Hilton7e SM CH4

8/20/2019 Hilton7e SM CH4

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McGraw-Hill/Irwin 2008 The McGraw-Hill Companies, Inc.

Managerial Accounting, 7/e 4-1

CHAPTER 4

Process Costing and Hybrid Product-CostingSystems

ANSWERS TO REVIEW QUESTIONS

4-1 In a job-order costing system, costs are assigned to batches or job orders ofproduction. Job-order costing is used by firms that produce relatively small numbersof dissimilar products. In a process-costing system, costs are averaged over a largenumber of product units. Process costing is used by firms that produce largenumbers of nearly identical products.

4-2 Process costing would be an appropriate product-costing system in the followingindustries: petroleum, food processing, lumber, chemicals, textiles, and electronics.Each of these industries is involved in the production of very large numbers ofhighly similar products.

4-3 Process costing could be used in the following nonmanufacturing enterprises:processing of tests in a medical diagnostic laboratory, processing of tax returns bythe Internal Revenue Service, and processing of loan applications in a bank.

4-4 Product-costing systems are used for the following purposes:

(a) In financial accounting: Product costs are needed to value inventory on thebalance sheet and to compute the cost-of-goods-sold expense on the incomestatement.

(b) In managerial accounting: Product costs are needed for planning, for costcontrol, and to provide managers with data for decision making.

(c) In reporting to interested organizations: Product cost information is used toreport on relationships between firms and various outside organizations. Forexample, hospitals keep track of the costs of medical procedures that arereimbursed by insurance companies or by the federal government under the

Medicare program.

4-5 An equivalent unit is a measure of the amount of productive effort applied in theproduction process. In process costing, costs are assigned to equivalent units ratherthan to physical units.


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4-2 Solutions Manual

4-6 The following four steps are used in process costing:

(a) Analysis of physical flow of units: All of the units in the beginning and endinginventories, those started during the period, and those transferred out to finishedgoods are accounted for.

(b) Calculation of equivalent units: The equivalent units of activity are computed fordirect material and for conversion.

(c) Computation of unit costs: The costs per equivalent unit for direct material andconversion are computed.

(d) Analysis of total costs: The cost of the goods completed and transferred out andthe cost of the ending work-in-process inventory are determined.

4-7 (a) Journal entry to enter direct-material costs into Work-in-Process Inventory

account:

Work-in-Process Inventory: Department A .................... XXXRaw-Material Inventory .......................................... XXX

(b) Journal entry to record transfer of goods from the first to the second departmentin the production sequence:

Work-in-Process Inventory: Department B .................... XXXWork-in-Process Inventory: Department A .......... XXX

4-8 Transferred-in costs are the costs assigned to partially completed products that

have been completed in one production department and transferred from thatproduction department into the next department.

4-9 The $182,000 of transferred-in costs were incurred prior to January 1 and in themixing department. The costs must have been incurred prior to January 1, becausethey are included in the cost of the beginning work-in-process inventory on thatdate. Moreover, these costs must have been incurred in the mixing department,because they have been transferred into the cooking department.

4-10 The name ''weighted-average method'' comes from the fact that the cost perequivalent unit computed under this method is a weighted average of costs incurred

during the current period and costs incurred during prior periods.


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4-11 The difference between normal and actual costing lies in the calculation of themanufacturing-overhead cost of the current period. Under actual costing, themanufacturing-overhead cost of the current period is the actual overhead costincurred during the period. Under normal costing, the current-period manufacturingoverhead is computed as the product of the predetermined overhead rate and theactual level of the cost driver used to apply manufacturing overhead.

4-12 If manufacturing overhead were applied according to some activity base (or costdriver) other than direct labor, then direct-labor costs and manufacturing-overheadcosts would be accounted for separately instead of being combined into oneaccount called "conversion costs." Thus, instead of two columns for direct-materialand conversion costs, there would be three columns: direct material, direct labor,and manufacturing overhead.

4-13 Operation costing is a hybrid product-costing system that is used when conversion

activities are very similar across product lines, but the direct materials differsignificantly. This is often the case in batch manufacturing operations. Conversioncosts are accumulated by department, and process-costing methods are used toassign these costs to products. In contrast, direct-material costs are accumulated by

job order or by batch, and job-order costing is used to assign direct-material costs toproducts.

4-14 The departmental production report is the key document in a process-costingsystem rather than the job-cost sheet used in job-order costing. The departmentalproduction report shows the analysis of the physical flow of units, the calculation ofequivalent units, the computation of the cost per equivalent unit, and the analysis ofthe total costs incurred in the production department. The report shows the cost ofthe ending work-in-process inventory as well as the cost of the goods completed andtransferred out of the department.

4-15 There is no direct material in the March 1 work in process for the stitchingdepartment because direct material (rawhide lacing) is added at the end of theprocess in that department.


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SOLUTIONS TO EXERCISES

EXERCISE 4-16 (10 MINUTES)

The general formula for all three cases is the following:

Work-in-process,beginning

+ Units startedduring month

– Units completedduring month

= Work-in-process,ending

Using this formula, the missing amounts are:

1. 12,000 units

2. 5,300 kilograms

3. 750,000 gallons


All three of these companies manufacture large numbers of relatively homogeneousproducts (i.e., lumber and paper). Therefore, process costing is an appropriate product-costing system.


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1. 6,000 equivalent units (refer to (a) in the following table)

2. 4,400 equivalent units (refer to (b) in the following table)

CALCULATION OF EQUIVALENT UNITS: RAINBOW GLASS COMPANYWeighted-Average Method

PhysicalUnits

Percentageof

Completion withRespect toConversion

Equivalent Units

DirectMaterial Conversion

Work in process, October 1 .... 1,000 60%Units started during October .. 5,000

Total units to account for ........ 6,000

Units completed and transferredout during October ........... 4,000 100% 4,000 4,000

Work in process, October 31 .. 2,000 20% 2,000 400Total units accounted for ........ 6,000 _____ ____Total equivalent units .............. (a) 6,000 (b) 4,400


CALCULATION OF EQUIVALENT UNITS: TERRA ENERGY COMPANY - LODI PLANTWeighted-Average Method

PhysicalUnits

Percentageof

Completionwith

Respect toConversion

Equivalent UnitsDirect

Material Conversion

Work in process, November 1 ................ 2,000,000 25%Units started during November ............. 950,000Total units to account for ....................... 2,950,000

Units completed and transferredout during November ......................... 2,710,000 100% 2,710,000 2,710,000

