, -nc., *or Ca! 2009.
Total Pro2u-tion Costs $ 58","00 ",(12,000 $5,19(,"00 .ire-t 3aterials $ "90,0(0 0,220,000 $0,710,0( 0 $0,220,000 "(0 $ 7,000 Conversion Costs $ 91,0"0 1,092,000 $1,"80,0"0 $1,092,000 "(" $ 0,000

(Ste) 4) <or4 in process, e5innin5 (5iven) Costs a++e+ in current perio+ (5iven) 1otal costs to account *or (Ste) =) Costs a++e+ in current perio+ Divi+e ! e)uivalent units o* 3or4 +one in current perio+ (#olution $%&i it 17'21) Cost per e)uiv. unit o* 3or4 +one in current perio+ (Ste) >) Assi5nment o* costs6 Complete+ an+ trans*erre+ out ("(0 units)6 <or4 in process, e5innin5 (80 units) Costs a++e+ to e5innin5 3or4 in process in current perio+ 1otal *rom e5innin5 inventor! #tarte+ an+ complete+ (080 units) 1otal costs o* units complete+ an+ trans*erre+ out <or4 in process, en+in5 (120 units) 1otal costs accounte+ *or
=
A

$ 58","00 200,000 78","00 0,800,000 ",58","00 (12,000 $5,19(,"00

$"90,0(0

$91,0"0

(8= $7,000) F ("8= $0,000) (080G $7,000) F (080G $0,000) (72J $7,000) F (0(J $0,000) $0,710,0(0 F $1,"80,0"0

$)uivalent units use+ to complete e5innin5 3or4 in process *rom #olution $%&i it 17'21, #tep 2. $)uivalent units starte+ an+ complete+ *rom #olution $%&i it 17'21, #tep 2. J $)uivalent units in 3or4 in process, en+in5 *rom #olution $%&i it 17'21, #tep 2.

17'7

17-*4 (20'25 min.) Stan2ar2--ostin! 9et,o2, assi!nin! -osts# 1. SO$%TION E&HI'IT 17-*4A #teps 1 an+ 26 #ummari7e 8utput in 9&!sical :nits an+ Compute 8utput in $)uivalent :nits; #tan+ar+ Costin5 Cet&o+ o* 9rocess Costin5 *or /uc4!Ks /o%es *or 2ul! 2010
(Ste) 1+ P,"si-al %nits (Ste) *+ Equivalent %nits .ire-t Conversion 3aterials Costs (3or4 +one e*ore current perio+)

/lo0 o1 Pro2u-tion

<or4 in process, e5innin5 (5iven) #tarte+ +urin5 current perio+ (5iven) 1o account *or Complete+ an+ trans*erre+ out +urin5 current perio+6 .rom e5innin5 3or4 in processI 185,000 (100> 100>); 185,000 (100> ? 25>) #tarte+ an+ complete+ 027,000 100>, 027,000 100> <or4 in process, en+in5= (5iven) 108,000 100>; 108,000 80> Accounte+ *or <or4 +one in current perio+ onl!
I G

185,000 "(5,000 (50,000 185,000

0 027,000G 027,000 108,000 HHHHHHH (50,000 108,000 HHHHHHH "(5,000

108,750 027,000 110,"00 HHHHHHH 57(,150

De5ree o* completion in t&is +epartment6 +irect materials, 100>; conversion costs, 25>. 512,000 p&!sical units complete+ an+ trans*erre+ out minus 185,000 p&!sical units complete+ an+ trans*erre+ out *rom e5innin5 3or4'in'process inventor!. =De5ree o* completion in t&is +epartment6 +irect materials, 100>; conversion costs, 80>.

17'8

2. SO$%TION E&HI'IT 17-*4' #teps 0, ", an+ 56 #ummari7e 1otal Costs to Account .or, Compute Cost per $)uivalent :nit, an+ Assi5n 1otal Costs to :nits Complete+ an+ to :nits in $n+in5 <or4 in 9rocess; #tan+ar+ Costin5 Cet&o+ o* 9rocess Costin5 *or /uc4!Ks /o%es *or 2ul! 2010
Total Pro2u-tion .ire-t Conversion Costs 3aterials Costs $ 007,(25 $2"0,500 F $ 97,125 1,81","15 ("(5,000 $1.00) F (57(,150 $2.10) $2,152,0"0 $8"5,000 F $1,007,0"0 $ 1.00 $ 2.10

(Ste) 4) <or4 in process, e5innin5 (5iven) Costs a++e+ in current perio+ at stan+ar+ costs 1otal costs to account *or (Ste) =+ #tan+ar+ cost per e)uivalent unit (5iven)

(Ste) >) Assi5nment o* costs at stan+ar+ costs6 Complete+ an+ trans*erre+ out (512,000 units)6 <or4 in process, e5innin5 (185,000 units) $ 007,(25 Costs a++e+ to e5. 3or4 in process in current perio+ 291,075 1otal *rom e5innin5 inventor! (29,000 #tarte+ an+ complete+ (027,000 units) 1,111,800 1otal costs o* units trans*erre+ out 1,7"0,800 <or4 in process, en+in5 (108,000 units) "11,2"0 1otal costs accounte+ *or $2,152,0"0 #ummar! o* variances *or current per*ormance6 Costs a++e+ in current perio+ at stan+ar+ costs (see #tep 0 a ove) Actual costs incurre+ (5iven) @ariance

$2"0,500 F $97,125 (0= $1.00) F (108,750= $2.10) (027,000G $1.00) F (027,000G $2.10) (108,000J $1.00) F (110,"00J $2.10) $8"5,000 F $1,007,0"0 $(0",500 $1,209,915 (07,500 1,207,"15 $ 0,000 : $ 2,500 .

=$)uivalent units to complete e5innin5 3or4 in process *rom #olution $%&i it 17'20A, #tep 2. G $)uivalent units starte+ an+ complete+ *rom #olution $%&i it 17'20A, #tep 2.
J

$)uivalent units in en+in5 3or4 in process *rom #olution $%&i it 17'20A, #tep 2.

17'9

17-*= (25 min.) 6ei!,te2-avera!e 9et,o2, assi!nin! -osts# 1. L 2. #olution $%&i it 17'2"A s&o3s e)uivalent units o* 3or4 +one to +ate *or /io Doc Corporation *or +irect materials an+ conversion costs. #olution $%&i it 17'2"/ summari7es total costs to account *or, calculates t&e cost per e)uivalent unit o* 3or4 +one to +ate *or +irect materials an+ conversion costs, an+ assi5ns t&ese costs to units complete+ an+ trans*erre+ out an+ to units in en+in5 3or4'in'process inventor!. SO$%TION E&HI'IT 17-*=A #teps 1 an+ 26 #ummari7e 8utput in 9&!sical :nits an+ Compute 8utput in $)uivalent :nits; <ei5&te+'Avera5e Cet&o+ o* 9rocess Costin5, /io Doc Corporation *or 2ul! 2008. (Ste) 1+ P,"si-al %nits 12,500 50,000 (2,500 "2,500 20,000 (2,500 (2,500 52,500 (Ste) *+ Equivalent %nits .ire-t Conversion 3aterials Costs

/lo0 o1 Pro2u-tion <or4 in process, e5innin5 (5iven) #tarte+ +urin5 current perio+ (5iven) 1o account *or Complete+ an+ trans*erre+ out +urin5 current perio+ <or4 in process, en+in5= (5iven) 20,000 100>; 20,000 50> Accounte+ *or <or4 +one to +ate

"2,500 20,000

"2,500 10,000

=De5ree o* completion6 +irect materials, 100>; conversion costs, 50>.

17'10

SO$%TION E&HI'IT 17-*=' #teps 0, ", an+ 56 #ummari7e 1otal Costs to Account .or, Compute Cost per $)uivalent :nit, an+ Assi5n 1otal Costs to :nits Complete+ an+ to :nits in $n+in5 <or4 in 9rocess; <ei5&te+'Avera5e Cet&o+ o* 9rocess Costin5, /io Doc Corporation *or 2ul! 2008.
Total Pro2u-tion Costs $1(2,500 810 ,750 $97(,250 .ire-t 3aterials $ 75,000 050,000 $"25,000 $"25,000 (2,500 $ (.80 Conversion Costs $ 87,500 "(0,750 $551,250 $551,250 52,500 $ 10.50

(Ste) 4)

<or4 in process, e5innin5 (5iven) Costs a++e+ in current perio+ (5iven) 1otal costs to account *or Costs incurre+ to +ate Divi+e ! e)uivalent units o* 3or4 +one to +ate (#olution $%&i it 17'2"A) Cost per e)uivalent unit o* 3or4 +one to +ate Assi5nment o* costs6 Complete+ an+ trans*erre+ out ("2,500 units) <or4 in process, en+in5 (20,000 units) 1otal costs accounte+ *or

(Ste) =)

(Ste) >)

$705,250 2"1,000 $97(,250

("2,500= $(.80) F ("2,500= $10.50) (20,000G $(.80) F (10,000G $10.50) $"25,000 F $551,250

=$)uivalent units complete+ an+ trans*erre+ out (5iven). G $)uivalent units in en+in5 3or4 in process (5iven).

17'11

17-*> (00 min.) /I/O 9et,o2, assi!nin! -osts# 1. L 2. #olution $%&i it 17'25A calculates t&e e)uivalent units o* 3or4 +one in t&e current perio+. #olution $%&i it 17'25/ summari7es total costs to account *or, calculates t&e cost per e)uivalent unit o* 3or4 +one in t&e current perio+ *or +irect materials an+ conversion costs, an+ assi5ns t&ese costs to units complete+ an+ trans*erre+ out an+ to units in en+in5 3or4'in'process inventor!. SO$%TION E&HI'IT 17-*>A #teps 1 an+ 26 #ummari7e 8utput in 9&!sical :nits an+ Compute 8utput in $)uivalent :nits; .-.8 Cet&o+ o* 9rocess Costin5, /io Doc Corporation *or 2ul! 2008.
(Ste) 1+ P,"si-al %nits (Ste) *+ Equivalent %nits .ire-t Conversion 3aterials Costs (3or4 +one e*ore current perio+)

/lo0 o1 Pro2u-tion

<or4 in process, e5innin5 (5iven) #tarte+ +urin5 current perio+ (5iven) 1o account *or Complete+ an+ trans*erre+ out +urin5 current perio+6 .rom e5innin5 3or4 in processI 12,500 (100> 100>); 12,500 (100> ? 70>) #tarte+ an+ complete+ 00,000 100>, 00,000 100> <or4 in process, en+in5= (5iven) 20,000 100>; 20,000 50> Accounte+ *or <or4 +one in current perio+ onl!
I G

12,500 50,000 (2,500 12,500

0 00,000 20,000 20,000 (2,500 50,000

G

0,750 00,000 10,000 "0,750

00,000

De5ree o* completion in t&is +epartment6 +irect materials, 100>; conversion costs, 70>. "2,500 p&!sical units complete+ an+ trans*erre+ out minus 12,500 p&!sical units complete+ an+ trans*erre+ out *rom e5innin5 3or4'in'process inventor!. =De5ree o* completion in t&is +epartment6 +irect materials, 100>; conversion costs, 50>.

