(c) Prepare the Work in Process Inventory _ Spraying Department T-account, clearly showing the ending balance. (d) Prepare the journal entries for the use of total direct materials, direct labour incurred, manufacturing overhead applied and the cost of the units completed and transferred out to the Packing Department.
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Process Costing
Process costing is a sort of operation costing which is employed to determine the value of a product at each process or stage of producing process, applicable where goods produced from a series of continuous operations or procedure.
Job Costing
Job costing is adhesive costs of each and every job involved in the production processes. It is an accounting measure. It is a method which determines the cost of specific jobs, which are performed according to the consumer’s specifications. Job costing is possible only in businesses where the production is done as per the customer’s requirement. For example, some customers order to manufacture furniture as per their needs.
ABC Costing
Cost Accounting is a form of managerial accounting that helps the company in assessing the total variable cost so as to compute the cost of production. Cost accounting is generally used by the management so as to ensure better decision-making. In comparison to financial accounting, cost accounting has to follow a set standard ad can be used flexibly by the management as per their needs. The types of Cost Accounting include – Lean Accounting, Standard Costing, Marginal Costing and Activity Based Costing.
(c) Prepare the Work in Process Inventory _ Spraying Department T-account, clearly
showing the ending balance.
(d) Prepare the
manufacturing
to the Packing Department.
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- Novel Toys, Inc., manufactures plastic water guns. Each guns left and right frames are produced in the Molding Department. The left and right frames are then transferred to the Assembly Department where the trigger mechanism is inserted and the halves are glued together. (The left and right halves together define the unit of output for the Molding Department.) In June, the Molding Department reported the following data: a. In the Molding Department, all direct materials are added at the beginning of the process. b. Beginning work in process consisted of 3,000 units, 20 percent complete with respect to direct labor and overhead. Costs in beginning inventory included direct materials, 450; and conversion costs, 138. c. Costs added to production during the month were direct materials, 950; and conversion costs, 2,174.50. d. Inspection takes place at the end of the process. Malformed units are discarded. All spoilage is considered abnormal. e. During the month, 7,000 units were started, and 8,000 good units were transferred out to Finishing. All other units finished were malformed and discarded. There were 1,000 units that remained in ending work in process, 25 percent complete. Required: 1. Prepare a physical flow schedule. 2. Calculate equivalent units of production using the weighted average method. 3. Calculate the unit cost. 4. What is the cost of goods transferred out? Ending work in process? Loss due to spoilage? 5. Prepare the journal entry to remove spoilage from the Molding Department.Golding Manufacturing, a division of Farnsworth Sporting Inc., produces two different models of bows and eight models of knives. The bow-manufacturing process involves the production of two major subassemblies: the limbs and the handles. The limbs pass through four sequential processes before reaching final assembly: layup, molding, fabricating, and finishing. In the layup department, limbs are created by laminating layers of wood. In the molding department, the limbs are heat-treated, under pressure, to form strong resilient limbs. In the fabricating department, any protruding glue or other processing residue is removed. Finally, in the finishing department, the limbs are cleaned with acetone, dried, and sprayed with the final finishes. The handles pass through two processes before reaching final assembly: pattern and finishing. In the pattern department, blocks of wood are fed into a machine that is set to shape the handles. Different patterns are possible, depending on the machines setting. After coming out of the machine, the handles are cleaned and smoothed. They then pass to the finishing department, where they are sprayed with the final finishes. In final assembly, the limbs and handles are assembled into different models using purchased parts such as pulley assemblies, weight-adjustment bolts, side plates, and string. Golding, since its inception, has been using process costing to assign product costs. A predetermined overhead rate is used based on direct labor dollars (80% of direct labor dollars). Recently, Golding has hired a new controller, Karen Jenkins. After reviewing the product-costing procedures, Karen requested a meeting with the divisional manager, Aaron Suhr. The following is a transcript of their conversation: Karen: Aaron, I have some concerns about our cost accounting system. We make two different models of bows and are treating them as if they were the same product. Now I know that the only real difference between the models is the handle. The processing of the handles is the same, but the handles differ significantly in the amount and quality of wood used. Our current costing does not reflect this difference in material input. Aaron: Your predecessor is responsible. He believed that tracking the difference in material cost wasnt worth the effort. He simply didnt believe that it would make much difference in the