Work in process, November 30 .............. 240,000 80% 240,000 192,000Total units accounted for ....................... 2,950,000 ________ ________Total equivalent units ............................. 2,950,000 2,902,000


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CALCULATION OF EQUIVALENT UNITS: FIT-FOR-LIFE FOODS CORPORATIONWeighted-Average Method

PhysicalUnits

Percentage

ofCompletion

withRespect to

DirectMaterial

Percentageof

Completionwith



Material Conversion

Work in process, January 1 .... 20,000 80% 60%Units started during the year .. 120,000Total units to account for ........ 140,000

Unit completed and transferredout during the year ............ 125,000 100% 100% 125,000 125,000Work in process, December 31 15,000 70% 30% 10,500 4,500Total units accounted for ........ 140,000 ______ _______Total equivalent units .............. 135,500 129,500


CALCULATION OF COST PER EQUIVALENT UNIT: IDAHO LUMBER COMPANYWeighted-Average Method

DirectMaterial Conversion Total

Work in process, November 1 ................... $ 65,000 $180,000 $ 245,000Costs incurred during November ............. 425,000 690,000 1,115,000Total costs to account for ......................... $490,000 $870,000 $1,360,000Equivalent units ......................................... 7,000 1,740Costs per equivalent unit .......................... $70* $500† $570

*$70 = $490,000 ÷ 7,000†$500 = $870,000 ÷ 1,740


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CALCULATION OF COST PER EQUIVALENT UNIT: OTSEGO GLASS COMPANYWeighted-Average Method

Direct

Material Conversion TotalWork in process, June 1 ......................... $ 37,000 $ 36,750 $ 73,750Costs incurred during June ................... 150,000 230,000 380,000Total costs to account for ...................... $187,000 $266,750 $453,750Equivalent units ...................................... 17,000 48,500Costs per equivalent unit ....................... $11.00* $5.50† $16.50

*$11.00 = $187,000 ÷ 17,000

†$5.50 = $266,750 ÷ 48,500


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SAVANNAH TEXTILES COMPANYWeighted-Average Method

Direct

Material Conversion TotalWork in process, September 1 .................. $ 94,000 $ 44,400 $138,400Costs incurred during September ............ 164,000 272,800 436,800Total costs to account for ......................... $258,000 $317,200 $575,200Equivalent units ......................................... 60,000 52,000Costs per equivalent unit .......................... $4.30 $6.10 $10.40

1. Cost of goods completed andtransferred out during September:

number of units

transferred out

total cost per

equivalent unit

..................... 50,000 $10.40 $520,000

2. Cost remaining in September 30work in process:

Direct material (10,000*

$4.30) $43,000

Conversion (2,000*

$6.10) ....... 12,200Total ............................................. 55,200

Total costs accounted for ............... $575,200

*Equivalent units in September 30 work in process:


Total equivalent units (weighted average) ........................ 60,000 52,000

Units completed and transferred out ................................ (50,000) (50,000)Equivalent units in ending work in process ..................... 10,000 2,000

3. Spreadsheet is shown on this chapter’s solutions manual opening screen.


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TULSA PAPERBOARD COMPANYWeighted-Average Method

Direct

Material Conversion TotalWork in process, February 1 ................... $ 5,500 $ 17,000 $ 22,500Costs incurred during February ............. 110,000 171,600 281,600Total costs to account for ....................... $115,500 $188,600 $304,100Equivalent units ....................................... 110,000 92,000Costs per equivalent unit ........................ $ 1.05 $ 2.05 $ 3.10

1. Cost of goods completed andtransferred out during February:

number of units

transferred out

total cost per

equivalent unit

....................... 90,000 $3.10 $279,000

2. Cost remaining in February 28 workin process:

Direct material (20,000*

$1.05) . $ 21,000

Conversion (2,000*

$2.05) ........ 4,100Total .............................................. 25,100

Total costs accounted for ................ $304,100

*Equivalent units in February 28 work in process:


Total equivalent units (weighted average) ....................... 110,000 92,000

Units completed and transferred out ............................... (90,000) (90,000)Equivalent units in ending work in process .................... 20,000 2,000


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1. Diagram of production process:Work-in-Process Inventory:

Preparation Department

Batch P25 Batch S33

Accumulatedby

department

Conversion costs:Direct-labor

Manufacturingoverhead

Work-in-Process Inventory:

Finishing Department

Batch P25 Batch S33

Accumulatedby

batch

Direct-material

costs

Work-in-Process Inventory:Packaging Department

Batch P25

Finished-Goods Inventory


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EXERCISE 4-25 (CONTINUED)

2. The product cost for each basketball is computed as follows:

Professional Scholastic

Direct material: ...................................................................Batch P25 ($42,000 ÷ 2,000) .......................................... $21.00 -0-Batch S33 ($45,000 ÷ 4,000) .......................................... -0- $11.25

Conversion: Preparation Department .............................. 7.50 7.50Conversion: Finishing Department .................................. 6.00 6.00

*Conversion: Packaging Department ................................ .50 -0-Total product cost……………………………………………... $35.00 $24.75

*The two production departments each worked on a total of 6,000 balls, but the PackagingDepartment handled only the 2,000 professional balls.

3. Journal entries:

Work-in-Process Inventory: Preparation Department .......... 39,500*Raw-Material Inventory ................................................. 39,500

*$39,500 = $42,000 of direct materialfor batch P25 – $2,500 of packaging material

Work-in-Process Inventory: Preparation Department .......... 45,000*

Raw-Material Inventory ................................................. 45,000

*Direct-material cost for batch S33.

Work-in-Process Inventory: Preparation Department .......... 45,000*Applied Conversion Costs ............................................ 45,000

*$45,000 = 6,000 units

$7.50 per unit

Work-in-Process Inventory: Finishing Department .............. 129,500*Work-in-Process Inventory: Preparation Department 129,500

*$129,500 = $39,500 + $45,000 + $45,000


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EXERCISE 4-25 (CONTINUED)

Work-in-Process Inventory: Finishing Department .............. 36,000*Applied Conversion Costs ............................................ 36,000

*$36,000 = 6,000 units $6.00 per unit

Work-in-Process Inventory: Packaging Department ............ 66,500*Finished-Goods Inventory ...................................................... 99,000†

Work-in-Process Inventory: Finishing Department .... 165,500

*$66,500 = $39,500 + (2,000

$7.50) + (2,000

$6.00).These are the costs accumulated for batch P25 only.

†$99,000 = $45,000 + (4,000

$7.50) + (4,000

$6.00).These are the costs accumulated for batch S33 only.

