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Chapter 18: Q32PGA (page 1017)

Dee Electronics makes game consoles in three processes: assembly, programming, and packaging. Direct materials are added at the beginning of the assembly process. Conversion costs are incurred evenly throughout the process. The Assembly Department had no Work-in-Process Inventory on October 31. In mid-November, Dee Electronics started production on 100,000 game consoles. Of this number, 90,000 game consoles were assembled during November and transferred out to the Programming Department. The November 30 Work-in-Process Inventory in the Assembly Department was 35% of the way through the assembly process. Direct materials costing \(399,000 were placed in production in Assembly during November, direct labor of \)139,000 was assigned, and manufacturing overhead of $130,280 was allocated to that department.

Requirements

1. Prepare a production cost report for the Assembly Department for November.

The company uses the weighted-average method.

2. Prepare a T-account for Work-in-Process Inventory—Assembly to show its activity during November, including the November 30 balance.

Short Answer

Expert verified

1. Production cost report


Production Cost Report for the Assembly Department

for November


Equivalent unit of production

UNITS

Physical units

Direct material

Conversion costs

Total

Units to account for:

  • Beginning WIP
  • Started in production

100,000

Total units to account for

100,000

Units accounted for:

  • Completed and transferred

90,000

90,000

90,000

  • Ending WIP

10,000

10,000

3,500


Total units accounted for

100,000

100,000

93,500

COSTS

Direct material

Conversion costs

Total costs

Costs to account for:

Beginning WIP

Cost added during the period


399,000

269,280

668,280

Total cost to account for


399,000

269,280

668,280

Divided by: total EUP


100,000

93,500


Cost per equivalent unit

$3.99

$2.88

Costs accounted for:

  • - Completed and transferred out

359,100

(90,000 x $3.99)

259,200

(90,000x$2.88)

618,300

  • - Ending WIP


39,900

(10,000x $3.99)

10,080

(3,500x$2.88)

49,980

Total costs accounted for

$399,000

$269,280

$668,280

2. The Ending balance of the WIP inventory account for the assembly department is $49,980

Step by step solution

01

Step-by-Step Solution:Step 1: Production Cost Report

Production cost report is prepared by the companies using the process costing system while determining the total manufacturing cost. It shows the detailed costing of the products.

02

Equivalent unit of production for conversion cost

Equivalentunitofproduction=EndingWIPunits×Completion%=10,000×35%=3,500

03

T-account for work-in-process inventory-assembly

Particulars

Amount ($)

Particulars

Amount ($)

Beginning WIP

WIP-programming department

618,300

Direct material

399,000

Direct labor

139,000

Manufacturing overhead

130,280

Ending WIP

49,980

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Most popular questions from this chapter

Selected production and cost data of Laura’s Caliper Co. follow for May 2018:

Mixing Department

Heating department

Units to account for :

  • Beginning WIP, April 30

25,000

10,000

  • Started in May

90,000

  • Transferred in during May

90,000

Total units to account for

115,000

100,000

Units accounted for:

  • Completed and transferred out during may

90,000

82,000

  • Ending WIP, May 31

25,000

18,000

Total units accounted for

115,000

100,000

On May 31, the Mixing Department ending Work-in-Process Inventory was 80%

complete for materials and 45% complete for conversion costs. The Heating Department ending Work-in-Process Inventory was 60% complete for materials and 35% complete for conversion costs. The company uses the weighted-average method. Requirements

1. Compute the equivalent units of production for direct materials and for conversion costs for the Mixing Department.

2. Compute the equivalent units of production for transferred in costs, direct materials, and conversion costs for the Heating Department.

Smith Paper Co. produces the paper used by wallpaper manufacturers. Smith’s four-stage process includes mixing, cooking, rolling, and cutting. On March 1, the Mixing Department had 400 rolls in process. During March, the Mixing Department completed the mixing process for those 400 rolls and also started and completed the mixing process for an additional 4,100 rolls of paper. The department started but did not finish the mixing process for an additional 500 rolls, which were 20% complete with respect to both direct materials and conversion work at the end of March. Direct materials and conversion costs are incurred evenly throughout the mixing process. The Mixing Department compiled the following data for March:

Direct materials

Direct labor

Manufacturing overhead allocated

Total costs

Beginning inventory, Mar. 1

\(475

\)275

\(300

\)1,050

Costs added during March

5,045

2,900

2,965

10,910

Total costs

\(5,520

\)3,175

\(3,265

\)11,960

Requirements

1. Prepare a production cost report for the Mixing Department for March. The company uses the weighted-average method.

2. Journalize all transactions affecting the company’s mixing process during March. Assume labor costs are accrued and not yet paid.

Refer to your answers from Exercise E18-21.

Requirements

1. Prepare the journal entries to record the assignment of direct materials and direct labor and the allocation of manufacturing overhead to the Blending Department. Also, prepare the journal entry to record the costs of the gallons completed and transferred out to the Packaging Department. Assume labor costs are accrued and not yet paid.

2. Post the journal entries to the Work-in-Process Inventory—Blending T-account.

What is the ending balance?

3. What is the average cost per gallon transferred out of the Blending Department

into the Packaging Department? Why would the company managers want to

know this cost?

The Blending Department for CenTex Paints started October with 1,000 gallons in process and started in production 9,500gallons. During the month, 7,000 gallons were completed and transferred to the next department. Ending work-in-process was3,500 gallons (100% complete with respect to direct materials and 30% complete for conversion costs). The department uses the

weighted-average method. The Blending Department incurred the following costs:

Beginning WIP-Direct materials cost

\(500

Beginning WIP-Conversion cost

1,210

Direct material added during the month

5,800

Conversion cost added during the month

5,230

Total

\)12,740

7. Prepare a production cost report for the Blending Department for the month of October.

Question: What types of companies use job order costing systems?
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