MANAGERIAL ACCOUNTING – CHAPTER # 4 - NEW

Exercise 4-17 (Equivalent Units; Weighted Average)

Glass Creations, Inc. manufactures decorative glass products. The firm employs a process-costing
system for its manufacturing operations. All direct materials are added at the beginning of the
process and conversion costs are incurred uniformly throughout the process. The company’s
production schedule for October follows.

Units
Work in process on October 1 (60% complete as to conversion) 1,000
Units started during October 5,000
Total units to account for 6,000
Units from beginning work in process, which were completed and transferred out during October 1,000
Units started and completed during October 3,000
Work in process on October 31 (20% complete as to conversion) 2,000
Total units accounted for 6,000

Required: Calculate each of the following amounts using weighted-average process costing.
1. Equivalent units of direct material during October.
2. Equivalent units of conversion activity during October.

Exercise 4-19 (Equivalent Units; Weighted Average)

Energy Resources Company refines a variety of petrochemical products. The following data are
from the firm’s Amarillo plant.

Work in process, November 1 2,000,000 gallons

Direct material 100% complete
Conversion 25% complete
Units started in process during November 950,000 gallons
Work in process, November 30 240,000 gallons
Direct material 100% complete
Conversion 80% complete

Required: Compute the equivalent units of direct material and conversion for the month of
November. Use the weighted-average method of process costing.

Exercise 4-20 (Cost per Equivalent Units; Weighted Average)

Montana Lumber Company grows, harvests, and processes timber for use in construction. The
following data pertain to the firm’s sawmill during November.

(Rs.)
Work in process, November 1:
Direct material 65,000
Conversion 180,000
Cost incurred during November:
Direct material 425,000
Conversion 690,000

The equivalent units of activity for November were as follows: 7,000 equivalent units of direct
material and 1,740 equivalent units of conversion activity.

Required: Calculate the cost per equivalent unit, for both direct material and conversion,
during November. Use weighted-average process costing.
Page 1 of 5
 MANAGERIAL ACCOUNTING – CHAPTER # 4 - NEW

Exercise 4-22 (Analysis of Total Costs; Weighted Average)

The following data pertain to Birmingham Paperboard Company, a manufacturer of cardboard

boxes.

Work in process, February 1: 10,000 Units*

Direct material Rs. 5,500
Conversion Rs. 17,000
Cost incurred during February:
Direct material Rs. 110,000
Conversion Rs. 171,000
*Complete as to direct material, 40% complete as to conversion.

The equivalent units of activity for February were as follows:

Units
Direct material (weighted-average method) 110,000
Conversion (weighted-average method) 92,000
Completed and transferred out 90,000

Required: Compute the following amounts using weighted-average process costing.

1. Cost of goods completed and transferred out during February.
2. Cost of the February 28 work in process inventory.

Exercise 4-25 (Cost Flows in Sequential Production: Journal Entries (Appendix))

Pegasus Block Company produces cement blocks used in the foundations for buildings. The
process takes place in two sequential departments. The following cost data pertain to the month
of October.

Pouring Finishing
Department Department
(Rs.) (Rs.)
Direct material entered into production 70,000 25,000
Direct labor 340,000 280,000
Applied manufacturing overhead 680,000 420,000
Cost of goods completed and transferred out *900,000 **400,000
*Cost of goods transferred to the Finishing Department.
**Cost of goods transferred to finished goods.

Required: Prepare journal entries to record the following events.

1. Incurrence of costs for direct material and direct labor and application of
manufacturing overhead in the Pouring Department.
2. Transfer of goods from Pouring to Finishing.
3. Incurrence of costs for direct material and direct labor and application of
manufacturing overhead in the Finishing Department.
4. Transfer of goods from the Finishing Department to finished-goods inventory.

Page 2 of 5
 MANAGERIAL ACCOUNTING – CHAPTER # 4 - NEW

Problem 4-30 (Missing Data, Production Report: Weighted-Average)

The following data pertain to the Hercules Tile Company for July.

(Rs.)
Work in process, July 1 (in units) 20,000
Units started during July ?
Total units to account for 65,000
Units completed and transferred out during July ?
Work in process, July 31 (in units) 15,000
Total equivalent units: direct material 65,000
Total equivalent units: conversion ?
Work in process, July 1: direct material 164,400
Work in process, July 1: conversion ?
Costs incurred during July: direct material ?
Costs incurred during July: conversion 659,400
Work in process, July 1: total cost 244,200
Total costs incurred during July 1,031,250
Total costs to account for 1,275,450
Cost per equivalent unit: direct material 8.25
Cost per equivalent unit: conversion ?
Total cost per equivalent unit 21.45
Cost of goods completed and transferred out during July ?
Cost remaining in ending work-in-process inventory: direct material ?
Cost remaining in ending work-in-process inventory: conversion 79,200
Total cost of July 31 work in process 202,950

Additional Information:
a. Direct material is added at the beginning of the production process, and conversion
activity occurs uniformly throughout the process.
b. The company uses weighted-average process costing.
c. The July 1 work in process was 30 percent complete as to conversion.
d. The July 31 work in process was 40 percent complete as to conversion.