Work-in-Process Inventory: Packaging Department ............ 3,500Raw-Material Inventory ................................................. 2,500*Applied Conversion Costs ............................................ 1,000†

*Cost of packaging material for batch P25.

†$1,000 = 2,000 units

$.50 per unit

Finished-Goods Inventory ...................................................... 70,000*Work-in-Process Inventory: Packaging Department .. 70,000

*$70,000 = $66,500 + $3,500


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1. Work-in-Process Inventory: Pouring Department ............... 1,090,000Raw-Material Inventory ................................................. 70,000Wages Payable .............................................................. 340,000

Manufacturing Overhead .............................................. 680,000

2. Work-in-Process Inventory: Finishing Department ............. 900,000Work-in-Process Inventory: Pouring Department ...... 900,000

3. Work-in-Process Inventory: Finishing Department ............. 725,000Raw-Material Inventory ............................................... 25,000Wages Payable ............................................................. 280,000

Manufacturing Overhead ............................................. 420,000

4. Finished-Goods Inventory ..................................................... 400,000Work-in-Process Inventory: Finishing Department ... 400,000


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SOLUTIONS TO PROBLEMS

PROBLEM 4-27 (50 MINUTES)

1. Physical flow of units:

PhysicalUnits

Work in process, 1/1/x1 .......................................................................... 200,000Units started during 20x1 ....................................................................... 1,000,000Total units to account for ....................................................................... 1,200,000

Units completed and transferred out during 20x1 ............................... 900,000Work in process, 12/31/x1 ...................................................................... 300,000Total units accounted for ....................................................................... 1,200,000

2. Equivalent units:

PhysicalUnits

Percentageof

Completionwith


Equivalent Units


Work in process, 1/1/x1 ............... 200,000 80%

Units started during 20x1 ............ 1,000,000Total units to account for ............ 1,200,000

Units completed and transferredout during 20x1 ....................... 900,000 100% 900,000 900,000

Work in process, 12/31/x1 ........... 300,000 50% 300,000 150,000Total units accounted for ............ 1,200,000 ________ ________Total equivalent units .................. 1,200,000 1,050,000


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PROBLEM 4-27 (CONTINUED)

3. Costs per equivalent unit:

Direct

Material Conversion TotalWork in process, 1/1/x1 ................................. $ 200,000 $ 504,000a $ 704,000Costs incurred during 20x1 ........................... 1,300,000 3,192,000b 4,492,000Total costs to account for .............................. $1,500,000 $3,696,000 $5,196,000Equivalent units .............................................. 1,200,000 1,050,000Costs per equivalent unit ............................... $1.25c $3.52d $4.77e

aConversion cost = direct labor + overhead= direct labor + (60%

direct labor)= 160%

direct labor

= 160% $315,000= $504,000

bConversion cost = 160%

direct labor= 160%

$1,995,000= $3,192,000

c$1.25 = $1,500,000 ÷ 1,200,000

d$3.52 = $3,696,000 ÷ 1,050,000

e$4.77 = $1.25 + $3.52


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4. Cost of ending inventories:

Cost of goods completed and transferred out:

unitequivalent

per costtotal

outdtransferre

unitsof number .................... 900,000 $4.77 $4,293,000

Cost remaining in 12/31/x1 work-in-process inventory:

Direct material:

materialdirect

of unit

equivalent

per cost

materialdirect

of units

equivalent

of number

........................ 300,000 $1.25 $375,000

Conversion:

conversion

of unit

equivalent

per cost

conversion

of units

equivalent

of number

.................................. 150,000

$3.52 528,000

Total cost of 12/31/x1 work in process ..................................................... $903,000

Check: Cost of goods completed and transferred out ........................... $4,293,000Cost of 12/31/x1 work-in-process inventory .............................. 903,000Total costs accounted for ............................................................ $5,196,000

The cost of the ending work-in-process inventory is $903,000

Ending finished-goods inventory: Of the 900,000 units completed during 20x1,

200,000 units remain in finished-goods inventory on December 31, 20x1. Therefore:

$4,293,000

(200,000 ÷ 900,000) = $954,000*

The cost of the ending finished-goods inventory is $954,000.

*Also, $954,000 = 200,000

$4.77 per unit


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1. PhysicalUnits

Work in process, June 1 ........................................................................... 50,000

Units started during June ......................................................................... 200,000Total units to account for .......................................................................... 250,000

Units completed and transferred out during June .................................. 190,000Work in process, June 30 ......................................................................... 60,000Total units accounted for .......................................................................... 250,000

2.

PhysicalUnits

Percentageof

Completionwith


Equivalent Units


Work in process, June 1 .......... 50,000 40%Units started during June ........ 200,000Total units to account for ......... 250,000

Units completed and transferredout during June .................... 190,000 100% 190,000 190,000

Work in process, June 30 ........ 60,000 60% 60,000 36,000Total units accounted for ......... 250,000Total equivalent units ............... 250,000 226,000

3.Direct

Material Conversion TotalWork in process, June 1 ................ $120,000 $ 34,400 $154,400Costs incurred during June .......... 492,500 349,800 842,300Total costs to account for ............. $612,500 $384,200 $996,700

Equivalent units ............................. 250,000 226,000Costs per equivalent unit .............. $2.45 $1.70 $4.15


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4. Cost of goods completed and transferred out during June:

number of units

transferred out

total cost per

equivalent unit

........................ 190,000 $4.15 $788,500

Cost remaining in June 30 work-in-process inventory:

Direct material:

number of

equivalent

units of

direct material

cost per

equivalent

unit of

direct material

.......................... 60,000 $2.45 $147,000

Conversion:

number of

equivalent

units of

conversion

cost per

equivalent

unit of

conversion

...................................... 36,000 $1.70 61,200

Total cost of June 30 work in process ....................................................... $208,200

Check: Cost of goods completed and transferred out .............................. $788,500Cost of June 30 work-in-process inventory .................................. 208,200Total costs accounted for ............................................................... $996,700


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The missing amounts are shown below. A completed production report follows.