17'12

SO$%TION E&HI'IT 17-*>' #teps 0, ", an+ 56 #ummari7e 1otal Costs to Account .or, Compute Cost per $)uivalent :nit, an+ Assi5n 1otal Costs to :nits Complete+ an+ to :nits in $n+in5 <or4 in 9rocess; .-.8 Cet&o+ o* 9rocess Costin5, /io Doc Corporation *or 2ul! 2008. Total Pro2u-tion Costs $1(2,500 810,750 $97(,250 .ire-t 3aterials $ 75,000 050,000 $"25,000 $050,000 50,000 $ $1(2,500 09,750 202,250 528,000 700,250 2"(,000 $97(,250 7 Conversion Costs $ 87,500 "(0,750 $551,250 $"(0,750 "0,750 $ 10.(0

(Ste) 4) <or4 in process, e5innin5 (5iven) Costs a++e+ in current perio+ (5iven) 1otal costs to account *or (Ste) =) Costs a++e+ in current perio+ Divi+e ! e)uivalent units o* 3or4 +one in current perio+ (#olution $%&i it 17'25A) Cost per e)uivalent unit o* 3or4 +one in current perio+ (Ste) >) Assi5nment o* costs6 Complete+ an+ trans*erre+ out ("2,500 units)6 <or4 in process, e5innin5 (12,500 units) Cost a++e+ to e5innin5 3or4 in process in current perio+ 1otal *rom e5innin5 inventor! #tarte+ an+ complete+ (00,000 units) 1otal costs o* units complete+ an+ trans*erre+ out <or4 in process, en+in5 (20,000 units) 1otal costs accounte+ *or

$75,000 F $87,500 = (0 $7) F (0,750= $10.(0) (00,000G $7) F (00,000G $10.(0) (20,000J $7) F (10,000J $10.(0) $"25,000 F $551,250

=$)uivalent units use+ to complete e5innin5 3or4 in process *rom #olution $%&i it 17'25A, #tep 2. A $)uivalent units starte+ an+ complete+ *rom #olution $%&i it 17'25A, #tep 2. J $)uivalent units in en+in5 3or4 in process *rom #olution $%&i it 17'25A, #tep 2.

17'10

17-*6 (00 min.) Stan2ar2--ostin! 9et,o2, assi!nin! -osts# 1. 1&e calculations o* e)uivalent units *or +irect materials an+ conversion costs are i+entical to t&e calculations o* e)uivalent units un+er t&e .-.8 met&o+. #olution $%&i it 17'25A s&o3s t&e e)uivalent unit calculations *or stan+ar+ costin5 an+ computes t&e e)uivalent units o* 3or4 +one in 2ul! 2008. #olution $%&i it 17'2( uses t&e stan+ar+ costs (+irect materials, $(.(0; conversion costs, $10."0) to summari7e total costs to account *or, an+ to assi5n t&ese costs to units complete+ an+ trans*erre+ out an+ to units in en+in5 3or4'in'process inventor!. 2. #olution $%&i it 17'2( s&o3s t&e +irect materials an+ conversion costs variances *or Direct materials Conversion costs $20,000 : $8,750 :

SO$%TION E&HI'IT 17-*6 #teps 0, ", an+ 56 #ummari7e 1otal Costs to Account .or, Compute Cost per $)uivalent :nit, an+ Assi5n 1otal Costs to :nits Complete+ an+ to :nits in $n+in5 <or4 in 9rocess; #tan+ar+ Costin5 Cet&o+ o* 9rocess Costin5, /io Doc Corporation *or 2ul! 2008.
Total Pro2u-tion .ire-t Conversion Costs 3aterials Costs $170,500 (12,500 $(.(0) F (8,750 $10."0) 785,000 (50,000 $(.(0) F ("0,750 $10."0) $958,500 $"12,500 F $5"(,000 $ (.(0 $170,500 09,000 212,500 510,000 722,500 20(,000 $958,500 $ 10."0

(Ste) 4) <or4 in process, e5innin5 (5iven) Costs a++e+ in current perio+ at stan+ar+ costs 1otal costs to account *or (Ste) =+ #tan+ar+ cost per e)uivalent unit (5iven) (Ste) >) Assi5nment o* costs at stan+ar+ costs6 Complete+ an+ trans*erre+ out ("2,500 units)6 <or4 in process, e5innin5 (12,500 units) Costs a++e+ to e5. 3or4 in process in current perio+ 1otal *rom e5innin5 inventor! #tarte+ an+ complete+ (00,000 units) 1otal costs o* units trans*erre+ out <or4 in process, en+in5 (20,000 units) 1otal costs accounte+ *or #ummar! o* variances *or current per*ormance6 Costs a++e+ in current perio+ at stan+ar+ costs (see #tep 0 a ove) Actual costs incurre+ (5iven) @ariance

(12,500 $(.(0) F (8,750 $10."0) (0= $(.(0) F (0,750= $10."0) (00,000G $(.(0) F (00,000G $10."0) (20,000J $(.(0) F (10,000J $10."0) $"12,500 F $5"(,000 $000,000 050,000 $ 20,000 : $"55,000 "(0,750 $ 8,750 :

=$)uivalent units to complete e5innin5 3or4 in process *rom #olution $%&i it 17'25A, #tep 2. G $)uivalent units starte+ an+ complete+ *rom #olution $%&i it 17'25A, #tep 2. J $)uivalent units in en+in5 3or4 in process *rom #olution $%&i it 17'25A, #tep 2.

17'1"

17-*7 (05?"0 min.) Trans1erre2-in -osts, 0ei!,te2-avera!e 9et,o2# 1, 2. L 0. #olution $%&i it 17'27A calculates t&e e)uivalent units o* 3or4 +one to +ate. #olution $%&i it 17'27/ summari7es total costs to account *or, calculates t&e cost per e)uivalent unit o* 3or4 +one to +ate *or trans*erre+'in costs, +irect materials, an+ conversion costs, an+ assi5ns t&ese costs to units complete+ an+ trans*erre+ out an+ to units in en+in5 3or4'in'process inventor!. SO$%TION E&HI'IT 17-*7A #teps 1 an+ 26 #ummari7e 8utput in 9&!sical :nits an+ Compute 8utput in $)uivalent :nits <ei5&te+'Avera5e Cet&o+ o* 9rocess Costin5; .inis&in5 Department o* Asa!a Clot&in5 *or 2une 2009.
(Ste) 1+ /lo0 o1 Pro2u-tion P,"si-al %nits (Ste) *+ Equivalent %nits Trans1erre2.ire-t Conversion in Costs 3aterials Costs

<or4 in process, e5innin5 (5iven) 1rans*erre+ in +urin5 current perio+ (5iven) 1o account *or Complete+ an+ trans*erre+ out +urin5 current perio+ <or4 in process, en+in5= (5iven) (0 100>; (0 0>; (0 75> Accounte+ *or <or4 +one to +ate

75 105 210 150 (0 210 210 150 195 150 (0 150 0 150 "5

=De5ree o* completion in t&is +epartment6 trans*erre+'in costs, 100>; +irect materials, 0>; conversion costs, 75>.

17'15

SO$%TION E&HI'IT 17-*7' #teps 0, ", an+ 56 #ummari7e 1otal Costs to Account .or, Compute Cost per $)uivalent :nit, an+ Assi5n 1otal Costs to :nits Complete+ an+ to :nits in $n+in5 <or4 in 9rocess; <ei5&te+'Avera5e Cet&o+ o* 9rocess Costin5, .inis&in5 Department o* Asa!a Clot&in5 *or 2une 2009. Total Pro2u-tion Costs $105,000 258,000 $0(0,000 Trans1erre2-in Costs $ 75,000 1"2,500 $ 217,500 $ 217,500 210 $1,005.71 $275,90" 87,0(( $0(0,000 .ire-t 3aterials $ 0 07,500 $07,500 $07,500 $ 150 250 Conversion Costs $ 00,000 78,000 $108,000 $108,000 195 $ 550.85

(Ste) 4+

<or4 in process, e5innin5 (5iven) Costs a++e+ in current perio+ (5iven) 1otal costs to account *or Costs incurre+ to +ate Divi+e ! e)uivalent units o* 3or4 +one to +ate (#olution $%&i it 17'27A) Cost per e)uivalent unit o* 3or4 +one to +ate Assi5nment o* costs6 Complete+ an+ trans*erre+ out (150 units) <or4 in process, en+in5 ((0 units)6 1otal costs accounte+ *or

(Ste) =+

(Ste) >+

(150 a $1,005.71) F (150 a $250) F (150a $550.85) ((0 $1,005.71) F (0 $250) F ("5 $550.85)

$ 217,500

$07,500

$108,000

$)uivalent units complete+ an+ trans*erre+ out *rom #ol. $%&i it 17'27, step 2. $)uivalent units in en+in5 3or4 in process *rom #ol. $%&i it 17'27A, step 2.

17'1(

17-*: (05?"0 min.) Trans1erre2-in -osts, /I/O 9et,o2# #olution $%&i it 17'28A calculates t&e e)uivalent units o* 3or4 +one in t&e current perio+ (*or trans*erre+'in costs, +irect'materials, an+ conversion costs) to complete e5innin5 3or4'in' process inventor!, to start an+ complete ne3 units, an+ to pro+uce en+in5 3or4 in process. #olution $%&i it 17'28/ summari7es total costs to account *or, calculates t&e cost per e)uivalent unit o* 3or4 +one in t&e current perio+ *or trans*erre+'in costs, +irect materials, an+ conversion costs, an+ assi5ns t&ese costs to units complete+ an+ trans*erre+ out an+ to units in en+in5 3or4' in'process inventor!. SO$%TION E&HI'IT 17-*:A #teps 1 an+ 26 #ummari7e 8utput in 9&!sical :nits an+ Compute 8utput in $)uivalent :nits .-.8 Cet&o+ o* 9rocess Costin5; .inis&in5 Department o* Asa!a Clot&in5 *or 2une 2009.

(Ste) 1+

(Ste) *+ Equivalent %nits

/lo0 o1 Pro2u-tion <or4 in process, e5innin5 (5iven) 1rans*erre+'in +urin5 current perio+ (5iven) 1o account *or Complete+ an+ trans*erre+ out +urin5 current perio+6 .rom e5innin5 3or4 in processa M75 (100> ? 100>); 75 (100> ? 0>); 75 (100> ? (0>)N #tarte+ an+ complete+ (75 100>; 75 100>; 75 100>) <or4 in process, en+in5c (5iven) ((0 100>; (0 0>; (0 75>) Accounte+ *or <or4 +one in current perio+ onl!
a

P,"si-al Trans1erre2-in .ire-t Conversion %nits Costs 3aterials Costs 75 (3or4 +one e*ore current perio+) 105 210 75 0 75 75 (0 HHH 210 (0 HHH 105 75 0 HHH 150 75 "5 HHH 150 75 00

De5ree o* completion in t&is +epartment6 1rans*erre+'in costs, 100>; +irect materials, 0>; conversion costs, (0>. 150 p&!sical units complete+ an+ trans*erre+ out minus 75 p&!sical units complete+ an+ trans*erre+ out *rom e5innin5 3or4'in'process inventor!. De5ree o* completion in t&is +epartment6 trans*erre+'in costs, 100>; +irect materials, 0>; conversion costs, 75>.

