Coastal Brewers manufactures fruit infused beers for local as well as international consumption. The Beer is prepared through two processes. Process I involves Blending and Fermentation and Process 2 involves Canning and Labeling for market. The packing of finish product cost is minimal in relation to the other processes and is not treated as a separate process. All beer related direct materials are added at the beginning of process 1. The information presented below is for process 1. The organization uses the FIFO method for inventory valuation. Physical units (liters) Direct Materials Conversion Cost Work in process July 01. Degree of completion materials 100%, conversion 50% 500,000 $100,000 $160,000 Started in July 4,500,000 Normal spoilage 3% of inputs Good units completed and transferred out in July ? Work in process July 31. Degree of completion, 100,% conversion 60% 400,000 Cost added during July $1,350,000 $1,820,000 All spoiled units are 40% complete as to conversion. 200,000 (liters) The spoiled units result from temperature fluctuations during the fermentation process. Required Prepare a process costing work sheeting using the fifo method

Coastal Brewers manufactures fruit infused beers for local as well as international consumption. The Beer is prepared through two processes. Process I involves Blending and Fermentation and Process 2 involves Canning and Labeling for market. The packing of finish product cost is minimal in relation to the other processes and is not treated as a separate process. All beer related direct materials are added at the beginning of process 1. The information presented below is for process 1. The organization uses the FIFO method for inventory valuation. Physical units (liters) Direct Materials Conversion Cost Work in process July 01. Degree of completion materials 100%, conversion 50% 500,000 $100,000 $160,000 Started in July 4,500,000 Normal spoilage 3% of inputs Good units completed and transferred out in July ? Work in process July 31. Degree of completion, 100,% conversion 60% 400,000 Cost added during July $1,350,000 $1,820,000 All spoiled units are 40% complete as to conversion. 200,000 (liters) The spoiled units result from temperature fluctuations during the fermentation process. Required Prepare a process costing work sheeting using the fifo method

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Description: Har Coastal Brewers manufactures fruit infused beers for local as well asinternational consumption. The Beer is prepared through two processes.Process I involves Blending and Fermentation and Process 2 involvesCanning and Labeling for market. The pac

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....