Units started during July ....................................................................................... 45,000

Units completed and transferred out during July ............................................... 50,000Total equivalent units: conversion ....................................................................... 56,000

Work in process, July 1: conversion .................................................................... $ 79,800Costs incurred during July: direct material ......................................................... 371,850Cost per equivalent unit: conversion ................................................................... 13.20Cost of goods completed and transferred out during July ................................ 1,072,500Cost remaining in ending work-in-process inventory: direct material .............. 123,750

PRODUCTION REPORT: VESUVIUS TILE COMPANY

Weighted-Average Method

PhysicalUnits

Percentageof

Completionwith



Material ConversionWork in process, July 1 ................... 20,000 30%Units started during July ................. 45,000Total units to account for ................ 65,000

Units completed and transferredout during July ............................ 50,000 100% 50,000 50,000

Work in process, July 31 ................. 15,000 40% 15,000 6,000Total units accounted for ................ 65,000 _____ _____Total equivalent units ...................... 65,000 56,000


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Work in process, July 1 ..................................... $164,400 $ 79,800 $ 244,200

Costs incurred during July ............................... 371,850 659,400 1,031,250Total costs to account for ................................. $536,250 $739,200 $1,275,450Equivalent units ................................................. 65,000 56,000Costs per equivalent unit .................................. $8.25* $13.20† $21.45**

*$8.25 = $536,250 ÷ 65,000†$13.20 = $739,200 ÷ 56,000**$21.45 = $8.25 + $13.20

Cost of goods completed and transferred out during July:

unitequivalent

per costtotal

outdtransferre

unitsof number .......................... 50,000 $21.45 $1,072,500

Cost remaining in July 31 work-in-process inventory:

Direct material:

materialdirect

of unitequivalent

per cost

materialdirect

of unitsequivalent

of number

............................. 15,000 $8.25 $ 123,750

Conversion:

conversion

of unit

equivalent

per cost

conversion

of units

equivalent

of number

....................................... 6,000

$13.20 79,200

Total cost of July 31 work in process ..................................................... $202,950

Check: Cost of goods completed and transferred out .. $1,072,500Cost of July 31 work-in-process inventory ........ 202,950Total costs accounted for ................................... $1,275,450


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1. a.

PhysicalUnits

Percentage

ofCompletion

withRespect toConversion


Material ConversionWork in process, May 1 .............. 25,000 40%Units started during May ............ 30,000Total units to account for ........... 55,000

Units completed and

transferred out during May .... 35,000 100% 35,000 35,000Work in process, May 31 ............ 20,000 80% 20,000 16,000Total units accounted for ........... 55,000 _____ _____Total equivalent units ................. 55,000 51,000

b.Direct

Material Conversion Total

Total costs to account for

Equivalent units

$308,000

55,000

$2,483,700

51,000

$2,791,700

Costs per equivalent unit $5.60 $48.70 $54.30*

*$54.30 = $5.60 + $48.70


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c. Cost of goods completed and transferred out during May:

unitequivalent

per costtotal

outdtransferre

unitsof number

35,000 $54.30 $1,900,500

Cost remaining in May 31 work-in-process inventory:

Direct material:

materialdirectof unit

equivalent

per cost

materialdirectof units

equivalent

of number

......................20,000 $5.60 $112,000

Conversion:

conversion

of unit

equivalent

per cost

conversion

of units

equivalent

of number

.............................. 16,000 $48.70 779,200

Total cost of May 31 work in process.................................................... $891,200

Check: Cost of goods completed and transferred out ............................ $1,900,500 Cost of May 31 work-in-process inventroy ................................ 891,200 Total costs accounted for ............................................................. $2,791,700

2. Journal entry:

Finished-Goods Inventory ............................................ 1,900,500

Work-in-Process Inventory .................................. 1,900,500


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1.Physical

Units

Work in process, April 1 ........................................................................... 10,000Units started during April ......................................................................... 100,000Total units to account for ......................................................................... 110,000

Units completed and transferred out during April .................................. 80,000Work in process, April 30 ......................................................................... 30,000Total units accounted for ................................................................................ 110,000

2.

PhysicalUnits

Percentage

ofCompletion



Material ConversionWork in process, April 1 ............. 10,000 20%Units started during April ........... 100,000Total units to account for ........... 110,000

Units completed and

transferred out during April ... 80,000 100% 80,000 80,000Work in process, April 30 30,000 33 1/3% 30,000 10,000Total units accounted for ........... 110,000 ______ _____Total equivalent units ................. 110,000 90,000

3.Direct

Material Conversion TotalWork in process, April 1 ............................ $ 22,000 $ 4,500 $ 26,500Costs incurred during April ...................... 198,000 158,400 356,400

Total costs to account for ......................... $220,000 $162,900 $382,900Equivalent units ......................................... 110,000 90,000Costs per equivalent unit .......................... $2.00 $1.81 $3.81


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4. Cost of goods completed and transferred out during April:

unitequivalent

per costtotal

outdtransferre

unitsnumberof

. ...................... 80,000 $3.81 $304,800

Cost remaining in April 30 work-in-process inventory:

Direct material:

materialdirect

of unit

equivalent

per cost

materialdirect

of units

equivalent

of number

.......................... 30,000

$2.00 $60,000

Conversion:

conversion

of unit

equivalent

per cost

conversion

of units

equivalent

of number

.................................... 10,000

$1.81 18,100

Total cost of April 30 work-in-process ................................................... $78,100

Check: Cost of goods completed and transferred out ........................ $304,800Cost of April 30 work-in-process inventory ............................ 78,100Total costs accounted for ........................................................ $382,900



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1.

PhysicalUnits

Percentageof

Completionwith



Material ConversionWork in process, August 1 ........... 40,000 80%Units started during August ......... 80,000Total units to account for .............. 120,000

Units completed and transferredout during August ..................... 100,000 100% 100,000 100,000

Work in process, August 31 ......... 20,000 30% 20,000 6,000Total units accounted for .............. 120,000 ______ ______Total equivalent units .................... 120,000 106,000

2.Direct

Material Conversion Total

Total costs to account for

Equivalent units

$138,000

120,000

$1,089,680

106,000

$1,227,680

Costs per equivalent unit $1.15 $10.28 $11.43*

*$11.43 = $1.15 + $10.28

3. Cost of goods completed and transferred out during August:

unitequivalent

per costtotal

outdtransferre

unitsof number .................... 100,000 $11.43 $1,143,000


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4. Cost remaining in August 31 work-in-process inventory:

Direct material:

materialdirect

of unit

equivalent

per cost

materialdirect

of units

equivalent

of number

........................ 20,000

$1.15 $23,000

Conversion:

conversion

of unit

equivalent

per cost

conversion

of units

equivalent

of number

.................................. 6,000

$10.28 61,680

Total cost of August 31 work in process .................................................... $ 84,680

Check: Cost of goods completed and transferred out .............................. $1,143,000Cost of August 31 work-in-process inventory .............................. 84,680Total costs accounted for: .............................................................. $1,227,680

