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Chapter 18: Q45PGB (page 1024)

Preparing a production cost report, second department, withbeginning WIP and transferred in costs; journal entries; FIFO method Work Problem P18-40B using the FIFO method. The Mixing Department beginningwork in process of 400 units is 80% complete as to both direct materials and conversion costs. Round equivalent unit costs to four decimal places. Round all other costs to the nearest dollar.

Short Answer

Expert verified

1. Production cost report


Production Cost Report- Department 2



Equivalent unit of production

UNITS

Physical units

Direct material

Conversion costs

Total

Units to account for:

  • Beginning WIP

400

  • Started in production

4,600

Total units to account for

5,000

Units accounted for:

  • Completed and transferred

4,500

4,180

4,180

  • Ending WIP

500

100

100

Total units accounted for

5,000

4,280

4,280

COSTS

Direct material

Conversion costs

Total costs

Costs to account for:

Beginning WIP

$475

$575

$1,050

Cost added during the period

5,045

5,865

10,910

Total cost to account for

5,520

6,440

11,960

Divided by: total EUP

4,280

4,280

Cost per equivalent unit

$1.29

$1.50

Costs accounted for:

  • - Completed and transferred out

5,391

(4,180 x $1.29)

6,290

(4,180x$1.50)

11,681

  • - Ending WIP

129

(100x $1.29)

150

(100x$1.50)

279

Total costs accounted for

5,520

6,440

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 shows the direct material, and the conversion cost separately of a product that involves a certain number of manufacturing processes.

02

Equivalent unit of production for direct material cost

Particulars

EUP

Opening WIP (400 x 20%)

80

Completed and transferred (4,500 – 400) x 100%

4,100

Ending WIP (500 x 20%)

100

Total EUP

4,280

03

Equivalent unit of production for conversion costs

Particulars

EUP

Opening WIP (400 x 20%)

80

Completed and transferred (4,500 – 400) x 100%

4,100

Ending WIP (500 x 20%)

100

Total EUP

4,280

04

Journal Entries

Date

Particulars

Debit ($)

Credit ($)

1.

WIP Inventory-Mixing department

5,045

Raw material

5,045

2.

WIP inventory-Mixing department

2,900

Wages payable

2,900

3.

WIP inventory – mixing department

2,965

Manufacturing overhead

2,965

4.

WIP inventory-cooking department

11,681

WIP inventory – mixing department

11,681

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Most popular questions from this chapter

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?

Question: Department 4 has completed production on units that have a total cost of $15,000. The units are ready for sale. Give the journal entry.

Question: The Mixing Department of Complete Foods had 62,000 units to account for in October. Of the 62,000 units, 38,000 units were completed and transferred to the next department, and 24,000 units were 20% complete. All of the materials are added at the beginning of the process. Conversion costs are added evenly throughout the mixing process and the company uses the weighted-average method.

Compute the total equivalent units of production for direct materials and

conversion costs for October.

Describe some ways managers use production cost reports to make business decisions.

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.
See all solutions

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