Required: Compute the missing amounts, and prepare the firm's July production report.

Problem 4-31 (Partial Production Report; Journal Entries; Weighted-Average Method)

Neptune Corporation accumulates costs for its product using process costing. Direct material is
added at the beginning of the production process, and conversion activity occurs uniformly
throughout the process. A partially completed production report for the month of May follows.
Production Report
For the Month of May

Physical Percentage of Equivalent Units

Units Completion with Direct Conversion
(Rs.) Respect to Material (Rs.)
Conversion (Rs.)
Work in process, May 1 25,000 40%
Units started during May 30,000
Total units to account for 55,000
Units completed and transferred out during May 35,000 35,000 35,000
Work in process, May 31 20,000 80% 20,000 16,000
Total units accounted for 55,000

Page 3 of 5
 MANAGERIAL ACCOUNTING – CHAPTER # 4 - NEW

Direct Conversion Total

Material (Rs.) (Rs.)
(Rs.)
Work in process, May 1 143,000 474,700 617,700
Costs incurred during May 165,000 2,009,000 2,174,000
Total costs to account for 308,000 2,483,700 2,791,700

Required:

1. Complete each of the following process-costing steps using the weighted-average

method:
a. Calculation of equivalent units.
b. Computation of unit costs.
c. Analysis of total costs.
2. Prepare a journal entry to record the transfer of the cost of goods completed and
transferred out during May.

Problem 4-32 (Missing Data; Production Report; Weighted-Average)

The following data pertain to the Guardian Tire and Rubber Company for the month of May.

(Rs.)
Work in process, May 1 (in units) ?
Units started during May 60,000
Total units to account for 75,000
Units completed and transferred out during May ?
Work in process, May 31 (in units) 10,000
Total equivalent units: direct material 75,000
Total equivalent units: conversion ?
Work in process, May 1: direct material 135,000
Work in process, May 1: conversion ?
Costs incurred during May: direct material ?
Costs incurred during May: conversion 832,250
Work in process, May 1: total cost 172,500
Total costs incurred during May 1,402,250
Total costs to account for 1,574,750
Cost per equivalent unit: direct material 9.40
Cost per equivalent unit: conversion ?
Total cost per equivalent unit 21.65
Cost of goods completed and transferred out during May ?
Cost remaining in ending work-in-process inventory: direct material ?
Cost remaining in ending work-in-process inventory: conversion 73,500
Total cost of May 31 work in process 167,500

Additional Information:
a. Direct material is added at the beginning of the production process, and conversion
activity occurs uniformly throughout the process.
b. Hercules uses weighted-average process costing.
c. The May 1 work in process was 20 percent complete as to conversion,
d. The May 31 work in process was 60 percent complete as to conversion.

Required:

Compute the missing amounts, and prepare the firm's May production report.

Page 4 of 5
 MANAGERIAL ACCOUNTING – CHAPTER # 4 - NEW

Problem 4-38 (Transferred-in Costs; Weighted-Average Method (Appendix))

Eric Aluminum Company manufactures a variety of aluminum parts for the automotive industry.
The company uses a weighted-average process-costing system. A unit of product passes through
three departments—molding, assembly, and finishing—before it is completed.
The following activity took place in the Finishing Department during May.

Units
Work-in-process inventory, May 1 1,400
Units transferred in from the Assembly Department 14,000
Units completed and transferred out to finished-goods inventory 11,900

Raw material is added at the beginning of processing in the Finishing Department. The work-in-
process inventory was 70 percent complete as to conversion on May 1 and 40 percent complete as
to conversion on May 31. The equivalent units and current period costs per equivalent unit of
production for each cost factor are as follows for the Finishing Department.

Equivalent Current Period Costs

units per Equivalent Unit
(Rs.)
Transferred-in costs 15,400 5.00
Raw material 15,400 1.00
Conversion cost 13,300 3.00
Total 9.00

Required:
1. Calculate the following amounts:
a. Cost of units completed and transferred out to finished-goods inventory during
May.
b. Cost of the Finishing Department's work-in-process inventory on May 31.
2. The total costs of prior departments included in the work-in-process inventory of the
Finishing Department on May I amounted to Rs. 6,750. Prepare the journal entry to
record the transfer of goods from the Assembly Department to the Finishing Department
during May.

Page 5 of 5