5. Journal entry:

Finished-Goods Inventory ................................................ 1,143,000Work-in-Process Inventory ..................................... 1,143,000


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1. Direct material cost was $1,404,000:

XY634……….. $ 267,000

AA788………. 689,000GU321………. 448,000Total……. $1,404,000

Goodson’s total direct-labor payroll amounted to $126,500 for 6,325 hours of work($126,500 ÷ $20 per hour). Thus, conversion cost was $506,000:

Direct labor……………………………….…….. $126,500Overhead applied (6,325 hours x $60)…….. 379,500

Total………………………………………….. $506,000

2. Goods completed during April cost $1,872,000 (24,000 units x $78) as the followingcalculations show:

PhysicalUnits

PercentageOf

CompletionWith


Equivalent Units


Work in process, April 1………………. 4,000 75%Units started during April…………….. 25,000Total units to account for…………….. 29,000

Units completed and transferredout during April…………………….. 24,000 100% 24,000 24,000

Work in process, April 30…………….. 5,000 40% 5,000 2,000Total units accounted for……………... 29,000Total equivalent units………………….. 29,000 26,000


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Work in process, April 1…………………… $ 220,000 $ 66,000 $ 286,000Costs incurred during April………………. 1,404,000 506,000 1,910,000Total costs to account for…………………. $1,624,000 $572,000 $2,196,000Equivalent units……………………………... 29,000 26,000Cost per equivalent unit…………………… $56a $22b $78c

a$1,624,000 ÷ 29,000 = $56b$572,000 ÷ 26,000 = $22c$56 + $22 = $78

3. The cost of the ending work-in-process inventory is $324,000:

Direct material (5,000 x $56)…….. $280,000Conversion cost (2,000 x $22)….. 44,000

Total……………………………. $324,000

4. (a) No material would be added during May. All material is introduced at the startof Goodson’s manufacturing process, and these units were begun in April.

(b) Since the work-in-process inventory is 40% complete at the end of April, 60%of the conversion would be done in May.

5. Given that the ending work-in-process inventory is at the 40% stage of completion,these units would not have reached the 70% point in April where HH887 is added.Therefore, there would be zero equivalent units with respect to part HH887 in theending work-in-process inventory.


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1. The ending work-in-process inventory consisted of 500 units (300 + 900 – 700).

2. The cost of goods completed during June totaled $57,400 (700 units x $82):

PhysicalUnits

PercentageOf

CompletionWith


Equivalent Units


Work in process, June 1………………. 300 30%Units started during June…………….. 900Total units to account for……………... 1,200

Units completed and transferredduring June………………………….. 700 100% 700 700

Work in process, June 30……………... 500 60% 500 300Total units accounted for……………… 1,200Total equivalent units………………….. 1,200 1,000


Work in process, June 1…………………… $15,000 $ 6,300 $21,300Costs incurred during June………………. 45,000 25,700 70,700Total costs to account for…………………. $60,000 $32,000 $92,000Equivalent units……………………………... 1,200 1,000Cost per equivalent unit……………………. $50a $32b $82c

a$60,000 ÷ 1,200 = $50b$32,000 ÷ 1,000 = $32c$50 + $32 = $82

Finished-Goods Inventory…………………………… 57,400Work-in-Process Inventory…………………. 57,400

3. The cost of the June 30 work-in-process inventory is $34,600:

Direct materials (500 x $50)……... $25,000Conversion cost (300 x $32)…….. 9,600

Total……………………………… $34,600


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4. Equivalent units measure the amount of manufacturing activity (i.e., for directmaterial or conversion) that has been applied to a batch of physical units. If, forexample, a company has 600 physical units in process that are 40% complete as to

conversion, the firm has done the equivalent amount of conversion activity as wouldbe required to do all of the conversion work for 240 units (600 x 40%).

Equivalent units are needed to state manufacturing activity on a commonmeasurement scale. One cannot add completed units to units in process. Such acombination is like adding apples and oranges, as some units are complete andsome are incomplete. Instead, these units are first converted to equivalent units,and the latter are then used in unit-cost calculations.


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The missing amounts are shown below. A completed production report follows.

Work in process, May 1 (in units) ......................................................................... 15,000

Units completed and transferred out during May ............................................... 65,000Total equivalent units: conversion ....................................................................... 71,000

Work in process, May 1: conversion .................................................................... $ 37,500Costs incurred during May: direct material ......................................................... 570,000Cost per equivalent unit: conversion ................................................................... 12.25Cost of goods completed and transferred out during May ................................ 1,407,250Cost remaining in ending work-in-process inventory: direct material .............. 94,000

PRODUCTION REPORT: HERCULES TIRE AND RUBBER COMPANY

Weighted-Average Method Percentage

of Completion

with

Equivalent Units

Physical Respect to Direct Units

Conversion

Material

Conversion

Work in process, May 1 ................. 15,000 20%Units started during May ............... 60,000Total units to account for .............. 75,000

Units completed and transferredout during May..................... 65,000 100% 65,000 65,000

Work in process, May 31 ............... 10,000 60% 10,000 6,000Total units accounted for .............. 75,000 _____ _____

Total equivalent units .................... 75,000 71,000


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Work in process, May 1 ................. $135,000 $ 37,500 $ 172,500

Costs incurred during May ........... 570,000 832,250 1,402,250Total costs to account for ............. $705,000 $869,750 $1,574,750Equivalent units ............................. 75,000 71,000Costs per equivalent unit .............. $9.40* $12.25† $21.65**

*$9.40 = $705,000 ÷ 75,000†$12.25 = $869,750 ÷ 71,000**$21.65 = $9.40 + $12.25


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Cost of goods completed and transferred out during May:

unitequivalent

per costtotal

outdtransferre

unitsof number

............................... 65,000 $21.65 $1,407,250

Cost remaining in May 31 work-in-process inventory:

Direct material:

materialdirect

of unit

equivalent

per cost

materialdirect

of units

equivalent

of number

................................. 10,000

$9.40 $94,000

Conversion:

conversion

of unit

equivalent

per cost

conversion

of units

equivalent

of number

........................................... 6,000

$12.25 73,500

Total cost of May 31 work-in-process ............................................................... $167,500

Check: Cost of goods completed and transferred out ...... $1,407,250Cost of May 31 work-in-process inventory............ 167,500Total costs accounted for ....................................... $1,574,750