17'17

SO$%TION E&HI'IT 17-*:' #teps 0, ", an+ 56 #ummari7e 1otal Costs to Account .or, Compute Cost per $)uivalent :nit, an+ Assi5n 1otal Costs to :nits Complete+ an+ to :nits in $n+in5 <or4 in 9rocess; .-.8 Cet&o+ o* 9rocess Costin5, .inis&in5 Department o* Asa!a Clot&in5 *or 2une 2009.
Total Pro2u-tion Costs $ 90,000 2"(,000 $00(,000 Trans1erre2-in Costs .ire-t 3aterials Conversion Costs $ (0,000 $ 0 $ 00,000 100,800 07,500 78,000 $190,800 $07,500 $108,000 $100,800 105 $ 9(8.89 $07,500 150 $ 250 $ 78,000 $ 150 520

(Ste) 4+

<or4 in process, e5innin5 (5iven) Costs a++e+ in current perio+ (5iven) 1otal costs to account *or Costs a++e+ in current perio+ Divi+e ! e)uivalent units o* 3or4 +one in current perio+ (#olution $%&i it 17'28A) Cost per e)uivalent unit o* 3or4 +one in current perio+ Assi5nment o* costs6 Complete+ an+ trans*erre+ out (150 units) <or4 in process, e5innin5 (75 units) Costs a++e+ to e5innin5 3or4 in process in current perio+ 1otal *rom e5innin5 inventor! #tarte+ an+ complete+ (75 units) 1otal costs o* units complete+ an+ trans*erre+ out <or4 in process, en+in5 ((0 units)6 1otal costs accounte+ *or

(Ste) =+

(Ste) >+

$ 90,000 0",050 12",050 100,"1( 25",7(( 81,50" $00(,000

$ (0,000 (0a $9(8.89)

$ 0 F (75a $250)

$ 00,000 F (00 a $520) F (75 $520) F ("5c $520) F $108,000

(75 $9(8.89) F (75 $250) ((0c $9(8.89) F (0c $250) $190,800 F $07,500

$)uivalent units use+ to complete e5innin5 3or4 in process *rom #olution $%&i it 17'28A, step 2. $)uivalent units starte+ an+ complete+ *rom #olution $%&i it 17'28A, step 2. c $)uivalent units in en+in5 3or4 in process *rom #olution $%&i it 17'28A, step 2.

17'18

17.29 (15'20 min.) Stan2ar2--ostin! 9et,o2# 1. #ince t&ere 3as no a++itional 3or4 nee+e+ on t&e e5innin5 inventor! 3it& respect to materials, t&e initial mulc& must &ave een 100> complete 3it& respect to materials. .or conversion costs, t&e 3or4 +one to complete t&e openin5 inventor! 3as "0",250 9(5,000 A "5>. 1&ere*ore, t&e un*inis&e+ mulc& in openin5 inventor! must &ave een 55> complete 3it& respect to conversion costs. 2. -t is clear t&at t&e en+in5 <-9 is also 100> complete 3it& respect to +irect materials (1,817,000 1,817,000), an+ it is (0> (A 1,090,200 1,817,000) complete 3it& re5ar+ to conversion costs. 0. <e can *irst o tain t&e total stan+ar+ costs per unit. 1&e num er o* units starte+ an+ complete+ +urin5 Au5ust is 8"5,000, an+ a total cost o* $(,717,750 is attac&e+ to t&em. 1&e per unit stan+ar+ cost is t&ere*ore ($(,717,750 8"5,000) A $7.95. -* % an+ ! represent t&e per unit cost *or +irect materials an+ conversion costs, respectivel!, 3e t&ere*ore 4no3 t&at6 % F ! A 7.95 <e also 4no3 t&at t&e en+in5 inventor! is coste+ at $12,192,070 an+ contains 1,817,000 e)uivalent units o* materials an+ 1,090,200 e)uivalent units o* conversion costs. 1&is provi+es a secon+ e)uation6 1,817,000 % F 1,090,200 ! A 12,192,070. #olvin5 t&ese e)uations reveals t&at t&e +irect materials cost per unit, %, is $".85, 3&ile t&e conversion cost per unit, !, is $0.10. ". .inall!, t&e openin5 <-9 containe+ 9(5,000 e)uivalent units o* materials an+ (9(5,000' "0",250) A 500,750 e)uivalent units o* conversion costs. Appl!in5 t&e stan+ar+ costs compute+ in step (0), t&e cost o* t&e openin5 inventor! must &ave een6 9(5,000 O $".85 F 500,750 O $0.10 A $(,025,575.

17'19

17-4@ (25 min.) 6ei!,te2-avera!e 9et,o2# 1. #ince +irect materials are a++e+ at t&e e5innin5 o* t&e assem l! process, t&e units in t&is +epartment must e 100> complete 3it& respect to +irect materials. #olution $%&i it 17'00A s&o3s e)uivalent units o* 3or4 +one to +ate6 Direct materials Conversion costs 25,000 e)uivalent units 2",250 e)uivalent units

2. L 0. #olution $%&i it 17'00/ summari7es t&e total Assem l! Department costs *or 8cto er 2009, calculates cost per e)uivalent unit o* 3or4 +one to +ate , an+ assi5ns t&ese costs to units complete+ (an+ trans*erre+ out) an+ to units in en+in5 3or4 in process usin5 t&e 3ei5&te+' avera5e met&o+. SO$%TION E&HI'IT 17-4@A #teps 1 an+ 26 #ummari7e 8utput in 9&!sical :nits an+ Compute 8utput in $)uivalent :nits; <ei5&te+'Avera5e Cet&o+ o* 9rocess Costin5, Assem l! Department o* Parsen Compan!, *or 8cto er 2009. (Ste) 1+ /lo0 o1 Pro2u-tion <or4 in process, e5innin5 (5iven) #tarte+ +urin5 current perio+ (5iven) 1o account *or Complete+ an+ trans*erre+ out +urin5 current perio+ <or4 in process, en+in5= (5iven) 2,500 100>; 2,500 70> Accounte+ *or <or4 +one to +ate P,"si-al %nits 5,000 20,000 25,000 22,500 2,500 25,000 25,000 2",250 (Ste) *+ Equivalent %nits .ire-t Conversion 3aterials Costs

22,500 2,500

22,500 1,750

=De5ree o* completion in t&is +epartment6 +irect materials, 100>; conversion costs, 70>.

17'20

SO$%TION E&HI'IT 17-4@' #teps 0, ", an+ 56 #ummari7e 1otal Costs to Account .or, Compute Cost per $)uivalent :nit, an+ Assi5n 1otal Costs to :nits Complete+ an+ to :nits in $n+in5 <or4 in 9rocess; <ei5&te+'Avera5e Cet&o+ o* 9rocess Costin5, Assem l! Department o* Parsen Compan!, *or 8cto er 2009.
Total Pro2u-tion Costs $1,(52,750 (,807,500 $8,"90,250 .ire-t 3aterials $1,250,000 ",500,000 $5,750,000 $5,750,000 $ $7,717,500 772,750 $8,"90,250 25,000 200 Conversion Costs $ "02,750 2,007,500 $2,7"0,250 $2,7"0,250 $ 2",250 110

(Ste) 4)

<or4 in process, e5innin5 (5iven) Costs a++e+ in current perio+ (5iven) 1otal costs to account *or Costs incurre+ to +ate Divi+e ! e)uivalent units o* 3or4 +one to +ate (#olution $%&i it 17'00A) Cost per e)uivalent unit o* 3or4 +one to +ate Assi5nment o* costs6 Complete+ an+ trans*erre+ out (22,500 units) <or4 in process, en+in5 (2,500 units) 1otal costs accounte+ *or

(Ste) =)

(Ste) >)

(22,500= $200) F (22,500= $110) (2,500G $200) F (1,750G $110) $(,150,000 F $2,(19,000

= G

$)uivalent units complete+ an+ trans*erre+ out *rom #olution $%&i it 17'00A, #tep 2. $)uivalent units in 3or4 in process, en+in5 *rom #olution $%&i it 17'00A, #tep 2.

17-41 (10 min.) 5ournal entries (-ontinuation o1 17-4@+# 1. <or4 in 9rocess??Assem l! Department Accounts 9a!a le Direct materials purc&ase+ an+ use+ in pro+uction in 8cto er. <or4 in 9rocess??Assem l! Department @arious accounts Conversion costs incurre+ in 8cto er. ",500,000 ",500,000

2.

2,007,500 2,007,500

0.

<or4 in 9rocess??1estin5 Department 7,717,500 <or4 in 9rocess??Assem l! Department 7,717,500 Cost o* 5oo+s complete+ an+ trans*erre+ out in 8cto er *rom t&e Assem l! Department to t&e 1estin5 Department. 6or7 in Pro-ess88Asse9 l" .e)art9ent /e5innin5 inventor!, 8cto er 1 1,(52,750 0. 1rans*erre+ out to 1. Direct materials ",500,000 <or4 in 9rocess?1estin5 2. Conversion costs 2,007,500 $n+in5 -nventor!, 8cto er 01 772,750

7,717,500

17'21

17-4* (20 min.) /I/O 9et,o2 (-ontinuation o1 17-4@+# 1. 1&e e)uivalent units o* 3or4 +one in t&e current perio+ in t&e Assem l! Department in 8cto er 2009 *or +irect materials an+ conversion costs are s&o3n in #olution $%&i it 17'02A. 2. 1&e cost per e)uivalent unit o* 3or4 +one in t&e current perio+ in t&e Assem l! Department in 8cto er 2009 *or +irect materials an+ conversion costs is calculate+ in #olution $%&i it 17'02/. 0. #olution $%&i it 17'02/ summari7es t&e total Assem l! Department costs *or 8cto er 2009, an+ assi5ns t&ese costs to units complete+ (an+ trans*erre+ out) an+ units in en+in5 3or4 in process un+er t&e .-.8 met&o+. 1&e cost per e)uivalent unit o* e5innin5 inventor! an+ o* 3or4 +one in t&e current perio+ +i**er6 'e!innin! Inventor" $250.00 ($1,250,000 5,000 e)uiv. units) 10".25 ($ "02,750 0,000 e)uiv. units) $08".25 6or7 .one in Current Perio2 $225.00 110.00 $005.00 Conversion Costs $110= $110==

Direct materials Conversion costs 1otal cost per unit

Cost per e)uivalent unit (3ei5&te+'avera5e) Cost per e)uivalent unit (.-.8)
= ==

.ire-t 3aterials $200= $225==

*rom #olution $%&i it 17'00/ *rom #olution $%&i it 17'02/

1&e cost per e)uivalent unit +i**ers et3een t&e t3o met&o+s ecause eac& met&o+ uses +i**erent costs as t&e numerator o* t&e calculation. .-.8 uses onl! t&e costs a++e+ +urin5 t&e current perio+ 3&ereas 3ei5&te+'avera5e uses t&e costs *rom t&e e5innin5 3or4'in'process as 3ell as costs a++e+ +urin5 t&e current perio+. /ot& met&o+s also use +i**erent e)uivalent units in t&e +enominator. 1&e *ollo3in5 ta le summari7es t&e costs assi5ne+ to units complete+ an+ t&ose still in process un+er t&e 3ei5&te+'avera5e an+ .-.8 process'costin5 met&o+s *or our e%ample. 6ei!,te2 Avera!e /I/O (Solution (Solution EB,i it 17-4@'+ EB,i it 17-4*'+ .i11eren-e Cost o* units complete+ an+ trans*erre+ out $7,717,500 $7,705,250 F $17,750 <or4 in process, en+in5 772,750 755,000 $17,750 1otal costs accounte+ *or $8,"90,250 $8,"90,250

