account- manufactures a product that passes through two departments

account- manufactures a product that passes through two departments

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HOMEWORK #4

CHAPTER 4

E4-7)

Pureform, Inc., manufactures a product that passes through two
departments. Data for a recent month for the first department follow:

	Units	Materials	Labor	Overhead
Work in process, beginning	73,000	$	350,000	$	28,000	$	41,000
Units started in process	760,000
Units transferred out	780,000
Work in process, ending	53,000
Cost added during the month		$	920,000	$	390,000	$	590,000

The beginning work in process inventory was 80% complete with
respect to materials and 60% complete with respect to processing. The ending
work in process inventory was 75% complete with respect to materials and 50%
complete with respect to processing. The company uses the weighted-average
method of accounting for units and costs

Requirement 1:
(a)	Prepare a quantity schedule for the month for the first department.

Quantity Schedule
Units to be accounted for:


Total units to be accounted for

(b)

Compute the equivalent units for the month for the first
department.

Equivalent Units (EU)
Materials
Labor
Overhead

Requirement
2:

Determine the
costs per equivalent unit for May.

Cost per
equivalent unit

E4-8)

Helox, Inc., manufactures a product that passes through two
production processes. A quantity schedule for the month of May for the first
process follows:

	Quantity Schedule
Units to be accounted for:
Work in process, May 1 (materials 100% complete; conversion 40% complete)		5,000
Started into production		180,000
Total units to be accounted for		185,000

Costs in the beginning work in process inventory of the first
processing department were: materials, $1,500; and conversion cost, $4,000
Costs added during the month were: materials, $54,000; and conversion cost,
$352,000.

Requirement 1:

Assume that the company uses the weighted-average method of
accounting for units and costs. Determine the equivalent units for the month
for the first process.

	Quantity Schedule	Equivalent Units
	Materials	Conversion
Units accounted for as follows:
Transferred to the next process	175,000
Work in process, May 31 (materials 100% complete, conversion 30% complete)	10,000
Total units accounted for	185,000

Requirement 2:

Compute the costs per equivalent unit for the month for the
first process.

	Cost per EU
Materials	$
Conversion
Whole Unit	$

E4-9)

Helox, Inc., manufactures a product that passes through two
production processes. The company uses the weighted-average method of
accounting for units and costs. A quantity schedule for the month of May for
the first process follows:

	Quantity Schedule	Equivalent Units
	Materials	Conversion
Units accounted for as follows:
Transferred to the next process	175,000	175,000	175,000
Work in process, May 31 (materials 100% complete, conversion 30% complete)	10,000	10,000	3,000
Total units accounted for	185,000	185,000	178,000

	Total Cost	Materials	Conversion
Cost to be accounted for:
Work in process, May 1	$	5,500	$	1,500	$	4,000
Cost added by the department		406,000		54,000		352,000
Total cost to be accounted for	$	411,500	$	55,500	$	356,000
Equivalent units				185,000		178,000

Required:

Complete the following cost reconciliation for the first
process.

		Equivalent Units
	Total Cost	Materials	Conversion
Cost accounted for as follows:
Transferred to the next process	$
Work in process, May 31:
Materials
Conversion
Total work in process
Total cost accounted for	$

E4-13)

Sunspot Beverages, Ltd., of Fiji makes blended tropical fruit
drinks in two stages. Fruit juices are extracted from fresh fruits and
blended in the Blending Department. The blended juices are then bottled and
packed for shipping in the Bottling Department. The following information
pertains to the operations of the Blending Department for June. (The currency
in Fiji is the Fijian dollar.)

	Percent Completed
	Units	Materials	Conversion
Work in process, beginning	20,000		100	%		75	%
Started into production	91,300
Completed and transferred out	96,831
Work in process, ending	14,469		100	%		25	%
Work in process, beginning		$	25,200		$	24,800
Cost added during June		$	334,800		$	238,700

Required:

Prepare a production report for the Blending Department for June
assuming that the company uses the weighted-average method.

Quantity Schedule
Units to be accounted for:


Total units

	Quantity Schedule	Equivalent Units
Materials	Conversion
Units accounted for as follows:


Total units and equivalent units of production

	Total Cost	Materials	Conversion	Whole Unit
Cost to be accounted for:


Total cost to be accounted for	$
Equivalent units
Cost per equivalent unit

Cost Reconciliation
	Total Cost	Equivalent Units (EU)
	Materials	Conversion
Cost accounted for as follows:
Transferred to bottling	$
Work in process, June 30:
Materials
Conversion
Total work in process
Total cost	$

P4-17)

You are employed by Spirit Company, a manufacturer of digital
watches. The company’s chief financial officer is trying to verify the
accuracy of the ending work in process and finished goods inventories prior
to closing the books for the year. You have been asked to assist in this
verification. The year-end balances shown on Spirit Company’s books are as
follows:

	Units		Costs
Work in process, December 31 (labor and overhead 50% complete)	215,000	$	660,960
Finished goods, December 31	130,000	$	1,009,800

Materials are added to production at the beginning of the
manufacturing process, and overhead is applied to each product at the rate of
60% of direct labor cost. There was no finished goods inventory at the
beginning of the year. A review of Spirit Company’s inventory and cost
records has disclosed the following data:

Costs

	Units		Materials		Labor
Work in process, January 1 (labor and overhead 80% complete)	200,000	$	200,000	$	315,000
Units started into production	646,000
Cost added during the year
Materials cost		$	1,300,000
Labor cost				$	1,895,000
Units completed during the year	631,000

The company uses the weighted-average cost method.

Requirement 1:

Determine the equivalent units and costs per equivalent unit for
materials, labor, and overhead for the year.

a.	The equivalent units would be:

	Materials	Labor	Overhead


Total equivalent units

b.	The costs per equivalent unit would be

	Materials	Labor	Overhead	Whole Unit


Total costs	$
Cost per EU	$

Requirement 2:

Determine the amount of cost that should be assigned to the
ending Work in Process and Finished Goods inventories.

	Work in Process	Finished Goods	Total
Work in process:
Materials	$
Labor
Overhead
Finished goods
Total cost that should be assigned to inventories	$

Requirement 3:

Prepare the necessary
correcting journal entry to adjust the Work in Process and Finished Goods
inventories to the correct balances as of December 31.

General Journal	Debit	Credit

Requirement 4:

Determine the cost of goods sold for the year assuming there is
no under- or overapplied overhead.

Cost of goods sold
The simplest computation (in units except for last two entries):





Cost per equivalent unit	$
Cost of goods sold	$
Alternative computation (in dollars):
Total manufacturing cost incurred:
Materials	$
Labor
Overhead
Total manufacturing cost
Less: Cost assigned to inventories
Cost of goods sold	$

Work in
Process

Finished
Goods

Cost that should be assigned to inventories (above)

Year-end balances in the accounts

Difference