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1. a.Percentage

of

Completionwith Respect

Tax toReturns Conversion

(physical (labor and Equivalent Unitsunits) overhead) Labor Overhead

Returns in process, February 1 .... 200 25%Returns started in February .......... 825Total returns to account for .......... 1,025

Returns completedduring February ....................... 900 100% 900 900

Returns in process, February 28 .. 125 80% 100 100Total returns accounted for .......... 1,025 ____ ____Total equivalent units of activity .. 1,000 1,000

b.Labor Overhead Total

Returns in process, February 1 ................... £ 6,000 £ 2,500 £ 8,500Costs incurred during February .................. 89,000 45,000 134,000

Total costs to account for ............................ £95,000 £47,500 £142,500Equivalent units ............................................ 1,000 1,000Costs per equivalent unit ............................. £95.00 £47.50 £142.50

2. Cost of returns in process on February 28:

Labor: equivalent units

cost per equivalent unit100

£95.00 ....................................................... £ 9,500

Overhead: equivalent units cost per equivalent unit100

£47.50 ....................................................... 4,750

Total cost of returns in process on February 28 ......................................... £14,250


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1. PRODUCTION REPORT: MIXING DEPARTMENT(Weighted-Average Method)

Percentage

of

Completion with Equivalent Units

Physical Respect to Direct Units Conversion Material Conversion

Work in process, November 1 ....... 4,000 75%Units started during November .... 16,000Total units to account for .............. 20,000

Units completed and transferredout during November .......... 15,000 100% 15,000 15,000

Work in process, November 30 5,000 20% 5,000 1,000Total units accounted for .............. 20,000 ____ _ _ ____Total equivalent units .................... 20,000 16,000


Work in process, November 1 ....... $ 22,800 $ 46,510 $ 69,310Costs incurred during November . 81,600* 196,690† 278,290

Total costs to account for ............. $104,400 $ 243,200 $347,600Equivalent units ............................. 20,000 16,000

Costs per equivalent unit .............. $5.22 $15.20 $20.42

*$81,600 = $10,000 + $51,000 + (4,000 ÷ 10,000)($51,500)†$196,690 = $103,350 + (.40)($103,350) + $52,000


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Cost of goods completed and transferred out during November:

unitequivalent

per costtotal

outdtransferre

unitsof number ............................. 15,000

$20.42 $306,300

Cost remaining in November 30 work-in-process inventory

Direct material:

materialdirect

of unit

equivalent

per cost

materialdirect

of units

equivalent

of number

................................. 5,000

$5.22 $26,100

Conversion

conversion

of unit

equivalent

per cost

conversion

of units

equivalent

of number

........................................... 1,000

$15.20 15,200

Total cost of November 30 work in process .................................................... $41,300

Check: Cost of goods completed and transferred out ........ $306,300

Cost of November 30 work-in-process inventory ... 41,300Total costs accounted for ........................................ $347,600

2. a. Work-in-Process Inventory: Mixing Department ............ 81,600

Raw-Material Inventory ........................................... 81,600

b. Work-in-Process Inventory: Mixing Department ............ 103,350

Wages Payable ........................................................ 103,350

c. Work-in-Process Inventory: Mixing Department ............ 93,340*

Manufacturing Overhead ........................................ 93,340

*$93,340 = (.40)($103,350) + ($52,000)

d. Work-in-Process Inventory: Finishing Department ........ 306,300Work-in-Process Inventory: Mixing Department .. 306,300


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1. The unit costs and total costs for each of the products manufactured by PlastoCorporation during the month of May are calculated as follows:

Extrusion Form Trim FinishUnits produced ..................... 16,000 11,000 5,000 2,000Material costs ....................... $192,000 $ 44,000 $15,000 $12,000

Unit material cost .......... 12.00 4.00 3.00 6.00Conversion costs* ................ 392,000 132,000 69,000 42,000

Unit conversion cost ..... 24.50 12.00 13.80 21.00

*Direct labor and manufacturing overhead.


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Unit CostsPlasticSheets

StandardModel

DeluxeModel

ExecutiveModel

Material costs:

Extrusion ........................ $12.00 $12.00 $12.00 $12.00Form ............................... 4.00 4.00 4.00Trim ................................ 3.00 3.00Finish .............................. 6.00

Conversion costs:Extrusion ........................ 24.50 24.50 24.50 24.50Form ............................... 12.00 12.00 12.00Trim ................................ 13.80 13.80Finish .............................. _ _ _ 21.00

Total unit cost ....................... $36.50 $52.50 $69.30 $96.30

Units produced ..................... 5,000 6,000 3,000 2,000Total product cost* ............... $182,500 $315,000 $207,900 $192,600

*Total costs accounted for:

Product Total Product CostsPlastic sheets $182,500Standard model 315,000Deluxe model 207,900Executive model 192,600Total $898,000

2. Journal entries:

Work-in-Process Inventory: Extrusion ............................. 584,000Raw-Material Inventory ............................................ 192,000Applied Conversion Costs ...................................... 392,000

Finished-Goods Inventory ................................................. 182,500Work-in-Process Inventory: Extrusion ................... 182,500

Work-in-Process Inventory: Forming ............................... 577,500Work-in-Process Inventory: Extrusion ................... 401,500Raw-Material Inventory ............................................ 44,000Applied Conversion Costs ...................................... 132,000


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Finished-Goods Inventory ................................................. 315,000Work-in-Process Inventory: Forming ..................... 315,000

Work-in-Process Inventory: Trimming ............................. 346,500Work-in-Process Inventory: Forming ..................... 262,500Raw-Material Inventory ............................................ 15,000Applied Conversion Costs ...................................... 69,000

Finished-Goods Inventory ................................................. 207,900Work-in-Process Inventory: Trimming ................... 207,900

Work-in-Process Inventory: Finishing .............................. 192,600Work-in-Process Inventory: Trimming ................... 138,600

Raw-Material Inventory ............................................ 12,000Applied Conversion Costs ...................................... 42,000

Finished-Goods Inventory ................................................. 192,600Work-in-Process Inventory: Finishing ................... 192,600


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1. Conversion cost per unit in department I:

*producedunits

overheadingmanufactur labor direct

5,0004,00011,000

$230,000$38,000

uniper $13.40 t

*Note that all of the products sold after processing in departments I, II, or III wereproduced orginally in department I.

2. Conversion cost per unit in department II:

*producedunits

overheadingmanufactur labor direct

5,0004,000

$68,000$22,000

unitper $10.00

*Note that all of the products sold after processing in departments II and III werecolored in department II.