17'22

1&e .-.8 en+in5 inventor! is lo3er t&an t&e 3ei5&te+'avera5e en+in5 inventor! ! $17,750. 1&is is ecause .-.8 assumes t&at all t&e &i5&er'cost prior'perio+ units in 3or4 in process are t&e *irst to e complete+ an+ trans*erre+ out 3&ile en+in5 3or4 in process consists o* onl! t&e lo3er'cost current'perio+ units. 1&e 3ei5&te+'avera5e met&o+, &o3ever, smoot&es out cost per e)uivalent unit ! assumin5 t&at more o* t&e lo3er'cost units are complete+ an+ trans*erre+ out, 3&ile some o* t&e &i5&er'cost units in e5innin5 3or4 in process are place+ in en+in5 3or4 in process. #o, in t&is case, t&e 3ei5&te+'avera5e met&o+ results in a lo3er cost o* units complete+ an+ trans*erre+ out an+ a &i5&er en+in5 3or4'in'process inventor! relative to t&e .-.8 met&o+. SO$%TION E&HI'IT 17-4*A #teps 1 an+ 26 #ummari7e 8utput in 9&!sical :nits an+ Compute 8utput in $)uivalent :nits; .-.8 Cet&o+ o* 9rocess Costin5, Assem l! Department o* Parsen Compan! *or 8cto er 2009. (Ste) 1+ /lo0 o1 Pro2u-tion <or4 in process, e5innin5 (5iven) #tarte+ +urin5 current perio+ (5iven) 1o account *or Complete+ an+ trans*erre+ out +urin5 current perio+6 .rom e5innin5 3or4 in processI 5,000 (100> 100>); 5,000 (100> (0>) #tarte+ an+ complete+ 17,500 100>, 17,500 100> <or4 in process, en+in5= (5iven) 2,500 100>; 2,500 70> Accounte+ *or <or4 +one in current perio+ onl!
I G

P,"si-al %nits (3or4 +one e*ore current perio+) 5,000 20,000 25,000

(Ste) *+ Equivalent %nits .ire-t Conversion 3aterials Costs

5,000 17,00 0G 2,500 HHHHH 25,000

0 17,500 2,500 20,000

2,000 17,500 1,750 HHHHHH 21,250

De5ree o* completion in t&is +epartment6 +irect materials, 100>; conversion costs, (0>. 22,500 p&!sical units complete+ an+ trans*erre+ out minus 5,000 p&!sical units complete+ an+ trans*erre+ out *rom e5innin5 3or4'in'process inventor!. =De5ree o* completion in t&is +epartment6 +irect materials, 100>; conversion costs, 70>.

17'20

SO$%TION E&HI'IT 17-4*' #teps 0, ", an+ 56 #ummari7e 1otal Costs to Account .or, Compute Cost per $)uivalent :nit, an+ Assi5n 1otal Costs to :nits Complete+ an+ to :nits in $n+in5 <or4 in 9rocess; .-.8 Cet&o+ o* 9rocess Costin5, Assem l! Department o* Parsen Compan! *or 8cto er 2009. Total Pro2u-tion Costs $1,(52,750 (,807,500 $8,"90,250 .ire-t 3aterials $1,250,000 ",500,000 $5,750,000 $",500,000 20,000 $ 225 Conversion Costs $ "02,750 2,007,500 $2,7"0,250 $2,007,500 $ 21,250 110

(Ste) 4) <or4 in process, e5innin5 (5iven) Costs a++e+ in current perio+ (5iven) 1otal costs to account *or (Ste) =) Costs a++e+ in current perio+ Divi+e ! e)uivalent units o* 3or4 +one in current perio+ (#olution $%&i it 17'02A) Cost per e)uivalent unit o* 3or4 +one in current perio+ (Ste) >) Assi5nment o* costs6 Complete+ an+ trans*erre+ out (22,500 units)6 <or4 in process, e5innin5 (5,000 units) Costs a++e+ to e5. 3or4 in process in current perio+ 1otal *rom e5innin5 inventor! #tarte+ an+ complete+ (17,500 units) 1otal costs o* units complete+ L trans*erre+ out <or4 in process, en+in5 (2,500 units) 1otal costs accounte+ *or

$1,(52,750 220,000 1,872,750 5,8(2,500 7,705,250 755,000 $8,"90,250

$1,250,000 F $ "02,750 = (0 $225) F (2,000= $110) (17,500G $225) F (17,500G $110) (2,500J $225) F (1,750J $110) $5,750,000 F $2,7"0,250

=$)uivalent units use+ to complete e5innin5 3or4 in process *rom #olution $%&i it 17'02A, #tep 2. A $)uivalent units starte+ an+ complete+ *rom #olution $%&i it 17'02A, #tep 2. J $)uivalent units in en+in5 3or4 in process *rom #olution $%&i it 17'02A, #tep 2.

17'2"

17#44 (00 min.) Trans1erre2-in -osts, 0ei!,te2-avera!e 9et,o2 (relate2 to 17-4@ to 17-4*+# 1. 1rans*erre+'in costs are 100> complete, an+ +irect materials are 0> complete in ot& e5innin5 an+ en+in5 3or4'in'process inventor!. 1&e reason is t&at trans*erre+'in costs are al3a!s 100> complete as soon as t&e! are trans*erre+ in *rom t&e Assem l! Department to t&e 1estin5 Department. Direct materials in e5innin5 or en+in5 3or4 in process *or t&e 1estin5 Department are 0> complete ecause +irect materials are a++e+ onl! 3&en t&e testin5 process is 90> complete an+ t&e units in e5innin5 an+ en+in5 3or4 in process are onl! 70> an+ (0> complete, respectivel!. 2. #olution $%&i it 17'00A computes t&e e)uivalent units o* 3or4 +one to +ate in t&e 1estin5 Department *or trans*erre+'in costs, +irect materials, an+ conversion costs. 0. #olution $%&i it 17'00/ summari7es total 1estin5 Department costs *or 8cto er 2009, calculates t&e cost per e)uivalent unit o* 3or4 +one to +ate in t&e 1estin5 Department *or trans*erre+'in costs, +irect materials, an+ conversion costs, an+ assi5ns t&ese costs to units complete+ an+ trans*erre+ out an+ to units in en+in5 3or4 in process usin5 t&e 3ei5&te+'avera5e met&o+. ". 2ournal entries6 a. <or4 in 9rocess??1estin5 Department <or4 in 9rocess??Assem l! Department Cost o* 5oo+s complete+ an+ trans*erre+ out +urin5 8cto er *rom t&e Assem l! Department to t&e 1estin5 Department . .inis&e+ Qoo+s <or4 in 9rocess??1estin5 Department Cost o* 5oo+s complete+ an+ trans*erre+ out +urin5 8cto er *rom t&e 1estin5 Department to .inis&e+ Qoo+s inventor! 7,717,500 7,717,500

20,"59,(00 20,"59,(00

17'25

SO$%TION E&HI'IT 17-44A #teps 1 an+ 26 #ummari7e 8utput in 9&!sical :nits an+ Compute 8utput in $)uivalent :nits; <ei5&te+'Avera5e Cet&o+ o* 9rocess Costin5, 1estin5 Department o* Parsen Compan! *or 8cto er 2009. (Ste) 1+ P,"si-al /lo0 o1 Pro2u-tion %nits <or4 in process, e5innin5 (5iven) 7,500 1rans*erre+ in +urin5 current perio+ (5iven) 22,500 1o account *or 00,000 Complete+ an+ trans*erre+ out +urin5 current perio+ 2(,000 <or4 in process, en+in5= (5iven) 0,700 0,700 100>; 0,700 0>; 0,700 (0> Accounte+ *or 00,000 <or4 +one to +ate (Ste) *+ Equivalent %nits Trans1erre2-in .ire-t Conversion Costs 3aterials Costs

2(,000 0,700 00,000

2(,000 0 2(,000

2(,000 2,220 28,520

=De5ree o* completion in t&is +epartment6 trans*erre+'in costs, 100>; +irect materials, 0>; conversion costs, (0>.

17'2(

SO$%TION E&HI'IT 17-44' #teps 0, ", an+ 56 #ummari7e 1otal Costs to Account .or, Compute Cost per $)uivalent :nit, an+ Assi5n 1otal Costs to :nits Complete+ an+ to :nits in $n+in5 <or4 in 9rocess; <ei5&te+'Avera5e Cet&o+ o* 9rocess Costin5, 1estin5 Department o* Parsen Compan! *or 8cto er 2009. Total Pro2u-tion Costs $ 0,7(7,9(0 21,078,100 $25,1"(,0(0 Trans1erre2 -in Costs $ 2,902,500 7,717,500 $10,(50,000 $10,(50,000 $ 00,000 055 .ire-t 3aterials $ 0 9,70",700 $9,70",700 $9,70",700 $ 2(,000 0(9 Conversion Costs $ 805,"(0 0,955,900 $",791,0(0 $",791,0(0 $ 28,520 1(8

(Ste) 4)<or4 in process, e5innin5 (5iven) Costs a++e+ in current perio+ (5iven) 1otal costs to account *or (Ste) =) Costs incurre+ to +ate Divi+e ! e)uivalent units o* 3or4 +one to +ate (#olution $%&i it 17'00A) $)uivalent unit costs o* 3or4 +one to +ate (Ste) >)Assi5nment o* costs6 Complete+ an+ trans*erre+ out (2(,000 units) <or4 in process, en+in5 (0,700 units) 1otal costs accounte+ *or

$20,"59,(00 1,(8(,"(0 $25,1"(,0(0

(2(,000= $055) F (2(,000= $0(9) (0,700G $055) F (0G $0(9) $10,"29,500 F $9,70",700

F (2(,000= $1(8) F (2,220G $1(8) F $",791,0(0

=$)uivalent units complete+ an+ trans*erre+ out *rom #olution $%&i it 17'00A, #tep 2. G $)uivalent units in en+in5 3or4 in process *rom #olution $%&i it 17'00A, #tep 2.

