Learning Materials
Features
Discover
Chapter 18: Q.18-15RQ (page 1006)
Question: How is the cost per equivalent unit of production calculated?
Answer:
The cost per equivalent unit of production is calculated by dividing the total cost with the Equivalent unit of production.
Over 30 million students worldwide already upgrade their learning with Vaia!
All the tools & learning materials you need for study success - in one app.
Get started for free
Question: Identify each costing system characteristic as job order costing or process costing.
a. One Work-in-Process Inventory account
b. Production cost reports
c. Cost accumulated by process
d. Job cost sheets
e. Manufactures homogenous products through a series of uniform steps
f. Multiple Work-in-Process Inventory accounts
g. Costs transferred at end of period
h. Manufactures batches of unique products or provides specialized services
Bert’s Exteriors produces exterior siding for homes. The Preparation Department begins with wood, which is chopped into small bits. At the end of the process, an adhesive is added. Then the wood/adhesive mixture goes on to the Compression Department, where the wood is compressed into sheets. Conversion costs are added evenly throughout the preparation process. January data for the Preparation Department are as follows:
UNITS | |
Beginning work-in-process inventory | 0 sheets |
Started in production | 3,800 sheets |
Completed and transferred out to compression in January | 2,900 sheets |
Ending work-in-process inventory (30% of the way through the preparation process) | 900 sheets |
COSTS | |
Beginning work-in-process inventory | $0 |
Costs added during January | |
Wood | 2,888 |
Adhesive | 1,914 |
Direct labor | 987 |
Manufacturing overhead allocated | 2,500 |
Total costs | 8,289 |
Requirements
1. Prepare a production cost report for the Preparation Department for January. The company uses the weighted-average method. (Hint: Each direct material added at a different point in the production process requires its own equivalent units of production computation.)
2. Prepare the journal entry to record the cost of the sheets completed and transferred out to the Compression Department.
3. Post the journal entries to the Work-in-Process Inventory—Preparation T-account. What is the ending balance?
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.
Ocean Worthy uses three processes to manufacture lifts for personal watercraft: forming a lift’s parts from galvanized steel, assembling the lift, and testing the completed lift. The lifts are transferred to Finished Goods Inventory before shipment to marinas across the country.
Ocean Worthy’s Testing Department requires no direct materials. Conversion costs are incurred evenly throughout the testing process. Other information follows for the month of August:
UNITS | |
Beginning work-in-process inventory | 2,000 units |
Transferred in from assembling department during the period | 7,000 units |
Completed during the period | 4,000 units |
Ending work in process inventory (40% complete for conversion work) | 5,000 units |
COSTS | |
Beginning work in process inventory (transferred in costs, \(93,400, conversion costs, \)18,100) | $111,500 |
Transferred in from the assembly department during the period | 672,000 |
Conversion cost added during the period | 54,000 |
The cost transferred into Finished Goods Inventory is the cost of the lifts transferred out of the Testing Department. Ocean Worthy uses weighted-average
process costing.
Requirements
1. Prepare a production cost report for the Testing Department.
2. What is the cost per unit for lifts completed and transferred out to Finished Goods Inventory? Why would management be interested in this cost?
Describe ways the production cost report can be used by management.
What do you think about this solution?
We value your feedback to improve our textbook solutions.
Explanations 
Textbooks 
Exams 
GCSE 
IGCSE 
AS 
A Level 
International A Level 
University Admissions Tests 
Flashcards 
Vaia AI 
Notes 
Study Plans 
Study Sets 
Find a job 
Find a degree 
Student Deals 
Magazine 
Mobile App