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Chapter 18: Q.18-12RQ (page 1006)
Question: If a company began the month with 50 units in process, started another 600 units during the month, and ended the month with 75 units in process, how many units were completed?
Answer:
The number of units completed during the year is 575 units.
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Question: List ways in which job order costing systems are similar to process costing systems.
Oxford Company had the following transactions in October:
1. Purchased raw materials on account, \(70,000
2. Used materials in production: \)26,000 in the Mixing Department; \(14,000 in the
Packaging Department; \)1,000 in indirect materials
3. Incurred labor costs: \(8,000 in the Mixing Department; \)7,200 in the Packaging
Department; \(2,200 in indirect labor
4. Incurred manufacturing overhead costs: \)3,500 in machinery depreciation; paid
\(2,300 for rent and \)1,590 for utilities
Prepare the journal entries for Oxford Company.
Miller Company sells several products. Sales reports show that the sales volume of its most popular product has increased the past three quarters while overall profits have decreased. How might production cost reports assist management in making decisions about this product?
Refreshing Water Company produces premium bottled water. In the second department, the Bottling Department, conversion costs are incurred evenly throughout the bottling process, but packaging materials are not added until the end of the process. Costs in beginning Work-in-Process Inventory include transferred in costs of \(1,400, direct labor of \)700, and manufacturing overhead of \(330. March data for the Bottling Department follow:
REFRESHING WATER COMPANY WORK-IN-PROCESS INVENTORY – BOTTLING Month ended March 31,2018 | ||||||
| Dollars | ||||||
Units | Transferred in | Direct materials | Direct labor | Manufacturing overheads | Total costs | |
Beginning inventory, Mar. 1 (40% complete) | 15,000 | \)1,400 | \(700 | \)330 | \(2,430 | |
Production started | 160,000 | 135,100 | \)30,400 | 33,100 | 16,300 | 214,900 |
Transferred out | 152,000 | |||||
Ending inventory, Mar 31 (70% completed) | 23,000 | |||||
Requirements
1. Prepare a production cost report for the Bottling Department for the month of
March. The company uses the weighted-average method.
2. Prepare the journal entry to record the cost of units completed and transferred out.
3. Post all transactions to the Work-in-Process Inventory—Bottling T-account. What is the ending balance?
Color Explosion prepares and packages paint products. Color Explosion has two departments: Blending and Packaging. Direct materials are added at the beginning of the blending process (dyes) and at the end of the packaging process (cans). Conversion costs are added evenly throughout each process. The company uses the weighted- average method. Data from the month of May for the Blending Department are as follows:
Gallons | |
Beginning work-in-process inventory | 0 gallons |
Started in production | 8,500 gallon |
Completed and transferred out to packaging in may | 6,500 gallon |
Ending work-in-process inventory (30% of the way through the blending process) | 2,000 gallon |
Costs | |
Beginning work-in-process inventory | \(0 |
Costs added during May: | |
| 5,525 |
| 1,500 |
| 2,547 |
Total costs added during May | \)9,572 |
Requirements
1. Compute the Blending Department’s equivalent units of production for direct
materials and for conversion costs.
2. Compute the total costs of the units (gallons)
a. completed and transferred out to the Packaging Department.
b. in the Blending Department ending Work-in-Process Inventory.
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