17'27

17-4= (00 min.) Trans1erre2-in -osts, /I/O 9et,o2 (-ontinuation o1 17-44+# 1. As e%plaine+ in 9ro lem 17'00, re)uirement 1, trans*erre+'in costs are 100> complete an+ +irect materials are 0> complete in ot& e5innin5 an+ en+in5 3or4'in'process inventor!. 2. 1&e e)uivalent units o* 3or4 +one in 8cto er 2009 in t&e 1estin5 Department *or trans*erre+'in costs, +irect materials, an+ conversion costs are calculate+ in #olution $%&i it 17' 0"A. 0. #olution $%&i it 17'0"/ summari7es total 1estin5 Department costs *or 8cto er 2009, calculates t&e cost per e)uivalent unit o* 3or4 +one in 8cto er 2009 in t&e 1estin5 Department *or trans*erre+'in costs, +irect materials, an+ conversion costs, an+ assi5ns t&ese costs to units complete+ an+ trans*erre+ out an+ to units in en+in5 3or4 in process usin5 t&e .-.8 met&o+. ". 2ournal entries6 a. <or4 in 9rocess??1estin5 Department <or4 in 9rocess??Assem l! Department Cost o* 5oo+s complete+ an+ trans*erre+ out +urin5 8cto er *rom t&e Assem l! Dept. to t&e 1estin5 Dept. . .inis&e+ Qoo+s <or4 in 9rocess??1estin5 Department Cost o* 5oo+s complete+ an+ trans*erre+ out +urin5 8cto er *rom t&e 1estin5 Department to .inis&e+ Qoo+s inventor!. 7,705,250 7,705,250

20,"(0,7(( 20,"(0,7((

17'28

SO$%TION E&HI'IT 17-4=A #teps 1 an+ 26 #ummari7e 8utput in 9&!sical :nits an+ Compute 8utput in $)uivalent :nits; .-.8 Cet&o+ o* 9rocess Costin5, 1estin5 Department o* Parsen Compan! *or 8cto er 2009.
(Ste) *+ (Ste) 1+ Equivalent %nits P,"si-al Trans1erre2.ire-t Conversion %nits in Costs 3aterials Costs 7,500 (3or4 +one e*ore current perio+) 22,500 00,000

/lo0 o1 Pro2u-tion <or4 in process, e5innin5 (5iven) 1rans*erre+'in +urin5 current perio+ (5iven) 1o account *or Complete+ an+ trans*erre+ out +urin5 current perio+6 .rom e5innin5 3or4 in processI 7,500 (100> 100>); 7,500 (100> 0>); 7,500 (100> 70>) #tarte+ an+ complete+ 18,800 100>; 18,800 100>; 18,800 100> <or4 in process, en+in5= (5iven) 0,700 100>; 0,700 0>; 0,700 (0> Accounte+ *or <or4 +one in current perio+ onl!
I G

7,500 0 18,800G 18,800 0,700 HHHHHH 00,000 0,700 22,500

18,800 0 18,800 2,220 HHHHHH 7,500 2,250

HHHHH 2(,000

20,270

De5ree o* completion in t&is +epartment6 1rans*erre+'in costs, 100>; +irect materials, 0>; conversion costs, 70>. 2(,000 p&!sical units complete+ an+ trans*erre+ out minus 7,500 p&!sical units complete+ an+ trans*erre+ out *rom e5innin5 3or4'in'process inventor!. =De5ree o* completion in t&is +epartment6 trans*erre+'in costs, 100>; +irect materials, 0>; conversion costs, (0>.

17'29

SO$%TION E&HI'IT 17-4=' #teps 0, ", an+ 56 #ummari7e 1otal Costs to Account .or, Compute Cost per $)uivalent :nit, an+ Assi5n 1otal Costs to :nits Complete+ an+ to :nits in $n+in5 <or4 in 9rocess; .-.8 Cet&o+ o* 9rocess Costin5, 1estin5 Department o* Parsen Compan! *or 8cto er 2009.
Total Pro2u-tion Costs $ 0,717,005 21,095,850 $25,110,185 Trans1erre2-in Costs $ 2,881,875 7,705,250 $10,(17,125 $ 7,705,250 $ 22,500 0"0.79 .ire-t 3aterials $ 0 9,70",700 $9,70",700 $9,70",700 $ 2(,000 0(9.00 Conversion Costs $ 805,"(0 0,955,900 $",791,0(0 $0,955,900 $ 20,270 170.00

(Ste) 4) <or4 in process, e5innin5 (5iven) Costs a++e+ in current perio+ (5iven) 1otal costs to account *or (Ste) =) Costs a++e+ in current perio+ Divi+e ! e)uivalent units o* 3or4 +one in current perio+ (#olution $%&i it 17'0"A) Cost per e)uiv. unit o* 3or4 +one in current perio+ (Step 5) Assignment of costs: Completed and transferred out (26,300 units): Work in process, beginning (7,500 units) Costs added to beg. work in process in current period Total from beginning inventory Started and completed (18,800 units) Total costs of units completed & transferred out Work in process, ending (3,700 units) Total costs accounted for

$ 0,717,005 0,150,000 (,8(7,005 1(,59(,"01 20,"(0,7(( 1,("9,"19 $25,110,185

$2,881,875 F $0 F $805,"(0 = (0 $0"0.79) F (7,500 $0(9.00) F (2,250= $170.00)

=

(18,800G $0"0.79)F(18,800G $0(9.00)F(18,800G $170.00) (0,700J $0"0.79) F (0J $0(9.00) $10,(17,125 F $9,70",700 F (2,220J $170.00) F $",791,0(0

=$)uivalent units use+ to complete e5innin5 3or4 in process *rom #olution $%&i it 17'0"A, #tep 2. G $)uivalent units starte+ an+ complete+ *rom #olution $%&i it 17'0"A, #tep 2. J $)uivalent units in en+in5 3or4 in process *rom #olution $%&i it 17'0"A, #tep 2.

17'00

17-4> (25 min.) 6ei!,te2-avera!e 9et,o2# #olution $%&i it 17'05A s&o3s e)uivalent units o* 3or4 +one to +ate o*6 Direct materials Conversion costs (25 e)uivalent units 525 e)uivalent units

,ote t&at +irect materials are a++e+ 3&en t&e Assem l! Department process is 10> complete. /ot& t&e e5innin5 an+ en+in5 3or4 in process are more t&an 10> complete an+ &ence are 100> complete 3it& respect to +irect materials. #olution $%&i it 17'05/ summari7es t&e total Assem l! Department costs *or April 2009, calculates cost per e)uivalent unit o* 3or4 +one to +ate *or +irect materials an+ conversion costs, an+ assi5ns t&ese costs to units complete+ (an+ trans*erre+ out), an+ to units in en+in5 3or4 in process usin5 t&e 3ei5&te+'avera5e met&o+. SO$%TION E&HI'IT 17-4>A #teps 1 an+ 26 #ummari7e 8utput in 9&!sical :nits an+ Compute 8utput in $)uivalent :nits; <ei5&te+'Avera5e Cet&o+ o* 9rocess Costin5, Assem l! Department o* 9orter Ran+cra*t *or April 2009. (Ste) 1+ Equivalent %nits P,"si-al %nits 75 550 (25 500 125 (25 (25 525 (Ste) *+ .ire-t 3aterials Conversion Costs

/lo0 o1 Pro2u-tion <or4 in process, e5innin5 (5iven) #tarte+ +urin5 current perio+ (5iven) 1o account *or Complete+ an+ trans*erre+ out +urin5 current perio+ <or4 in process, en+in5= (5iven) 125 100>; 125 20> Accounte+ *or <or4 +one to +ate
=

500 125

500 25

De5ree o* completion in t&is +epartment6 +irect materials, 100>; conversion costs, 20>.

17'01

SO$%TION E&HI'IT 17-4>' #teps 0, ", an+ 56 #ummari7e 1otal Costs to Account .or, Compute Cost per $)uivalent :nit, an+ Assi5n 1otal Costs to :nits Complete+ an+ to :nits in $n+in5 <or4 in 9rocess; <ei5&te+'Avera5e Cet&o+ o* 9rocess Costin5, Assem l! Department o* 9orter, April 2009.
Total Pro2u-tion Costs .ire-t 3aterials Conversion Costs

(Ste) 4) <or4 in process, e5innin5 (5iven) Costs a++e+ in current perio+ (5iven) 1otal costs to account *or (Ste) =) Costs incurre+ to +ate Divi+e ! e)uivalent units o* 3or4 +one to +ate (#olution $%&i it 17'05A) Cost per e)uivalent unit o* 3or4 +one to +ate (Ste) >) Assi5nment o* costs6 Complete+ an+ trans*erre+ out (500 units) <or4 in process, en+in5 (125 units) 1otal costs accounte+ *or
= G

$ 1,910 28,"90 $00,"00

$ 1,775 17,(00 $19,075 $19,075 $ (25 01

105 10,890 $11,025 $11,025 $ 525 21

$2(,000 ","00 $00,"00

(500= $01) F (500= $21) (125G $01) F (25G $21) $19,075 F $11,025

$)uivalent units complete+ an+ trans*erre+ out *rom #olution $%&i it 17'05A, #tep 2. $)uivalent units in en+in5 3or4 in process *rom #olution $%&i it 17'05A, #tep 2.

17'02

17-46 (5?10 min.)

5ournal entries (-ontinuation o1 17-4>+# 17,(00 17,(00

1. <or4 in 9rocess?? Assem l! Department Accounts 9a!a le 1o recor+ +irect materials purc&ase+ an+ use+ in pro+uction +urin5 April 2. <or4 in 9rocess?? Assem l! Department @arious Accounts 1o recor+ Assem l! Department conversion costs *or April 0. <or4 in 9rocess??.inis&in5 Department <or4 in 9rocess?? Assem l! Department 1o recor+ cost o* 5oo+s complete+ an+ trans*erre+ out in April *rom t&e Assem l! Department to t&e .inis&in5 Department

10,890 10,890

2(,000 2(,000

6or7 in Pro-ess 88 Asse9 l" .e)art9ent /e5innin5 inventor!, April 1 1,910 0. 1rans*erre+ out to 1. Direct materials 17,(00 <or4 in 9rocess??.inis&in5 2. Conversion costs 10,890 $n+in5 inventor!, April 00 ","00

2(,000

17'00

17-47 (20 min.) /I/O 9et,o2 (-ontinuation o1 17-4>+# 1&e e)uivalent units o* 3or4 +one in April 2009 in t&e Assem l! Department *or +irect materials an+ conversion costs are s&o3n in #olution $%&i it 17'07A. #olution $%&i it 17'07/ summari7es t&e total Assem l! Department costs *or April 2009, calculates t&e cost per e)uivalent unit o* 3or4 +one in April 2009 in t&e Assem l! Department *or +irect materials an+ conversion costs, an+ assi5ns t&ese costs to units complete+ (an+ trans*erre+ out) an+ to units in en+in5 3or4 in process un+er t&e .-.8 met&o+. 1&e e)uivalent units o* 3or4 +one in e5innin5 inventor! is6 +irect materials, 75 100> A 75; an+ conversion costs 75 "0> A 00. 1&e cost per e)uivalent unit o* e5innin5 inventor! an+ o* 3or4 +one in t&e current perio+ are6 6or7 .one in Current Perio2 (Cal-ulate2 %n2er /I/O 3et,o2+ $02 $22

Direct materials Conversion costs

'e!innin! Inventor" $20.(7 ($1,775 75) $".50 ($105 00)

1&e *ollo3in5 ta le summari7es t&e costs assi5ne+ to units complete+ an+ t&ose still in process un+er t&e 3ei5&te+'avera5e an+ .-.8 process'costin5 met&o+s *or our e%ample. 6ei!,te2 Avera!e /I/O (Solution (Solution EB,i it 17-4>'+ EB,i it 17-47'+ .i11eren-e $2(,000 $25,850 ?$150 ","00 ",550 F$150 $00,"00 $00,"00

Cost o* units complete+ an+ trans*erre+ out <or4 in process, en+in5 1otal costs accounte+ *or

1&e .-.8 en+in5 inventor! is &i5&er t&an t&e 3ei5&te+'avera5e en+in5 inventor! ! $150. 1&is is ecause .-.8 assumes t&at all t&e lo3er'cost prior'perio+ units in 3or4 in process are t&e *irst to e complete+ an+ trans*erre+ out 3&ile en+in5 3or4 in process consists o* onl! t&e &i5&er'cost current'perio+ units. 1&e 3ei5&te+'avera5e met&o+, &o3ever, smoot&es out cost per e)uivalent unit ! assumin5 t&at more o* t&e &i5&er'cost units are complete+ an+ trans*erre+ out, 3&ile some o* t&e lo3er'cost units in e5innin5 3or4 in process are place+ in en+in5 3or4 in process. Rence, in t&is case, t&e 3ei5&te+'avera5e met&o+ results in a &i5&er cost o* units complete+ an+ trans*erre+ out an+ a lo3er en+in5 3or4'in'process inventor! relative to t&e .-.8 met&o+.

