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Chapter 18: Q39PGB (page 1021)

Question: Mayhem 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 March 31. In mid-April, Mayhem Electronics started production on 99,000 game consoles. Of this number, 95,000 game consoles were assembled during April and transferred out to the Programming Department. The April 30 Work-in-Process Inventory in the Assembly Department was 45% of the way through the assembly process. Direct materials costing \(301,950 were placed in production in Assembly during April, direct labor of \)100,960 was assigned, and manufacturing overhead of $136,200 was allocated to that department.

Requirements

1. Prepare a production cost report for the Assembly Department for April. The

company uses the weighted-average method.

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

Short Answer

Expert verified

Answer:

1. Production cost report

Production Cost Report

for Assembly Department

Equivalent unit of production

UNITS

Physical units

Direct material

Conversion costs

Total

Units to account for:

  • Beginning WIP
  • Started in production

99,000

Total units to account for

99,000

Units accounted for:

  • Completed and transferred

95,000

95,000

95,000

  • Ending WIP

4,000

4,000

1,800

Total units accounted for

99,000

99,000

96,800

COSTS

Direct material

Conversion costs

Total costs

Costs to account for:

Beginning WIP

Cost added during the period

$301,950

$237,160

539,110

Total cost to account for

301,950

237,160

539,100

Divided by: total EUP

99,000

96,800

Cost per equivalent unit

$3.05

$2.45

Costs accounted for:

  • Completed and transferred out

289,750

(95,000 x $3.05)

232,750

(95,000x$2.45)

522,500

  • Ending WIP

12,200

(4,000x $3.05)

4,410

(1,800x$2.45)

16,610

Total costs accounted for

$301,950

$237,160

539,110

2. The Ending balance of the WIP inventory account for the assembly department is $16,610

Step by step solution

01

Production Cost Report

A production cost report is a report of a manufacturing company that involves various manufacturing processes which shows the comprehensive costs of a product

02

Equivalent unit of production for conversion cost

Equivalentunitofproduction=EndingWIPunits×Completion%=4,000×45%=1,800

03

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

Particulars

Amount ($)

Particulars

Amount ($)

Beginning WIP

WIP-programming department

522,500

Direct material

301,950

Direct labor

100,960

Manufacturing overhead

136,200

Ending WIP

16,610

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Most popular questions from this chapter

Salish Craft Beers provides the following information for the Malting Department for the month of August 2018:


UNITS
COSTS

Beginning Work-in-Process Inventory

0

\(0

Started in Production in August

26,000

54,000*

Total to Account For

26,000

\)54,000

Completed and Transferred to Packaging Department during August

21,000

?

Ending Work-in-Process Inventory (30% complete for direct materials and 60% complete for conversion work)

5,000

?

Total Accounted For

26,000

\(54,000

* Includes \)18,000 direct materials and $36,000 conversion costs

Requirements

Complete a production cost report for the Malting Department for the month of August 2018 to determine the cost of the units completed and transferred out, and the cost of the ending Work-in-Process Inventory. Assume Salish Craft Beers uses the weighted average method.

Question: Why is the calculation of equivalent units of production needed in a process costing system?

Happy Colors manufactures crayons in a three-step process: mixing, molding, and packaging. The Mixing Department combines the direct materials of paraffin wax and pigments. The heated mixture is pumped to the Molding Department, where it is poured into molds. After the molds cool, the crayons are removed from the molds and are transferred to the Packaging Department, where paper wrappers are added and the crayons are boxed.

In the Mixing Department, the direct materials are added at the beginning of the

process and the conversion costs are incurred evenly throughout the process. Work in process of the Mixing Department on April 1, 2018, consisted of 300 batches of crayons that were 30% of the way through the production process. The beginning balance in Work-in-Process Inventory—Mixing was \(27,800, which consisted of \)10,700 in direct materials costs and $17,100 in conversion costs. During April, 3,200 batches were started in production. The Mixing Department transferred 2,800 batches to the Molding Department in April, and 700 were still in process on April 30. This ending inventory was 80% of the way through the mixing process. Happy Colors uses FIFO process costing.

At April 30, before recording the transfer of costs from the Mixing Department

to the Molding Department, the Happy Colors general ledger included the following account:

Work-in-process inventory – Mixing

Balance, March 1

27,800

Direct materials

22,400

Direct labor

21,330

Manufacturing overhead

44,070

Requirements

1. Prepare a production cost report for the Mixing Department for April. Round

equivalent unit costs to four decimal places. Round all other costs to the nearest

dollar.

2. Journalize all transactions affecting the Mixing Department during April, including the entries that have already been posted. Assume the labor costs are accrued and not yet paid.

Bishop Company uses the FIFO method in its process costing system. The Mixing Department started the month with 500 units in a process that was 20% complete, started in the production of 2,000 units, and transferred 2,100 units to the finished goods storage area. All materials are added at the beginning of the process, and conversion costs occur evenly. The units in process at the end of the month are 45% complete concerning conversion costs. The department incurred the following costs:

Beginning WIP

Added this month

Total

Direct materials

\(500

\)2,000

\(2,500

Conversion cost

1,250

5,450

6,700

Total

\)1,750

\(7,450

\)9,200

14A. How many units are still in process at the end of the month?

15A. Compute the equivalent production units for the Mixing Department for the current month.

16A. Determine the cost per equivalent unit for the current period for direct materials and conversion costs.

17A. Determine the cost to be transferred to the next department.

Question: Spring Fresh produces premium bottled water. Spring Fresh purchases artesian water, stores the water in large tanks, and then runs the water through two processes: filtration and bottling.

During February, the filtration process incurred the following costs in processing

200,000 liters:

Wages of workers operating filtration equipment

$34,950

Manufacturing overhead allocated to filtration

19,050

Water

110,000

Spring Fresh had no beginning Work-in-Process Inventory in the Filtration Department in February.

Requirements

1. Use the FIFO method to compute the February conversion costs in the Filtration Department.

2. The Filtration Department completely processed 200,000 liters in February. Use

the FIFO method to determine the filtration cost per liter.
See all solutions

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