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MODULE 3.exercises - Answer Only
MODULE 3.exercises - Answer Only
EXERCISES
PROBLEM 1
A. Equivalent units are needed as a measure of production volume. At
the end of the period, manufacturing costs must be spread over the
units produced, and it is incorrect to combine fully completed units
with those that are still in production (akin to adding apples and
oranges). Separate totals are needed because materials are often
introduced at specific points in production whereas conversion is often
introduced uniformly throughout manufacturing.
B. No. The units are still in production, so none of them are fully
completed. It would be correct to say that the firm has done the work
equivalent to manufacturing 9,000 finished units.
PROBLEM 2
A. Operation costing is used by firms that produce different models of
similar products. The products go through essentially the same
manufacturing process, so conversion costs can be assigned in a
manner similar to that used in process-costing systems. Materials, on
the other hand, are unique to the individual goods being produced and,
accordingly, the cost is assigned by batch (or in a manner similar to
that used in job costing).
PROBLEM 3
A. Transferred-in costs are costs attached to units that are transferred
from one processing department to the next. More specifically, these
are the manufacturing costs incurred in the "sending" department (i.e.,
direct materials, direct labor, and applied manufacturing overhead).
Job 201 -
190,000 - 190000
Job 202 - 94,000
Job 203 - 59,000
Total 343000
1.
Materials - April 1 64,000
Purchases 84,000
Materials – April 30 (60,000)
Direct materials used (78,000)
Indirect materials used 10,000
2.
3.
4.
5.
Department 1 Deparment 2
Materials Conversion Materials Conversion
Actual EP EP Actual EP EP
Started/ received 60,000 40,000
( 33,000 x 33
C & T (40,000 x 18) 720,000 ) 990,000
IP end
A. Equivalent units:
Direct
Material Conversio
n
Transferred to finished goods 70,000 70,000
Work in process, June 30 20,000 12,000
Total 90,000 82,000
PROBLEM 8
1.
Actual Strawberry Chocolate Conversions
Units started 100,000 WD EP WD EP WD EP
2.
Strawberry = 180,000/100,000 = 1.80
Chocolate = 135,000/ 90,000 = 1.50
Concersion = 116,400/97,000 = 1.20
3.
Completed & transferred (90,000 x 4.50) 405,000
4.
In process, end
Strawberry ( 10,000 x 1.80) 18,000
Chocolate
Conversion ( 7,000 x 1.20) 8,400
26,400
PROBLEM 9
PROBLEM 11
1) FIFO
Units in process, beg. 6,000
Units started 42,000
48,000
Units completed & transferred
(40,000)
IP beg. 6,000 80% 4,800 70% 4,200
Started & completed 34,000 100% 34,000 100% 34,000
Units in process, end 8,000 10% 800 15% 1,200
48,000 39,600 39,400
2) AVERAGE
Units in process, beg. 6,000
Units started 42,000
48,000
Units completed 40,000 100% 40,000 100% 40,000
Units IP end 8,000 10% 800 15% 1,200
48,000 40,800 41,200
PROBLEM 12
1.)
Units in process beg. 300
Units started 2,000
2.3
2.)
540
Unit cost -Materials 3714 /1760 = 2.110227
Conversion 2258 /1730 = 1.305202
6512 3.415429
663
PROBLEM 13
a. Average
1) Units in process beg. 15,000
Units started 250,000
265,000
b) FIFO
Conversion 1,458,000/243,000 = 6
3) Completed& transferred
From IP beg.
Cost last month 270,000
Cost added ( 5,000 x 6) 30,000 300,000
From started & completed ( 230,000 x
20) 4,600,000 4,900,000
4) IP end
Materials ( 20,000 x 14) 280,000
Conversion (8,000 x 6) 48,000 328,000
5,228,000
PROBLEM 14
AVERAGE METHOD
Units completed & transferred 8,000 100% 8,000 100% 8,000 100% 8,000
Units IP end 1,500 100% 1,500 75% 1,125 50% 750%
Units lost – abnormal 500 100% 500 100% 500 100% 500
10,000 10,000 9,625 9,250
( 8,000 x 14.90
Completed & transferred ) 119,200
Factory Overhead ( 500 x 14.90 ) 7,450
In process, end
Materials ( 1,500 x 7.50 ) 11,250
Labor ( 1,125 x 2,40 ) 2,700
Overhead ( 750 x 5.00 ) 3,750 17,700
Total costs as accounted for 144,350
FIFO METHOD
PROBLEM 15
1.
Market value method
Product SV at SO Percentage Share in JC Add’l Cost Total Cost
A 420,000 60% 252,000 88,000 340,000
B 270,000 162,000 30,000 192,000
C 60,000 36,000 12,000 48,000
450,000 130,000 580,000
2.
Average unit cost method
Product Units Produced Ave UC Share in JC Add’l Cost Total Cost
A 50,000 4.5 225,000 88,000 313,000
B 40,000 180,000 30,000 210,000
C 10,000 45,000 12,000 57,000
450,000 130,000 580,000
PROBLEM 16
Hypothetical MV
Share in
2. Product Units Per Unit Total HMV Percentage JC
X 8,000 20-5 120,000 40% 80,000
Y 10,000 25-7 180,000 60% 120,000
300,000 200,000
PROBLEM 17
1.
- done -