3. Cost of a clear glass sheet:

=direct material perunit in department I +

conversion cost perunit in department I

$13.4020,000

$450,000

sheetper $35.90


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4. Cost of an unetched, colored glass sheet:

=cost per clearglass sheet +

direct materialper unit in department II +

conversion cost perunit in department II

$10.009,000

$72,000$35.90

sheetper $53.90

5. Cost of an etched, colored glass sheet:

=cost per unetched

colored glass sheet +conversion cost perunit in department III

5,000

$73,750$38,000$53.90

sheetper $76.25


1. Conversion costs:

Rolling

Molding

Punching

Dipping

Direct labor .................................. $300,000 $112,000 $128,000 $ 45,000

Manufacturing overhead .............. 450,000 168,000 192,000 67,500Total conversion cost................... $750,000 $280,000 $320,000 $112,500

Total units produced:Rolling only ............................ 20,000Rolling, molding, punching 8,000 8,000Rolling, molding, punching,

dipping ............................... 3,000

Conversion cost per unit ............. $37.50 $35.00 $40.00 $37.50


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2. Product costs:

Ceralam

SheetsSold Nonreflective Reflectiveafter Ceralam Ceralam Total

Rolling Housings Housings CostsDirect material:

Ceralam sheets .................... $480,000 $200,000 $120,000 $ 800,000Chemical dip ....................... 30,000 30,000

Conversion costs:Rolling .................................. 450,000a 187,500a 112,500a 750,000

Molding ................................ 175,000b 105,000b 280,000Punching.............................. 200,000c 120,000c 320,000Dipping ................................ _______ ________ 112,500d 112,500

Total cost .................................... $930,000 $762,500 $600,000 $2,292,500Units manufactured .................... 12,000 5,000 3,000Unit cost ...................................... $77.50 $152.50 $200.00

aNumber of units

rolling cost per unit ($37.50)

bNumber of units

molding cost per unit ($35.00) cNumber of units

punching cost per unit ($40.00)

dNumber of units dipping cost per unit ($37.50)

3. Journal entries:

Work-in-Process Inventory: Rolling .................................... 1,550,000Raw-Material Inventory .............................................. 800,000*Applied Conversion Costs ......................................... 750,000†

*$800,000 = direct-material cost for ceralam sheets†$750,000 = conversion cost in rolling operation


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Finished-Goods Inventory .................................................... 930,000*

Work-in-Process Inventory: Rolling .......................... 930,000

*$930,000 = 12,000 ceralam sheets sold afterrolling

$77.50 per unit

Cost of Goods Sold ............................................................... 930,000*Finished-Goods Inventory ......................................... 930,000

*$930,000 = cost of ceralam sheets sold afterrolling

Work-in-Process Inventory: Molding ................................... 620,000*Work-in-Process Inventory: Rolling .......................... 620,000

*$620,000 = cost remaining in Work-in-ProcessInventory: Rolling

= $1,550,000 – $930,000

Work-in-Process Inventory: Molding ................................... 280,000*Applied Conversion Costs ......................................... 280,000

*$280,000 = conversion cost in molding operation

Work-in-Process Inventory: Punching ................................ 900,000*Work-in-Process Inventory: Molding......................... 900,000

*$900,000 = cost remaining in Work-in-ProcessInventory: Molding

= $620,000 + $280,000

Work-in-Process Inventory: Punching ................................ 320,000*Applied Conversion Costs ......................................... 320,000

*$320,000 = conversion cost in punching operation


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Finished-Goods Inventory .................................................... 762,500*Work-in-Process Inventory: Punching ...................... 762,500

*$762,500 = 5,000 nonreflective ceralam housingssold after punching $152.50 per unit

Cost of Goods Sold ............................................................... 762,500*Finished-Goods Inventory ......................................... 762,500

*$762,500 = cost of nonreflective ceralamhousings sold after punching

Work-in-Process Inventory: Dipping ................................... 457,500*

Work-in-Process Inventory: Punching ...................... 457,500

*$457,500 = cost remaining in Work-in-ProcessInventory: Punching

= $900,000 + $320,000 – $762,500

Work-in-Process Inventory: Dipping ................................... 142,500Raw-Material Inventory ............................................... 30,000*Applied Conversion Costs ......................................... 112,500†

*$30,000 = direct-material cost for chemical dip†$112,500 = conversion cost in dipping operation

Finished-Goods Inventory .................................................... 600,000*Work-in-Process Inventory: Dipping ......................... 600,000

*$600,000 = 3,000 reflective ceralam housingssold after dipping

$200.00 per unit

Cost of Goods Sold ............................................................... 600,000Finished-Goods Inventory ......................................... 600,000



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1. a. Cost of units completed and transferred to finished-goods inventory duringMay:

Units completed and transferred out.............................................. 11,900Total cost per equivalent unit ......................................................... _ $9.00Cost of units completed and transferred out ................................. $107,100

b. To compute the cost of the Finishing Department's work-in-process inventoryon May 31, first determine the number of units in ending work-in-processinventory, as follows:

Work-in-process inventory, May 1 (in units) .................................. 1,400Add: Units transferred in ................................................................. 14,000

Units to account for ......................................................................... 15,400Less: Units transferred to finished goods ..................................... 11,900Work-in-process inventory, May 31 (in units) ................................ 3,500

Then compute the transferred-in, direct-material, and conversion costs in theMay 31 work-in-process inventory:

InputEquivalent

Units

Cost perEquivalent

Unit Cost

Transferred-in ........................ 3,500 $5.00 = $17,500Direct material ....................... 3,500 $1.00 = 3,500

Conversion ............................ 3,500

40% $3.00 = 4,200Total cost of May 31 work-in-process inventory .......................... $25,200

2. Equivalent units of transferred-in costs ................................................... 15,400Transferred-in cost per equivalent unit .................................................... $5.00Total transferred-in cost ............................................................................ $77,000Deduct: Transferred-in cost in May 1 work-in-process inventory .......... 6,750Total cost transferred in from the Assembly Department ...................... $70,250

Journal entry to record transfer:

Work-in-Process Inventory: Finishing Department ............. 70,250Work-in-Process Inventory: Assembly Department ..... 70,250


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SOLUTIONS TO CASES

CASE 4-42 (45 MINUTES)

1. Equivalent units of material ......................................................................... 8,000

Equivalent units of conversion .................................................................... 7,500

2. Cost per equivalent unit of material ............................................................ $3.30Cost per equivalent unit of conversion ....................................................... $2.80

3. October 31 work-in-process inventory ........................................................ $4,700Cost of goods completed and transferred out............................................ $42,700

4. Weighted-average unit cost of completed leather belts ............................ $6.10

These answers are supported by the following process-costing schedules. The firm's costper belt used for planning and control, $5.35, is substantially lower than the actual cost perbelt incurred in October, $6.10. Management should investigate this situation to determinewhether production costs can be reduced. If not, then the cost used for planning andcontrol purposes should be changed to reflect the firm's actual experience.