17'0"

SO$%TION E&HI'IT 17-47A #teps 1 an+ 26 #ummari7e 8utput in 9&!sical :nits an+ Compute 8utput in $)uivalent :nits; .-.8 Cet&o+ o* 9rocess Costin5, Assem l! Department o* 9orter Ran+cra*t *or April 2009.
(Ste) 1+ P,"si-al %nits 75 550 (25 75 0 "25G "25 125 125 (25 550 "95 25 "25 "5 (Ste) *+ Equivalent %nits .ire-t Conversion 3aterials Costs (3or4 +one e*ore current perio+)

/lo0 o1 Pro2u-tion <or4 in process, e5innin5 (5iven) #tarte+ +urin5 current perio+ (5iven) 1o account *or Complete+ an+ trans*erre+ out +urin5 current perio+6 .rom e5innin5 3or4 in processI 75 (100> 100>); 75 (100> "0>) #tarte+ an+ complete+ "25 100>; "25 100> <or4 in process, en+in5= (5iven) 125 100>; 125 20> Accounte+ *or <or4 +one in current perio+ onl!
I G

De5ree o* completion in t&is +epartment6 +irect materials, 100>; conversion costs, "0>. 500 p&!sical units complete+ an+ trans*erre+ out minus 75 p&!sical units complete+ an+ trans*erre+ out *rom e5innin5 3or4'in'process inventor!. =De5ree o* completion in t&is +epartment6 +irect materials, 100>; conversion costs, 20>.

SO$%TION E&HI'IT 17-47' #teps 0, ", an+ 56 #ummari7e 1otal Costs to Account .or, Compute Cost per $)uivalent :nit, an+ Assi5n 1otal Costs to :nits Complete+ an+ to :nits in $n+in5 <or4 in 9rocess; .-.8 Cet&o+ o* 9rocess Costin5, Assem l! Department o* 9orter Ran+cra*t *or April 2009.
Total Pro2u-tion Costs $ 1,910 28,"90 $00,"00 .ire-t 3aterials $ 1,775 17,(00 $19,075 $17,(00 $ $ 1,910 990 2,900 22,950 25,850 ",550 $00,"00 550 02 F F F Conversion Costs $ 105 10,890 $11,025 $10,890 $ "95 22

(Ste) 4) <or4 in process, e5innin5 (5iven) Costs a++e+ in current perio+ (5iven) 1otal costs to account *or (Ste) =) Costs a++e+ in current perio+ Divi+e ! e)uivalent units o* 3or4 +one in current perio+ ($%&i it 17'07A) Cost per e)uivalent unit o* 3or4 +one in current perio+ (Ste) >) Assi5nment o* costs6 Complete+ an+ trans*erre+ out (500 units)6 <or4 in process, e5innin5 (75 units) Costs a++e+ to e5in. 3or4 in process in current perio+ 1otal *rom e5innin5 inventor! #tarte+ an+ complete+ ("25 units) 1otal costs o* units complete+ L ts*+. out <or4 in process, en+in5 (125 units) 1otal costs accounte+ *or

$1,775 (0= $02) ("25G $02)

$105 ("5= $22) ("25G $22) (25J $22) $11,025

(125J $02) F $19,075 F

=$)uivalent units use+ to complete e5innin5 3or4 in process *rom #olution $%&i it 17'07A, #tep 2. A $)uivalent units starte+ an+ complete+ *rom #olution $%&i it 17'07A, #tep 2. J $)uivalent units in en+in5 3or4 in process *rom #olution $%&i it 17'07A, #tep 2.

17'05

17#4: (00 min.) Trans1erre2-in -osts, 0ei!,te2 avera!e# 1. #olution $%&i it 17'08A computes t&e e)uivalent units o* 3or4 +one to +ate in t&e /in+in5 Department *or trans*erre+'in costs, +irect materials, an+ conversion costs. #olution $%&i it 17'08/ summari7es total /in+in5 Department costs *or April 2009, calculates t&e cost per e)uivalent unit o* 3or4 +one to +ate in t&e /in+in5 Department *or trans*erre+'in costs, +irect materials, an+ conversion costs, an+ assi5ns t&ese costs to units complete+ an+ trans*erre+ out an+ to units in en+in5 3or4 in process usin5 t&e 3ei5&te+'avera5e met&o+. 2. 2ournal entries6 a. <or4 in 9rocess?? /in+in5 Department <or4 in 9rocess??9rintin5 Department Cost o* 5oo+s complete+ an+ trans*erre+ out +urin5 April *rom t&e 9rintin5 Department to t&e /in+in5 Department . .inis&e+ Qoo+s <or4 in 9rocess?? /in+in5 Department Cost o* 5oo+s complete+ an+ trans*erre+ out +urin5 April *rom t&e /in+in5 Department to .inis&e+ Qoo+s inventor! 1"",000 1"",000

2"9,012 2"9,012

SO$%TION E&HI'IT 17-4:A #teps 1 an+ 26 #ummari7e 8utput in 9&!sical :nits an+ Compute 8utput in $)uivalent :nits; <ei5&te+'Avera5e Cet&o+ o* 9rocess Costin5, /in+in5 Department o* 9u lis&, -nc. *or April 2009.
(Ste) *+ Equivalent %nits P,"si-al Trans1erre2- .ire-t Conversion %nits in Costs 3aterials Costs 900 2,700 0,(00 0,000 0,000 0,000 0,000 (00 (00 0 0(0 0,(00 0,(00 0,000 0,0(0 (Ste) 1+

/lo0 o1 Pro2u-tion <or4 in process, e5innin5 (5iven) 1rans*erre+'in +urin5 current perio+ (5iven) 1o account *or Complete+ an+ trans*erre+ out +urin5 current perio+6 <or4 in process, en+in5a (5iven) ((00 100>; (00 0>; (00 (0>) Accounte+ *or <or4 +one to +ate
a

De5ree o* completion in t&is +epartment6 trans*erre+'in costs, 100>; +irect materials, 0>; conversion costs, (0>.

17'0(

SO$%TION E&HI'IT 17-4:' #teps 0, ", an+ 56 #ummari7e 1otal Costs to Account .or, Compute Cost per $)uivalent :nit, an+ Assi5n 1otal Costs to :nits Complete+ an+ to :nits in $n+in5 <or4 in 9rocess; <ei5&te+'Avera5e Cet&o+ o* 9rocess Costin5, /in+in5 Department o* 9u lis&, -nc. *or April 2009. Total Pro2u-tion Costs $ "7,775 209,700 $287,"75 Trans1erre2-in Costs $ 02,775 1"",000 $17(,775 $17(,775 0,(00 $ "9.10" $2"9,012 08,"(0 $287,"75 .ire-t 3aterials $ 0 2(,700 $2(,700 $2(,700 0,000 $ 8.90 Conversion Costs $15,000 (9,000 $8",000 $8",000 0,0(0 $ 25

(Ste) 4+

<or4 in process, e5innin5 (5iven) Costs a++e+ in current perio+ (5iven) 1otal costs to account *or Costs incurre+ to +ate Divi+e ! e)uivalent units o* 3or4 +one to +ate (#olution $%&i it 17'08A) Cost per e)uivalent unit o* 3or4 +one to +ate Assi5nment o* costs6 Complete+ an+ trans*erre+ out (0,000 units) <or4 in process, en+in5 ((00 units)6 1otal costs accounte+ *or

(Ste) =+

(Ste) >+

(0,000a O $"9.10") F (0,000a O $8.90) F (0,000a O $25) ((00 O $"9.10") F (0 O $8.90) F (0(0 O $25)

$17(,77 5

F $2(,700

$8",000

$)uivalent units complete+ an+ trans*erre+ out *rom #ol. $%&i it 17'08A, step 2. $)uivalent units in en+in5 3or4 in process *rom #ol. $%&i it 17'08A, step 2.

17'07

17-4? (00 min.) Trans1erre2-in -osts, /I/O 9et,o2 (-ontinuation o1 17-4:+# 1. #olution $%&i it 17'09A calculates t&e e)uivalent units o* 3or4 +one in April 2009 in t&e /in+in5 Department *or trans*erre+'in costs, +irect materials, an+ conversion costs. #olution $%&i it 17'09/ summari7es total /in+in5 Department costs *or April 2009, calculates t&e cost per e)uivalent unit o* 3or4 +one in April 2009 in t&e /in+in5 Department *or trans*erre+'in costs, +irect materials, an+ conversion costs, an+ assi5ns t&ese costs to units complete+ an+ trans*erre+ out an+ to units in en+in5 3or4 in process usin5 t&e .-.8 met&o+. 2ournal entries6 a. <or4 in 9rocess?? /in+in5 Department <or4 in 9rocess??9rintin5 Department Cost o* 5oo+s complete+ an+ trans*erre+ out +urin5 April *rom t&e 9rintin5 Department to t&e /in+in5 Department. . .inis&e+ Qoo+s <or4 in 9rocess?? /in+in5 Department Cost o* 5oo+s complete+ an+ trans*erre+ out +urin5 April *rom t&e /in+in5 Department to .inis&e+ Qoo+s inventor!. 1"1,750 1"1,750

2"0,525 2"0,525

2. 1&e e)uivalent units o* 3or4 +one in e5innin5 inventor! is6 1rans*erre+'in costs, 900 100> A 900; +irect materials, 900 0> A 0; an+ conversion costs, 900 "0> A 0(0. 1&e cost per e)uivalent unit o* e5innin5 inventor! an+ o* 3or4 +one in t&e current perio+ are6 'e!innin! Inventor" $0(."2 ($02,775 900) $00.95 ($27,855 900) S $"1.(7 ($15,000 0(0) 6or7 .one in Current Perio2 $50.00 ($1"",000 2,700) $52.50 ($1"1,750 2,700) $ 8.90 $20.00

