Chapter 5 ~ Process Cost Accounting—General Procedures 279
E5-11 Cost of production summary and journal entries
1. For E5-10, prepare a cost of production summary for the
month for Blending.
2. Prepare a journal entry to transfer the completed units from
Blending to Finished Goods.
5-12 Adjusted unit cost computation
Colbert Company has 1,000 units in process in Forming at the
beginning of the month with a transferred cost of $21,200 from
Blanking. During the month, 5,000 units with a total cost of
$100,000 are received from Blanking; 4,000 units are finished and
transferred to Finishing; and 2,000 units are in process in Form-
ing at the end of the month, one-half completed.
Requir
Compute the adjusted unit cost from the prior department in the
Forming Department.
(Round the unit cost to three decimal places.)
PROBLEMS
P51 Cost of production summary, one department; no beginning
work in process
Hugo Products Co. produces a latex paint and uses the process
cost system. Materials, labor, and overhead are added evenly
throughout the process. The following information was obtained MM
from the company's accounts at the end of February.
Production Costs
Costs incurred during month,
Materials 5 Dene eee ere Co 00
Labor cen sees 20,000
Factory overhead vssesesisssssseeresvessisseserees 40,000
Production Report Units
Finished and transferred to stockroom during month... 200+ 60,000
Work in process, end of period, one-fourth completed ........ 10,000
Required:
Prepare a cost of production summary for February.
P5-2 Cost of production summary, one department; beginning work
in process
similar to Self-Study Problem 1
Andrews Company uses the process cast system. The following
data, taken from the organization’s books, reflect the results of
manufacturing operations during the month of October:280
Principles af Cost Accounting
P5-3
P5-4
Production Costs
Workin process, beginning of period
Materials ..ccsceseesee . $ 2,600
Labor OEE 200
Factory overhead eer 900 $ 5900
Costs incurred during month:
Materials esses . $10,000
Labor vente 7,500
Factory overhead votes 6000 29,500
Total oescceeeerseeeeeee . $29,400
Production Report Units
Finished and transferred to stockroom during month ...esceessees 18,000
‘Work in process, end of period, one-half completed we 2,000
Required:
Prepare a cost of production summary for October.
Cost of production summary, one department; beginning
inventory
Greene Company provides the following information regarding
its units of production:
1,000 units in ending work in process, one-third complete, on
June 30.
47,000 units started in production during July, with 42,000
completed in addition to the beginning work in process, by the
end of July.
The ending work in process inventory was two-thirds complete
atthe end of July.
Required:
Map the calculation of the equivalent units of production for
July, using the format in Figure 5-6 of the chapter.
Cost of production summary, multiple departments; no
beginning inventory
Department-Bravo, the second department in a three-department
production process for Military, Inc., received 10,000 units with a
total cost of $25,000 from Department-Alpha during the month of
May. Production costs in Bravo during the month were: materials,
$6,000; labor, $3,000; and factory overhead, $9,000. Of the 10,000
units transferred in, 8,000 were completed and transferred to
Department-Charlie during the month and 2,000 remained in work
in process at the end of the month, one-fourth complete.
Required:
Prepare a cost of production summary for Department-Bravo for
the month ended May 31.Chapter 5 ~ Process Cost Accounting—General Procedures 281
P55 Departmental cost work sheet analysis; cost of production
summary, three departments, no beginning inventories
Cubbies Manufacturing Co. has three departments and uses the
process cost system of accounting. A portion of the departmen-
tal cost work sheet prepared by the cost accountant at the end of
July is reproduced below,
Cubbies Manufacturing Co.
Departmental Cost Work She
For the Month Ended July 31, 2011
Cost per Units Units Amount Amount
unit received in transferred charged to credited to
Analysis transferred department or on hand department department
Cutting
Started in process coe 6,600
Costs for month
Materials $30,000
Labor .. . 16,000
Factory overhead... - 14000
Completed and transferred to Shaping ... $10.00 5,400 364,000
Closing inventory in process
(1/2 completed) — 1,200 6,000
Total 6,600 6.600 $60,000 $360,000
Shaping
Received during month from Cutting . 5,400 $54,000
Costs added during month
Materials 028 1,200
Labor ooseeseeseeeeseeeee : 125 6,000
Factory overhead... cece 00 4200
Completedand transferred to Finishing... $1260 368,000
Closing inventory in process
(2% completes) 11,000
Total
Finishing:
Received during month from Shaping 4,400 $55,000
Costs added during month;
Materials»... peeeenaren |) 180: 6300
LADO oes eee 1.00 4,200
Factory overhead .....+.+ 5 1.80 6,300
4,01
‘Completed and transferred to stock ..
8
$66,000
Closing inventory in process
(12 completed)
Total
5,800
ls
8
Required:
Prepare a cost of production summary for each department. (Round
unit costs to three decimal places.)282 Principles of Cost Accounting
P5-6 Journal entries and cost of goods manufactured statement
Required:
Using the data in PS-5:
1. Draft the necessary entries to record the manufacturing costs
incurred during the month of July.
2. Prepare a statement of cost of goods manufactured for the
month ended July 31.
P5-7 Change in unit cost from prior department and valuation of
inventory
Gomez Products Co. has two departments: Mixing and Cooking.
At the beginning of the month, Cooking had 4,000 units in
process with costs of $8,600 from Mixing, and its own depart-
mental costs of $500 for materials, $1,000 for labor, and $2,500
for factory overhead. During the month, 10,000 units were re-
ceived from Mixing with a cost of $25,000. Cooking incurred
costs of $4,250 for materials, $8,500 for labor, and $21,250 for
factory overhead, and finished 12,000 units. At the end of the
month, there were 2,000 units in process, one-half completed.