CALCULATION OF EQUIVALENT UNITS: LAREDO LEATHER CO. - DALLAS PLANTWeighted-Average Method

PhysicalUnits

Percentageof

Completionwith



Material ConversionWork in process, October 1 ............ 400 25%Units started during October .......... 7,600Total units to account for ................ 8,000

Units completed and transferredout during October ........................ 7,000 100% 7,000 7,000

Work in process, October 31 .......... 1,000 50% 1,000 500Total units accounted for ................ 8,000Total equivalent units ...................... 8,000 7,500


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CASE 4-42 (CONTINUED)

CALCULATION OF COSTS PER EQUIVALENT UNIT: DALLAS PLANTWeighted-Average Method

Direct

Material Conversion TotalWork in process, October 1 .............................. $ 1,250 $ 300 $ 1,550Costs incurred during October ......................... 25,150 20,700 45,850Total costs to account for ................................. $26,400 $21,000 $47,400Equivalent units ................................................. 8,000 7,500Costs per equivalent unit .................................. $3.30 $2.80 $6.10

ANALYSIS OF TOTAL COSTS: DALLAS PLANTWeighted-Average Method

Cost of goods completed and transferred out during October:

unitequivalent

per costtotal

outdtransferre

unitsof number .......................... 7,000 $6.10 $42,700

Cost remaining in October 31 work-in-process inventory:

Direct material:

materialdirect

of unit

equivalent

per cost

materialdirect

of units

equivalent

of number

............................. 1,000

$3.30 $3,300

Conversion:

conversionof unit

equivalent

per cost

conversionof units

equivalent

of number

....................................... 500

$2.80 1,400

Total cost of October 31 work in process ............................................... $4,700


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Check: Cost of goods completed and transferred out ... $42,700Cost of October 31 work-in-process inventory .. 4,700Total costs accounted for .................................... $47,400

5. If the units were 60 percent complete as of October 31, there would be 7,600equivalent units with respect to conversion. (To see this, just change the 500 in theright-hand column of the equivalent-units table in the solution to requirement (4) to600. This changes the last number in the right-hand column from 7,500 to 7,600.)

Now the unit cost of conversion drops from $2.80, as currently computed, to $2.76(rounded, $21,000 ÷ 7,600). Thus, the unit cost drops from $6.10 to $6.06(rounded).

As controller, Jeff Daley has an ethical obligation to refuse his friend's request toalter the estimate of the percentage of completion. What Daley can do is to helpMurray think of some legitimate ways to bring about real cost reductions. Severalethical standards for management accountants (listed in Chapter 1) apply in thissituation. Among the relevant standards are the following:

Competence:

Provide decision support information and recommendations that are accurate,clear, concise, and timely.

Credibility:

Communicate information fairly and objectively.

Disclose all relevant information that could reasonably be expected toinfluence an intended user's understanding of the reports, analyses, andrecommendations.


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CASE 4-43 (60 MINUTES)

PRODUCTION REPORT: HOME GARDEN COMPANY - GRADING DEPARTMENTWeighted-Average Method

PhysicalUnits

(pounds)

Percentage

ofCompletion



Material ConversionWork in process, November 1 ......... -0- — Units started during November ...... 36,000Total units to account for ................ 36,000

Units completed and transferred

out during November .................. 36,000 100% 36,000 36,000Work in process, November 30 ....... -0- — -0- -0-Total units accounted for ................ 36,000 _____ _____Total equivalent units ...................... 36,000 36,000


Work in process, November 1 ........................... -0- -0- -0-Costs incurred during November ..................... $265,680 $86,400 $352,080Total costs to account for ................................. $265,680 $86,400 $352,080

Equivalent units ................................................. 36,000 36,000Costs per equivalent unit .................................. $7.38 $2.40 $9.78

Cost of goods completed and transferred out of the Grading Departmentduring November:

unitequivalent

per costtotal

outdtransferre

unitsof number .......................... 36,000 $9.78 $352,080

Cost remaining in November 30 work-in-process inventory in theGrading Department ..................................................................................... -0-

Check: Cost of goods completed and transferred out ............. $352,080Cost of November 30 work-in-process inventory ........ -0-Total costs accounted for .............................................. $352,080


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PRODUCTION REPORT: HOME GARDEN COMPANY - SATURATING DEPARTMENTWeighted-Average Method

PhysicalUnits

(pounds)

Percentage

ofCompletion


Equivalent UnitsTransferred

in ConversionWork in process, November 1 ......... 1,600 50%Units transferred in during November 36,000Total units to account for ................ 37,600

Units completed and transferred

out during November .................. 35,600 100% 35,600 35,600Work in process, November 30 ....... 2,000 50% 2,000 1,000Total units accounted for ................ 37,600 _____ _____Total equivalent units ...................... 37,600 36,600

TransferredIn Conversion Total

Work in process, November 1 ........................... $ 13,850 $ 3,750 $ 17,600Costs incurred during November ..................... 352,080* 85,920 438,000Total costs to account for ................................. $365,930 $89,670 $455,600

Equivalent units ................................................. 37,600 36,600Costs per equivalent unit .................................. $9.7322 $2.45 $12.1822

*Cost of goods completed and transferred out of Grading Department during November,under the weighted-average method.


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Cost of goods completed and transferred out of the SaturatingDepartment during November:

unitequivalent

per costtotal

outdtransferre

unitsof number ....................... 35,600 $12.1822 $433,686†

Cost remaining in November 30 work-in-process inventory in theSaturating Department:

Transferred-in costs:

unit

equivalentper cost

in-dtransferre

costin-dtransferre

of unitsequivalent

of number

...................... 2,000 $9.7322 $19,464†

Direct material:

None

Conversion:

unit

equivalent

per cost

conversion

conversion

of units

equivalent

of number

...................................... 1,000

$2.45 2,450

Total cost of November 30 work in process ........................................... $21,914

Check: Cost of goods completed and transferred out ............. $433,686Cost of November 30 work-in-process inventory ........ 21,914Total costs accounted for .............................................. $455,600

†Rounded

Documents

Hilton7e SM CH4