unit cost of either model. Karen: Well, he may have been right, but I have my doubts. If there is a significant difference, it could affect our views of which model is more important to the company. The additional bookkeeping isnt very stringent. All we have to worry about is the pattern department. The other departments fit what I view as a process-costing pattern. Aaron: Why dont you look into it? If there is a significant difference, go ahead and adjust the costing system. After the meeting, Karen decided to collect cost data on the two models: the Deluxe model and the Econo model. She decided to track the costs for one week. At the end of the week, she had collected the following data from the pattern department: a. There were a total of 2,500 bows completed: 1,000 Deluxe models and 1,500 Econo models. b. There was no BWIP; however, there were 300 units in EWIP: 200 Deluxe and 100 Econo models. Both models were 80% complete with respect to conversion costs and 100% complete with respect to materials. c. The pattern department experienced the following costs: d. On an experimental basis, the requisition forms for materials were modified to identify the dollar value of the materials used by the Econo and Deluxe models: Required: 1. Compute the unit cost for the handles produced by the pattern department, assuming that process costing is totally appropriate. Round unit cost to two decimal places. 2. Compute the unit cost of each handle, using the separate cost information provided on materials. Round unit cost to two decimal places. 3. Compare the unit costs computed in Requirements 1 and 2. Is Karen justified in her belief that a pure process-costing relationship is not appropriate? Describe the costing system that you would recommend. 4. In the past, the marketing manager has requested more money for advertising the Econo line. Aaron has repeatedly refused to grant any increase in this products advertising budget because its per-unit profit (selling price minus manufacturing cost) is so low. Given the results in Requirements 1 through 3, was Aaron justified in his position?Aquatic Pleasures Corporation manufactures water skis by way of three consecutiveprocesses: Moulding, Spraying & Packing. In the Moulding Department, fibre glass is heatedand shaped into the form of a ski. In the Spraying Department the skis are sprayed into variouscolours and then sent to the Packing department where the skis are placed into cartons andsent to the Finished Goods warehouse.The following data relates to the Spraying Department for the month of October.During October, 2,000 skis valued at $324.25 each were transferred from the MouldingDepartment to the Spraying Department.Other costs incurred during the month were:Direct Materials AddedDirect LabourManufacturing Overhead$204,000$288,400$234,200Normal losses are estimated to be 5% of the units transferred in from Moulding. Inspectiontakes place during the processing operation, at which point bad skis are separated from goodskis and sold as scrap at $405 each.At inspection, 300 skis were rejected as scrap. These units…
- Cheetah Accessories uses four departments to produce handles for kitchen cabinets: Formingrequires mixing the raw materials, Moulding, Spraying and Drying. After leaving the DryingDepartment, the handles are packaged and sent to the Finished Goods warehouse for shipment toretail outlets.The following data relates to the Spraying Department for the month of June:During the month, 2,000 handles valued at $275 each were transferred from the MoldingDepartment to the Spraying Department.Other production costs incurred during the month are summarized as follows:Direct Materials AddedDirect Manufacturing WagesManufacturing Overhead$171,000$425,600$205,200Process inspection occurs during the process and normally no losses are expected at this stage.However, during the month 200 handles were rejected at inspection. Rejected units from thisdepartment are sold as scrap at $400 each. These units had reached the following degree ofcompletion:Transfer from Moulding 100%Direct material added…Cheetah Accessories uses four departments to produce handles for kitchen cabinets: Formingrequires mixing the raw materials, Moulding, Spraying and Drying. After leaving the DryingDepartment, the handles are packaged and sent to the Finished Goods warehouse for shipment toretail outlets.The following data relates to the Spraying Department for the month of June:During the month, 2,000 handles valued at $275 each were transferred from the MoldingDepartment to the Spraying Department.Other production costs incurred during the month are summarized as follows:Direct Materials AddedDirect Manufacturing WagesManufacturing Overhead$171,000$425,600$205,200Process inspection occurs during the process and normally no losses are expected at this stage.However, during the month 200 handles were rejected at inspection. Rejected units from thisdepartment are sold as scrap at $400 each. These units had reached the following degree ofcompletion:Transfer from Moulding 100%Direct material added…Cheetah Accessories uses four departments to produce handles for kitchen cabinets: Formingrequires mixing the raw materials, Moulding, Spraying and Drying. After leaving the DryingDepartment, the handles are packaged and sent to the Finished Goods warehouse for shipment toretail outlets.The following data relates to the Spraying Department for the month of June:During the month, 2,000 handles valued at $275 each were transferred from the MoldingDepartment to the Spraying Department.Other production costs incurred during the month are summarized as follows:Direct Materials AddedDirect Manufacturing WagesManufacturing Overhead$171,000$425,600$205,200Process inspection occurs during the process and normally no losses are expected at this stage.However, during the month 200 handles were rejected at inspection. Rejected units from thisdepartment are sold as scrap at $400 each. These units had reached the following degree ofcompletion:Transfer from Moulding 100%Direct material added…
