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 3860P59 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.