1rans*erre+'in costs (3ei5&te+ avera5e) 1rans*erre+'in costs (.-.8) Direct materials Conversion costs

1&e *ollo3in5 ta le summari7es t&e costs assi5ne+ to units complete+ an+ t&ose still in process un+er t&e 3ei5&te+'avera5e an+ .-.8 process'costin5 met&o+s *or t&e /in+in5 Department. 6ei!,te2 Avera!e /I/O (Solution (Solution EB,i it 17-4:'+ EB,i it 17-4?'+ $2"9,012 $2"0,525 08,"(0 09,780 $287,"75 $280,005

Cost o* units complete+ an+ trans*erre+ out <or4 in process, en+in5 1otal costs accounte+ *or

.i11eren-e ?$8,"87 F$1,017

17'08

1&e .-.8 en+in5 inventor! is &i5&er t&an t&e 3ei5&te+'avera5e en+in5 inventor! ! $1,017. 1&is is ecause .-.8 assumes t&at all t&e lo3er'cost prior'perio+ units in 3or4 in process (resultin5 *rom t&e lo3er trans*erre+'in costs in e5innin5 inventor!) are t&e *irst to e complete+ an+ trans*erre+ out 3&ile en+in5 3or4 in process consists o* onl! t&e &i5&er'cost current'perio+ units. 1&e 3ei5&te+'avera5e met&o+, &o3ever, smoot&es out cost per e)uivalent unit ! assumin5 t&at more o* t&e &i5&er'cost units are complete+ an+ trans*erre+ out, 3&ile some o* t&e lo3er'cost units in e5innin5 3or4 in process are place+ in en+in5 3or4 in process. Rence, in t&is case, t&e 3ei5&te+'avera5e met&o+ results in a &i5&er cost o* units complete+ an+ trans*erre+ out an+ a lo3er en+in5 3or4'in'process inventor! relative to .-.8. ,ote t&at t&e +i**erence in cost o* units complete+ an+ trans*erre+ out (?$8,"87) +oes not *ull! o**set t&e +i**erence in en+in5 3or4'in'process inventor! (F$1,017). 1&is is ecause t&e .-.8 an+ 3ei5&te+'avera5e met&o+s result in +i**erent values *or trans*erre+'in costs 3it& respect to ot& e5innin5 inventor! an+ costs trans*erre+ in +urin5 t&e perio+. SO$%TION E&HI'IT 17-4?A #teps 1 an+ 26 #ummari7e 8utput in 9&!sical :nits an+ Compute 8utput in $)uivalent :nits; .-.8 Cet&o+ o* 9rocess Costin5, /in+in5 Department o* 9u lis&, -nc. *or April 2009.
(Ste) 1+ (Ste) *+ Equivalent %nits

/lo0 o1 Pro2u-tion <or4 in process, e5innin5 (5iven) 1rans*erre+'in +urin5 current perio+ (5iven) 1o account *or Complete+ an+ trans*erre+ out +urin5 current perio+6 .rom e5innin5 3or4 in processa M900 (100> ? 100>); 900 (100> ? 0>); 900 #tarte+ an+ complete+ (2,100 100>; 2,100 100>; 2,100 100>) <or4 in process, en+in5c (5iven) ((00 100>; (00 % 0>; (00 (0>) Accounte+ *or <or4 +one in current perio+ onl!
a

P,"si-al Trans1erre2-in .ire-t Conversion %nits Costs 3aterials Costs 900 (3or4 +one e*ore current perio+) 2,700 0,(00

(100> ? "0>)N

900 0 2,100 2,100 (00 HHHH 0,(00 (00 HHHH 2,700 2,100 0 HHHH 0,000 2,100 0(0 HHHH 0,000 900 5"0

De5ree o* completion in t&is +epartment6 1rans*erre+'in costs, 100>; +irect materials, 0>; conversion costs, "0>. 0,000 p&!sical units complete+ an+ trans*erre+ out minus 900 p&!sical units complete+ an+ trans*erre+ out *rom e5innin5 3or4'in'process inventor!. c De5ree o* completion in t&is +epartment6 trans*erre+'in costs, 100>; +irect materials, 0>; conversion costs, (0>.

17'09

SO$%TION E&HI'IT 17-4?' #teps 0, ", an+ 56 #ummari7e 1otal Costs to Account .or, Compute Cost per $)uivalent :nit, an+ Assi5n 1otal Costs to :nits Complete+ an+ to :nits in $n+in5 <or4 in 9rocess; .-.8 Cet&o+ o* 9rocess Costin5, /in+in5 Department o* 9u lis&, -nc. *or April 2009.
Total Pro2u-tion Costs $ "2,855 207,"50 $280,005

(Ste) 4+ <or4 in process, e5innin5 (5iven) Costs a++e+ in current perio+ (5iven) 1otal costs to account *or (Ste) =+ Costs a++e+ in current perio+ Divi+e ! e)uivalent units o* 3or4 +one in current perio+ (#ol. $%&i it 17'09A) Cost per e)uivalent unit o* 3or4 +one in current perio+ (Ste) >+ Assi5nment o* costs6 Complete+ an+ trans*erre+ out (0,000 units) <or4 in process, e5innin5 (900 units) Costs a++e+ to e5innin5 3or4 in process in current perio+ 1otal *rom e5innin5 inventor! #tarte+ an+ complete+ (2,100 units) 1otal costs o* units complete+ an+ trans*erre+ out <or4 in process, en+in5 ((00 units)6 1otal costs accounte+ *or
a

Trans1erre2-in Costs $ 27,855 1"1,750 $1(9,(05 $1"1,750 2,700 $ 52.50

.ire-t 3aterials $ 0 2(,700 $2(,700 $2(,700 0,000 $ 8.90

Conversion Costs $15,000 (9,000 $8",000 $(9,000 0,000 $ 20.00

$ "2,855 20,"00 (0,285 177,2"0 2"0,525 09,780 $280,005

$27,855 F (0a O $52.50) F

$0 F $15,000 (900a O $8.90) F (5"0a O $20)

(2,100 O $52.50) F (2,100 O $8.90) F (2,100 O $20) ((00c O $52.50) F $1(9,(05 F (0c O $8.90) F $2(,700 (0(0c O $20) F $8",000

$)uivalent units use+ to complete e5innin5 3or4 in process *rom #olution $%&i it 17'09A, step 2. $)uivalent units starte+ an+ complete+ *rom #olution $%&i it 17'09A, step 2. c $)uivalent units in en+in5 3or4 in process *rom #olution $%&i it 17'09A, step 2.

17'"0

17-=@ ("5 min.) Trans1erre2-in -osts, 0ei!,te2-avera!e an2 /I/O 9et,o2s# 1. #olution $%&i it 17'"0A computes t&e e)uivalent units o* 3or4 +one to +ate in t&e Dr!in5 an+ 9ac4a5in5 Department *or trans*erre+'in costs, +irect materials, an+ conversion costs. #olution $%&i it 17'"0/ summari7es total Dr!in5 an+ 9ac4a5in5 Department costs *or 3ee4 07, calculates t&e cost per e)uivalent unit o* 3or4 +one to +ate in t&e Dr!in5 an+ 9ac4a5in5 Department *or trans*erre+'in costs, +irect materials, an+ conversion costs, an+ assi5ns t&ese costs to units complete+ an+ trans*erre+ out an+ to units in en+in5 3or4 in process usin5 t&e 3ei5&te+'avera5e met&o+. 2. #olution $%&i it 17'"0C computes t&e e)uivalent units o* 3or4 +one in 3ee4 07 in t&e Dr!in5 an+ 9ac4a5in5 Department *or trans*erre+'in costs, +irect materials, an+ conversion costs. #olution $%&i it 17'"0D summari7es total Dr!in5 an+ 9ac4a5in5 Department costs *or 3ee4 07, calculates t&e cost per e)uivalent unit o* 3or4 +one in 3ee4 07 in t&e Dr!in5 an+ 9ac4a5in5 Department *or trans*erre+'in costs, +irect materials, an+ conversion costs, an+ assi5ns t&ese costs to units complete+ an+ trans*erre+ out an+ to units in en+in5 3or4 in process usin5 t&e .-.8 met&o+. SO$%TION E&HI'IT 17-=@A #teps 1 an+ 26 #ummari7e 8utput in 9&!sical :nits an+ Compute 8utput in $)uivalent :nits; <ei5&te+'Avera5e Cet&o+ o* 9rocess Costin5, Dr!in5 an+ 9ac4a5in5 Department o* .rito'Pa! -nc. *or <ee4 07. (Ste) 1+ (Ste) *+ Equivalent %nits P,"si-al Trans1erre2.ire-t Conversion /lo0 o1 Pro2u-tion %nits in Costs 3aterials Costs <or4 in process, e5innin5 (5iven) 1,250 1rans*erre+ in +urin5 current perio+ (5iven) 5,000 1o account *or (,250 Complete+ an+ trans*erre+ out +urin5 current perio+ 5,250 5,250 5,250 5,250 <or4 in process, en+in5= (5iven) 1,000 1,000 100>; 1,000 0>; 1,000 "0> 1,000 0 "00 Accounte+ *or (,250 <or4 +one to +ate (,250 5,250 5,(50
=De5ree o* completion in t&is +epartment6 trans*erre+'in costs, 100>; +irect materials, 0>; conversion costs, "0>.

17'"1

SO$%TION E&HI'IT 17-=@' #teps 0, ", an+ 56 #ummari7e 1otal Costs to Account .or, Compute Cost per $)uivalent :nit, an+ Assi5n 1otal Costs to :nits Complete+ an+ to :nits in $n+in5 <or4 in 9rocess; <ei5&te+'Avera5e Cet&o+ o* 9rocess Costin5, Dr!in5 an+ 9ac4a5in5 Department o* .rito'Pa! -nc. *or <ee4 07. Total Pro2u-tion Costs $ 08,0(0 159,(00 $197,((0 Trans1erre2 -in Costs $ 29,000 9(,000 $125,000 $125,000 $ $17",000 20,0(0 $197,((0 (,250 20 .ire-t 3aterials $ 0 25,200 $25,200 $25,200 5,250 $ ".80 Conversion Costs $ 9,0(0 08,"00 $"7,"(0 $"7,"(0 5,(50 $ 8."0

(Ste) 4+

<or4 in process, e5innin5 (5iven) Costs a++e+ in current perio+ (5iven) 1otal costs to account *or Costs incurre+ to +ate Divi+e ! e)uivalent units o* 3or4 +one to +ate (#olution $%&i it 17'"0A) $)uivalent unit costs o* 3or4 +one to +ate Assi5nment o* costs6 Complete+ an+ trans*erre+ out (5,250 units) <or4 in process, en+in5 (1,000 units) 1otal costs accounte+ *or

(Ste) =+

(Ste) >+

(5,250= $20) F (5,250= $".80) F (5,250= $8."0) (1,000G $20) F (0G $".80) F ("00G $8."0)

$125,000

$25,200

F $"7,"(0

$)uivalent units complete+ an+ trans*erre+ out *rom #olution $%&i it 17'"0A, #tep 2. G$)uivalent units in en+in5 3or4 in process *rom #olution $%&i it 17'"0A, #tep 2.

