APCO Company manufactures various lines of bicycles. Because of the high volume of each line, the company employs a process costing system using the weighted-average method. Bicycle parts are manufactured in the molding department and then are consolidated into a single bike unit in the molding department and transferred to the assembly department, where they are assembled. After assembly, the bicycle is sent to the packing department. Annual cost and production figures for the assembly department are presented in the schedules below. Defective bicycles are identified at the inspection point when the assembly labor process is 70% complete; all assembly materials have been added at this point. The normal rejection rate for defective bicycles is 5% of the bicycles reaching the inspection point. Any defective bicycles above the 5% quota are considered to be abnormal. All defective bikes are removed from the production process and destroyed. Prior period costs Current period costs Total costs Assembly Department Cost Data Transferred in from Molding Department $ 91,200 1,245,000 Assembly Conversion Total Cost of Bike through Assembly $112,670 1,589,320 $ 1,701,990 Percentage Complete Assembly Materials $ 8,010 101,160 $ 13,460 243,160 $ 1,336,200 $ 109,170 $ 256,620 Assembly Department Production Data Transferred. Assembly Bicycles in Materials Assembly Conversion Beginning inventory 3,090 100% 100% Transferred in from molding during year 80% 54,000 100 Transferred out to packing during year Ending inventory 44,500 100 100 100 4,180 100 50 20 Required: 1. Compute the number of defective, or spoiled, bikes that are considered to be a. Normal spoilage. b. Abnormal spoilage. 2. Compute the equivalent units of production for the year for a. Bicycles transferred in from the molding department. b. Bicycles produced with regard to assembly materials. c. Bicycles produced with regard to assembly conversion. 3. Compute the cost per equivalent unit for the fully assembled bike. 4. Compute the amount of the total production cost of $1,701,990 that will be associated with the following items: a. Normal spoiled units. b. Good units completed in the assembly department. c. Abnormal spoiled units. d. Ending Work-in-Process Inventory in the assembly department.

APCO Company manufactures various lines of bicycles. Because of the high volume of each line, the company employs a process costing system using the weighted-average method. Bicycle parts are manufactured in the molding department and then are consolidated into a single bike unit in the molding department and transferred to the assembly department, where they are assembled. After assembly, the bicycle is sent to the packing department. Annual cost and production figures for the assembly department are presented in the schedules below. Defective bicycles are identified at the inspection point when the assembly labor process is 70% complete; all assembly materials have been added at this point. The normal rejection rate for defective bicycles is 5% of the bicycles reaching the inspection point. Any defective bicycles above the 5% quota are considered to be abnormal. All defective bikes are removed from the production process and destroyed. Prior period costs Current period costs Total costs Assembly Department Cost Data Transferred in from Molding Department $ 91,200 1,245,000 Assembly Conversion Total Cost of Bike through Assembly $112,670 1,589,320 $ 1,701,990 Percentage Complete Assembly Materials $ 8,010 101,160 $ 13,460 243,160 $ 1,336,200 $ 109,170 $ 256,620 Assembly Department Production Data Transferred. Assembly Bicycles in Materials Assembly Conversion Beginning inventory 3,090 100% 100% Transferred in from molding during year 80% 54,000 100 Transferred out to packing during year Ending inventory 44,500 100 100 100 4,180 100 50 20 Required: 1. Compute the number of defective, or spoiled, bikes that are considered to be a. Normal spoilage. b. Abnormal spoilage. 2. Compute the equivalent units of production for the year for a. Bicycles transferred in from the molding department. b. Bicycles produced with regard to assembly materials. c. Bicycles produced with regard to assembly conversion. 3. Compute the cost per equivalent unit for the fully assembled bike. 4. Compute the amount of the total production cost of $1,701,990 that will be associated with the following items: a. Normal spoiled units. b. Good units completed in the assembly department. c. Abnormal spoiled units. d. Ending Work-in-Process Inventory in the assembly department.

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter6: Process Costing

Section: Chapter Questions

Problem 38P: Healthway uses a process-costing system to compute the unit costs of the minerals that it produces....

See similar textbooks