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Chapter 18: Q38PGA (page 1020)

Work Problem P18-33A using the FIFO method. The Mixing Department beginning work in process of 300 units is 40% complete as to both direct materials and conversion costs. Round equivalent unit of production costs to four decimal places. Round all other costs to the nearest whole dollar.

Short Answer

Expert verified

1. Production cost report

Production Cost Report-Mixing Department


Equivalent unit of production

UNITS

Physical units

Direct material

Conversion costs

Total

Units to account for:

  • Beginning WIP

300

  • Started in production

4,700

Total units to account for

5,000

Units accounted for:

  • Completed and transferred

4,500

4,380

4,380

  • Ending WIP

500

100

100


Total units accounted for

5,000

4,480

4,480

COSTS

Direct material

Conversion costs

Total costs

Costs to account for:

Beginning WIP

$350

$445

$795

Cost added during the period


4,940

6,225

11,165

Total cost to account for

5,290

6,670

11,960

Divided by: total EUP


4,480

4,480


Cost per equivalent unit

$1.18

$1.49


Costs accounted for:

  • - Completed and transferred out

5,172

(4,380 x $1.18)

6,521

(4,380x$1.49)

11,693

  • - Ending WIP


118

(100x $1.18)

149

(100x$1.49)

267

Total costs accounted for

5,290

6,670

11,960

2. The journal entries to show the transaction affecting the mixing department are shown in step 4.

Step by step solution

01

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

A production cost report is a report prepared by a company that has several manufacturing processes, and this report shows the various kinds of costs of the product.

02

Equivalent unit of production for direct material cost

Particulars

EUP

Opening WIP (300 x 60%)

180

Completed and transferred (4,500 – 300) x 100%

4,200

Ending WIP (500 x 20%)

100

Total EUP

4,480

03

Equivalent unit of production for conversion costs

Particulars

EUP

Opening WIP (300 x 60%)

180

Completed and transferred (4,500 – 300) x 100%

4,200

Ending WIP (500 x 20%)

100

Total EUP

4,480

04

Journal Entries

Date

Particulars

Debit ($)

Credit ($)

1.

WIP Inventory-Mixing department

4,940

Raw material

4,940

2.

WIP inventory-Mixing department

3,000

Wages payable

3,000

3.

WIP inventory – mixing department

3,225

Manufacturing overhead

3,225

4.

WIP inventory-cooking department

11,693

WIP inventory – mixing department

11,693

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Most popular questions from this chapter

Carla Carpet manufactures broadloom carpet in seven processes: spinning, dyeing, plying, spooling, tufting, latexing, and shearing. In the Dyeing Department, direct materials (dye) are added at the beginning of the process. Conversion costs are incurred evenly throughout the process. Information for November 2018 follows:

UNITS

Beginning work-in-process inventory

70 rolls

Transferred in from spinning department during November

550 rolls

Completed during November

480 rolls

Ending work in process inventory (80% complete for conversion work)

140 rolls

COSTS

Beginning work in process inventory (transferred in costs, \(4,000, Materials costs, \)1,400 conversion costs, \(5,300)

\)10,700

Transferred in from the spinning department

23,280

Material costs added during November

14,100

Coversion cost added during November (manufacturing wages, \(8,725; manufacturing overhead allocated, \)43,991)

52,716

Requirements

1. Prepare the November production cost report for Carla’s Dyeing Department.

The company uses the weighted-average method.

2. Journalize all transactions affecting Carla’s Dyeing Department during November, including the entries that have already been posted. Assume labor costs are accrued and not yet paid.

Sea Worthy uses three processes to manufacture lifts for personal watercrafts: forming a lift’s parts from galvanized steel, assembling the lift, and testing the completed lift. The lifts are transferred to finished goods before shipment to marinas across the country. Sea Worthy’s Testing Department requires no direct materials. Conversion costs are incurred evenly throughout the testing process. Other information follows for October 2018:

UNITS

Beginning work-in-process inventory

2,300 units

Transferred in from assembling department during the period

6,800 units

Completed during the period

4,100 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

671,000

Conversion cost added during the period

49,000

The cost transferred into Finished Goods Inventory is the cost of the lifts transferred out of the Testing Department. Sea 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?

Question: What are the primary differences between job order costing systems and process costing systems?

Roan Paper Co. produces the paper used by wallpaper manufacturers. Roan’s four-stage process includes mixing, cooking, rolling, and cutting. On March 1, the Mixing Department had 300 rolls of paper in process. During March, the Mixing Department completed the mixing process for those 300 rolls and also started and completed the mixing process for an additional 4,200 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 compiledthe following data for March:

Direct materials

Direct labor

Manufacturing overhead allocated

Total costs

Beginning inventory, Mar. 1

\(350

\)245

\(200

\)795

Costs added during March

4,940

3,000

3,225

11,165

Total costs

\(5,290

\)3,245

\(3,425

\)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 the data and your answers from Exercise E18-23.

Requirements

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

2. Post the journal entries to the Work-in-Process Inventory—Fermenting T-account. What is the ending balance?

3. What is the average cost per gallon transferred out of the Fermenting Department into the Packaging Department? Why would Shea Winery’s managers want to know this cost?
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