17'"2

SO$%TION E&HI'IT 17-=@C #teps 1 an+ 26 #ummari7e 8utput in 9&!sical :nits an+ Compute 8utput in $)uivalent :nits; .-.8 Cet&o+ o* 9rocess Costin5, Dr!in5 an+ 9ac4a5in5 Department o* .rito'Pa! -nc. *or <ee4 07.
(Ste) 1+ P,"si-al %nits 1,250 5,000 (,250 1,250 0 ",000G ",000 1,000 1,000 (,250 5,000 5,250 ",(50 0 "00 ",000 ",000 1,250 250 (Ste) *+ Equivalent %nits Trans1erre2.ire-t Conversion in Costs 3aterials Costs (3or4 +one e*ore current perio+)

/lo0 o1 Pro2u-tion <or4 in process, e5innin5 (5iven) 1rans*erre+'in +urin5 current perio+ (5iven) 1o account *or Complete+ an+ trans*erre+ out +urin5 current perio+6 .rom e5innin5 3or4 in processI 1,250 (100> 100>); 1,250 (100> 0>); 1,250 (100> 80>) #tarte+ an+ complete+ ",000 100>; ",000 100>; ",000 100> <or4 in process, en+in5= (5iven) 1,000 100>; 1,000 0>; 1,000 "0> Accounte+ *or <or4 +one in current perio+ onl!
I G

De5ree o* completion in t&is +epartment6 1rans*erre+'in costs, 100>; +irect materials, 0>; conversion costs, 80>. 5,250 p&!sical units complete+ an+ trans*erre+ out minus 1,250 p&!sical units complete+ an+ trans*erre+ out *rom e5innin5 3or4'in'process inventor!. =De5ree o* completion in t&is +epartment6 trans*erre+'in costs, 100>; +irect materials, 0>; conversion costs, "0>.

17'"0

SO$%TION E&HI'IT 17-=@. #teps 0, ", an+ 56 #ummari7e 1otal Costs to Account .or, Compute Cost per $)uivalent :nit, an+ Assi5n 1otal Costs to :nits Complete+ an+ to :nits in $n+in5 <or4 in 9rocess; .-.8 Cet&o+ o* 9rocess Costin5, Dr!in5 an+ 9ac4a5in5 Department o* .rito'Pa! -nc. *or <ee4 07.
Total Pro2u-tion Costs $ 07,980 157,(00 $195,580 Trans1erre2 -in Costs $ 28,920 9",000 $122,920 $ 9",000 5,000 $ 18.80 .ire-t 3aterials $ 0 25,200 $25,200 $25,200 5,250 $ ".80 Conversion Costs $ 9,0(0 08,"00 $"7,"(0 $08,"00 ",(50 $ 8.258

(Ste) 4+ <or4 in process, e5innin5 (5iven)

Costs a++e+ in current perio+ (5iven) 1otal costs to account *or

(Ste) =+ Costs a++e+ in current perio+

Divi+e ! e)uivalent units o* 3or4 +one in current perio+ (#olution $%&i it 17'"0C) Cost per e)uivalent unit o* 3or4 +one in current perio+

(Ste) >+ Assi5nment o* costs6

Complete+ an+ trans*erre+ out (5,250 units)6 <or4 in process, e5innin5 (1,250 units) Costs a++e+ to e5. 3or4 in process in current perio+ 1otal *rom e5innin5 inventor! #tarte+ an+ complete+ (",000 units) 1otal costs o* units complete+ L trans*erre+ out <or4 in process, en+in5 (1,000 units) 1otal costs accounte+ *or

$ 07,980 8,0(5 "(,0"5 127,"02 170,"77 22,100 $195,580

$28,920 F $0 F $9,0(0 (0= $18.80) F (1,250= $".80) F (250= $8.258) (",000G $18.80) F (",000G $".80) F (",000G $8.258) (1,000J $18.80) F (0J $".80) F $122,920 F $25,200 ("00J $8.258) $"7,"(0

(Ste) 4+
= G

$)uivalent units use+ to complete e5innin5 3or4 in process *rom #olution $%&i it 17'"0C, #tep 2. $)uivalent units starte+ an+ complete+ *rom #olution $%&i it 17'"0C, #tep 2. J $)uivalent units in en+in5 3or4 in process *rom #olution $%&i it 17'"0C, #tep 2.

17'""

17."1 (00'05 min.) 6ei!,te2-avera!e an2 stan2ar2--ostin! 9et,o2# 1. #olution $%&i it 17'"1A computes t&e e)uivalent units o* 3or4 +one in ,ovem er 2010 ! 9a)uitaKs 9earls Compan! *or +irect materials an+ conversion costs. 2. an+ 0. #olution $%&i it 17'"1/ summari7es total costs o* t&e 9a)uitaKs 9earls Compan! *or ,ovem er 00, 2010 an+, usin5 t&e stan+ar+ cost per e)uivalent unit *or +irect materials an+ conversion costs, assi5ns t&ese costs to units complete+ an+ trans*erre+ out an+ to units in en+in5 3or4 in process. 1&e e%&i it also summari7es t&e cost variances *or +irect materials an+ conversion costs *or ,ovem er 2010. SO$%TION E&HI'IT 17-=1A #teps 1 an+ 26 #ummari7e 8utput in 9&!sical :nits an+ Compute 8utput in $)uivalent :nits; #tan+ar+ Costin5 Cet&o+ o* 9rocess Costin5, 9a)uitaKs 9earls Compan! *or t&e mont& en+e+ ,ovem er 00, 2010.
(Ste) *+ Equivalent %nits .ire-t Conversion 3aterials Costs (3or4 +one e*ore current perio+)

/lo0 o1 Pro2u-tion

(Ste) 1+ P,"si-al %nits

<or4 in process, e5innin5 (5iven) #tarte+ +urin5 current perio+ (5iven) 1o account *or Complete+ an+ trans*erre+ out +urin5 current perio+6 .rom e5innin5 3or4 in processI 25,000 (100> 100>); 25,000 (100> ? 75>) #tarte+ an+ complete+ 100,000 100>, 100,000 100> <or4 in process, en+in5= (5iven) 2(,250 100>; 2(,250 50> Accounte+ *or <or4 +one in current perio+ onl!
I

25,000 12(,250 151,250 25,000

0 100,000
G

(,250 100,000 10,125 HHHHHHH 119,075

100,000 2(,250 HHHHHHH 151,250 2(,250 HHHHHHH 12(,250

De5ree o* completion in t&is +epartment6 +irect materials, 100>; conversion costs, 75>. 125,000 p&!sical units complete+ an+ trans*erre+ out minus 25,000 p&!sical units complete+ an+ trans*erre+ out *rom e5innin5 3or4'in'process inventor!.

=De5ree o* completion in t&is +epartment6 +irect materials, 100>; conversion costs, 50>.

17'"5

SO$%TION E&HI'IT 17-=1' #teps 0, ", an+ 56 #ummari7e 1otal Costs to Account .or, Compute Cost per $)uivalent :nit, an+ Assi5n 1otal Costs to :nits Complete+ an+ to :nits in $n+in5 <or4 in 9rocess; #tan+ar+'Costin5 Cet&o+ o* 9rocess Costin5, 9a)uitaKs 9earls Compan! *or t&e mont& en+e+ ,ovem er 00, 2010.
Total Pro2u-tion .ire-t Conversion Costs 3aterials Costs $ 250,000 $ (2,500 F $ 187,500 1,509,075 (12(,250 2.50) F (119,075 $10.00) $1,759,075 $078,125 F $1,081,250 $ 2.50 $ 10.00

(Ste) 4) <or4 in process, e5innin5 (5iven) Costs a++e+ in current perio+ at stan+ar+ costs 1otal costs to account *or

(Ste) =+ #tan+ar+ cost per e)uivalent unit (5iven) (Ste) >) Assi5nment o* costs at stan+ar+ costs6 Complete+ an+ trans*erre+ out (125,000 units)6 <or4 in process, e5innin5 (25,000 units) $ 250,000 Costs a++e+ to e5. 3or4 in process in current perio+ (2,500 1otal *rom e5innin5 inventor! 012,500 #tarte+ an+ complete+ (100,000 units) 1,250,000 1otal costs o* units trans*erre+ out 1,5(2,500 <or4 in process, en+in5 (2(,250 units) 19(,875 1otal costs accounte+ *or $1,759,075 #ummar! o* variances *or current per*ormance6 Costs a++e+ in current perio+ at stan+ar+ costs (see #tep 0 a ove) Actual costs incurre+ (5iven) @ariance

$(2,500 (0= $2.50)

F $187,500 F ((,250= $10.00)

(100,000G $2.50) F (100,000G $10.00) (2(,250J $2.50) F (10,125J $10.00) $078,125 F $1,081,250 $015,(25 027,500 $ 11,875 : $1,190,750 1,207,"15 $ 10,((5 :

=$)uivalent units to complete e5innin5 3or4 in process *rom #olution $%&i it 17'"1A, #tep 2. G $)uivalent units starte+ an+ complete+ *rom #olution $%&i it 17'"1A, #tep 2.
J

$)uivalent units in en+in5 3or4 in process *rom #olution $%&i it 17'"1A, #tep 2.

17'"(

17-=* (25'00 min.) O)eration -ostin! 1. 1o o tain t&e over&ea+ rates, +ivi+e t&e u+5ete+ cost o* eac& operation ! t&e pairs o* s&oes t&at are e%pecte+ to 5o t&rou5& t&at operation.
'u2!ete2 Conversion Cost $1"5,125 58,050 ",275 (7,725 10,500 2,025 'u2!ete2 Pairs o1 S,oes 02,250 02,250 2,250 02,250 00,000 2,250 Conversion Cost )er Pair o1 S,oes $".50 1.80 1.90 2.10 0."5 0.90

8peration 1 8peration 2 8peration 0 8peration " 8peration 5 8peration ( 2.

#&oe t!pe6 Buantit!6 Direct Caterials 8peration 1 8peration 2 8peration 0 8peration " 8peration 5 8peration ( 1otal

6or7 Or2er 1@4?? /asic 1,000 $10,000 ",500 1,800 0 2,100 "50 0 $21,850

6or7 Or2er 1@=@@ $la orate 150 $",200 (75 270 285 015 0 105 $5,880

1&e +irect materials costs per unit var! ase+ on t&e t!pe o* s&oe ($090,000 00,000 A $10 *or t&e /asic, an+ $(0,000 2,250 A $28 *or t&e $la orate). Conversion costs are c&ar5e+ usin5 t&e rates compute+ in part (1), ta4in5 into account t&e speci*ic operations t&at eac& t!pe o* s&oe actuall! 5oes t&rou5&. 0. <or4 or+er 10099 (/asic s&oes)6 1otal cost $21,850 Divi+e+ ! num er o* pairs o* s&oes6 1,000 Cost per pair o* plain s&oes6 $ 21.85 <or4 or+er 10"00 ($la orate s&oes)6 1otal cost6 $5,880 Divi+e+ ! num er o* pairs o* s&oes6 150 Cost per pair o* *anc! s&oes6 $09.20

17'"7