- Cheetah Accessories uses four departments to produce handles for kitchen cabinets: Formingrequires mixing the raw materials, Moulding, Spraying and Drying. After leaving the DryingDepartment, the handles are packaged and sent to the Finished Goods warehouse for shipment toretail outlets.The following data relates to the Spraying Department for the month of June:During the month, 2,000 handles valued at $275 each were transferred from the MoldingDepartment to the Spraying Department.Other production costs incurred during the month are summarized as follows:Direct Materials AddedDirect Manufacturing WagesManufacturing Overhead$171,000$425,600$205,200Process inspection occurs during the process and normally no losses are expected at this stage.However, during the month 200 handles were rejected at inspection. Rejected units from thisdepartment are sold as scrap at $400 each. These units had reached the following degree ofcompletion:Transfer from Moulding 100%Direct material added…Cheetah Accessories uses four departments to produce handles for kitchen cabinets: Forming requires mixing the raw materials, Moulding, Spraying and Drying. After leaving the Drying Department, the handles are packaged and sent to the Finished Goods warehouse for shipment to retail outlets. The following data relates to the Spraying Department for the month of June: During the month, 2,000 handles valued at $275 each were transferred from the Molding Department to the Spraying Department. Other production costs incurred during the month are summarized as follows: Direct Materials Added Direct Manufacturing Wages Manufacturing Overhead $171,000 $425,600 $205,200 Process inspection occurs during the process and normally no losses are expected at this stage. However, during the month 200 handles were rejected at inspection. Rejected units from this department are sold as scrap at $400 each. These units had reached the following degree of completion: Transfer from Moulding 100% Direct…Rich company produces a variety of stationery products. One product, sealing wax sticks, passes through two processes: blending and molding. The weighted average method is used to account for the cost of production. Two ingredients, paraffin and pigment are added at the beginning of the process and heated and mixed for several hours. After blending, the resulting product is sent to the Molding department, where it is poured into molds and cooled. The following information relates to the blending process for November: a) Work in process, November 1, had 20,000 pounds, 20% complete with respect to conversion costs. Costs associated with partially completed units with: Paraffin : $ 120,000 Pigment : $ 100,000 Direct Labour : $ 30,000 Overhead applied : $ 10,000 b) Work in process, August 31, had 30,000 pounds, 70% complete with respect to conversion costs. c) Units completed and transferred out totalled 500,000 pounds. Costs…
- Concrete Creations manufactures concrete bird baths that are sold through retail outlets nationwide. The bird baths are made in a two-stage process. In the Forming Department, the concrete is poured into silicone molds where it is allowed to cure and set. Once set, the birdbaths are removed from the mold and sent to the Finishing Department where any imperfections are removed and the birdbaths are sprayed with a special sealant. Information for the Forming Department for the month of May is provided below. Assume that Concrete Creations uses the weighted-average method for cost allocation. Compute the cost per equivalent units of production for the Forming DepartmentConcrete Creations manufactures concrete bird baths that are sold through retail outlets nationwide. The bird baths are made in a two-stage process. In the Forming Department, the concrete is poured into silicone molds where it is allowed to cure and set. Once set, the birdbaths are removed from the mold and sent to the Finishing Department where any imperfections are removed and the birdbaths are sprayed with a special sealant. Information for the Forming Department for the month of May is provided below. Assume that Concrete Creations uses the weighted-average method for cost allocation. Calculate the total cost of ending work in process inventory as well as total cost of units transferred out for May.Novel Toys, Inc., manufactures plastic water guns. Each gun’s left and right frames are pro-duced in the Molding Department. The left and right frames are then transferred to the Assem-bly Department where the trigger mechanism is inserted and the halves are glued together. (The left and right halves together define the unit of output for the Molding Department.) In June,the Molding Department reported the following data:a. In the Molding Department, all direct materials are added at the beginning of the process.b. Beginning work in process consisted of 3,000 units, 20 percent complete with respect todirect labor and overhead. Costs in beginning inventory included direct materials, $450; andconversion costs, $138.c. Costs added to production during the month were direct materials, $950; and conversioncosts, $2,174.50.d. Inspection takes place at the end of the process. Malformed units are discarded. All spoilageis considered abnormal.e. During the month, 7,000 units were started, and…