Required:
1. Determine the unit cost for the month in Cooking.
2. Determine the new average unit cost for all units received
3. Determine the unit cost of goods finished.
4. Determine the accumulated cost of the goods finished and of
the ending work in process.
(Round unit costs to three decimal places.)
P5-8 Cost of production summary, two departments; beginning
inventory
similar to Self-Study Problem 2
Roberts Corporation uses a process cost system. The records for
the month of May show the following information:
Production Report Cutting Grinding
2 Units in process, May 1 ae 5,000 10,000
Started during the month - 20,000 =
Received from prior department sae - 16,000
Finished and transferred cs 18,000 10,000
Finished and on hand mee 5,000 =
Units in process, May $1 oe 5000 15,000
‘Stage of completion a 18 13
Production Costs
Work in process, May 1
(Gosia In Guitingieracter erenrerwrerieterserterers $50,000
Matorishs era eas cleraetncs fecareereenverees re) $5,000)
Labor wen 6.450
Factory overhead . oon 3860P59
Chapter 5 Process Cost Accounting — General Procedures
Production Costs
Costin Grinding:
Materials 5,000
Labor 5,500
Factory overhead, 3,500
Costs incurred during the month:
Materials 37,000 40,000
Labor 45,000 44,000
Factory overhead 50,000
Total $147,000
Requires
Prepare a cost of production summary for each department.
Ledger account analysis; cost of production summary
Analyze the information presented in the following general
ledger account of Mantle Manufacturing Co., which has three
departments: Shaping, Forming, and Finishing:
Work in Process—Forming
Mar. 1 10,260 | Mar. 31 50,000
31 Materials: 4,000
31 Labor 8,000
31 Factory 6,000
overhead
31 Shaping 36,000
Additional facts:
‘a. 2,000 units were in process at the beginning of the month,
one-half completed.
b. 10,000 units were received from Shaping during the month.
¢. 8,000 units were transferred to Finishing during the month.
d. Unit costs in Shaping and Forming were the same for March
as for the prior month.
e. The ratio of materials, labor, and factory overhead costs for
Forming in the beginning and ending balances of Work in
Process was in the same ratio as the costs incurred in
Forming during the current month.
Req
Prepare a cost of production summary for March.
Journal entries
Required:
Using the data in P5-9, determine:
1. The cost of goods received fram Shaping during the month.
2. The production costs incurred in Forming during the month.
3. The cost of goods completed and transferred to Finishing
during the month.284 Principles of Cost Accounting
P5-11 Cost of production summary, three departments; change in unit
cost from prior department; departmental cost work sheet;
journal entries; manufacturing statement
Ichiro Manufacturing Co. uses the process cost system. The
following information for the month of December was obtained
from the company's books and from the production reports
submitted by the department heads:
Production Report Mixing Blending Bottling
Started in process during month 12.500 = -
Received from prior department = 13000 10,000
Finished and transfered 13000 10,000» 11,000
Finished and on hand - 500 i
Units in process, end of period 2,000 4,000 2,000
‘Stage of completion 1a 48 1
Production Costs
‘Work in process, beginning of period
Costin Mixing «+++ $3078 $8,160
Materials... s1470
Labor we 650
Factory overhead ...... 565
Costin Blending ..s.ss.eeseseues 3,660
Materials ..... 240
Labor ue 908
Factory overhead ...... 780
Costin Botting
Materials... 900
Labor vo 300
Factory overhead ...... 3,020
Costs incurred during month:
Materials ....... 15,000 2,500 1,500
Labor 4750 8,000 6500
Factory overhead ......sessesee 5240 6,109 7,000
Total
Required:
1. Prepare cost of production summaries for the Mixing, Blend-
ing, and Bottling departments.
2. Prepare a departmental cost work sheet.
3. Draft the journal entries required to record the month’s
operations.
4, Prepare a statement of cost of goods manufactured for
December.Chapter 5 ~ Process Cost Accounting—General Procedures 285,
MINI-CASE
Ethics; Equivalent units of production
New York Beverages, Inc., has three plants that make and bottle cola,
lemon-lime, and miscellaneous flavored beverages, respectively. The raw
materials, labor costs, and automated technology are comparable among
the three plants. Top management has initiated an incentive compensa-
tion plan whereby the workers and managers of the plant with the lowest
unit cost per bottle will receive a year-end bonus. The results, approved by
the plant manager and reported by the plant controllers at each location,
were as follows:
(Note: tabular presentation not necessary in final draft.)
Item Bronx Brooklyn Queens
Materials $200,000 ‘$450,000 $325,000
Labor = 170,000 378,000 260,000
Overhead .. : 340,000 780,000 500,000
Total ... $710,000 $1,875,000 $1,075, 000
Equivalent units of production:
Completed 2,500,000, 6,200,000, 6,450,000
Ending work in process 100,000 400,000
(60% complete) —_—_—(25% complete}
Equivalent units 6 2,860,000, 6,300,000, 6,450,000,
Unit cost sss 5 $0.20 $0.25 $0,167
Required:
1. When provided copies of the results as a justification for distributing
the bonus to the Queens employees, the plant controllers at Bronx and
Brooklyn accused Queens of manipulating the inventory figures. Re-
viewing the above schedule, what do you think is the nature of the
accusation and how would such action affect the unit cost
computation?
2. Is there anything in the Institute of Management Accountants (IMA)
Code of Professional Ethics that the Queens plant controller should be
aware of in this situation?
3. Assume that the Queens plant controller revises the unit cost to more
accurately reflect reality. What should she do if the plant manager
ists that the unit cost computation remain as is?
Uses (ses
Process Costing
General Mills is @ company that uses process costing extensively. Go to
the companion Web site at www.cengage.com/accounting/vanderbeck
and click on the file for General Mills.