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Cooperative San José of southern Sonora state in Mexico makes a unique syrup using cane sugar and local herbs. The syrup is sold in small bottles and is prized as a flavoring for drinks and for use in desserts. The bottles are sold for $12 each. The first stage in the production process is carried out in the Mixing Department, which removes foreign matter from the raw materials and mixes them in the proper proportions in large vats. The company uses the weighted-average method in its process costing system. A hastily prepared report for the Mixing Department for April appears below: Units to be accounted for: Work in process, April 1 (materials 90% complete;conversion 80% complete) 30,000 Started into production 200,000 Total units to be accounted for 230,000 Units accounted for as follows: Transferred to next department 190,000 Work in process, April 30 (materials 75% complete;conversion 60% complete) 40,000 Total units accounted for 230,000…
Cooperative San José of southern Sonora state in Mexico makes a unique syrup using cane sugar and local herbs. The syrup is sold in small bottles and is prized as a flavoring for drinks and for use in desserts. The bottles are sold for $12 each. The first stage in the production process is carried out in the Mixing Department, which removes foreign matter from the raw materials and mixes them in the proper proportions in large vats. The company uses the weighted-average method in its process costing system. A hastily prepared report for the Mixing Department for April appears below: Units to be accounted for: Work in process, April 1 (materials 90% complete;conversion 80% complete) 30,000 Started into production 200,000 Total units to be accounted for 230,000 Units accounted for as follows: Transferred to next department 190,000 Work in process, April 30 (materials 75% complete;conversion 60% complete) 40,000 Total units accounted for 230,000…
Benson Pharmaceuticals uses a process-costing system to compute the unit costs of the over-the-counter cold remedies that it produces. It has three departments: mixing, encapsulating, and bottling. In mixing, the ingredients for the cold capsules are measured, sifted, and blended (with materials assumed to be uniformly added throughout the process). The mix is transferred out in gallon containers. The encapsulating department takes the powdered mix and places it in capsules (which are necessarily added at the beginning of the process). One gallon of powdered mix converts into 1,500 capsules. After the capsules are filled and polished, they are transferred to bottling, where they are placed in bottles that are then affixed with a safety seal, lid, and label. Each bottle receives 50 capsules. During March, the following results are available for the first two departments: Overhead in both departments is applied as a percentage of direct labor costs. In the mixing department, overhead is 200% of direct labor. In the encapsulating department, the overhead rate is 150% of direct labor. Required: 1. Prepare a production report for the mixing department using the weighted average method. Follow the five steps outlined in the chapter. (Note: Round to two decimal places for the unit cost.) 2. Prepare a production report for the encapsulating department using the weighted average method. Follow the five steps outlined in the chapter. (Note: Round to four decimal places for the unit cost.) 3. CONCEPTUAL CONNECTION Explain why the weighted average method is easier to use than FIFO. Explain when weighted average will give about the same results as FIFO.
Hales Company produces a product that requires two processes. In the first process, a subassembly is produced (subassembly A). In the second process, this subassembly and a subassembly purchased from outside the company (subassembly B) are assembled to produce the final product. For simplicity, assume that the assembly of one final unit takes the same time as the production of subassembly A. Subassembly A is placed in a container and sent to an area called the subassembly stores (SB stores) area. A production Kanban is attached to this container. A second container, also with one subassembly, is located near the assembly line (called the withdrawal store). This container has attached to it a withdrawal Kanban. Required: 1. Explain how withdrawal and production Kanban cards are used to control the work flow between the two processes. How does this approach minimize inventories? 2. Explain how vendor Kanban cards can be used to control the flow of the purchased subassembly. What implications does this have for supplier relationships? What role, if any, do continuous replenishment and EDI play in this process?
Process activity analysis The Brite Beverage Company bottles soft drinks into aluminum cans. The manufacturing process consists of three activities: 1. Mixing: water, sugar, and beverage concentrate are mixed. 2. Filling: mixed beverage is filled into 12-oz. cans. 3. Packaging: properly filled cans are boxed into cardboard fridge packs. The activity costs associated with these activities for the period are as follows: The activity costs do not include materials costs, which are ignored for this analysis. Each can is expected to contain 12 ounces of beverage. Thus, after being filled, each can is automatically weighed. If a can is too light, it is rejected, or kicked, from the filling line prior to being packaged. The primary cause of kicks is heat expansion. With heat expansion, the beverage overflows during filling, resulting in underweight cans. This process begins by mixing and filling 6,300,000 cans during the period, of which only 6,000,000 cans are actually packaged. Three hundred thousand cans are rejected due to underweight kicks. A process improvement team has determined that cooling the cans prior to filling them will reduce the amount of overflows due to expansion. After this improvement, the number of kicks is expected to decline from 300,000 cans to 63,000 cans, thus increasing the number of filled cans to 6,237,000 [6,000,000 + (300,000 63,000)]. A. Determine the total activity cost per packaged can under present operations. B. Determine the amount of increased packaging activity costs from the expected improvements. C. Determine the expected total activity cost per packaged can after improvements. Round to three decimal places.
Analyzing process cost elements across product types Mystic Bottling Company bottles popular beverages in the Bottling Department. The beverages are produced by blending concentrate with water and sugar. The concentrate is purchased from a concentrate producer. The concentrate producer sets higher prices for the more popular concentrate flavors. A simplified Bottling Department cost of production report separating the cost of bottling the four flavors follows: Beginning and ending work in process inventories are negligible, so they are omitted from the cost of production report. The flavor changeover cost represents the cost of cleaning the bottling machines between production runs of different flavors. A production ran of a new flavor is produced after a flavor changeover from the previous flavor. Higher-demand flavors are produced in larger production runs, while smaller-demand flavors are produced in smaller production runs. Prepare a memo to the production manager, analyzing this comparative cost information. In your memo, provide recommendations for further action, along with supporting schedules showing the total cost per case and cost per case by cost element. Round supporting calculations to the nearest cent.
Healthway uses a process-costing system to compute the unit costs of the minerals that it produces. It has three departments: Mixing, Tableting, and Bottling. In Mixing, at the beginning of the process all materials are added and the ingredients for the minerals are measured, sifted, and blended together. The mix is transferred out in gallon containers. The Tableting Department takes the powdered mix and places it in capsules. One gallon of powdered mix converts to 1,600 capsules. After the capsules are filled and polished, they are transferred to Bottling where they are placed in bottles, which are then affixed with a safety seal and a lid and labeled. Each bottle receives 50 capsules. During July, the following results are available for the first two departments (direct materials are added at the beginning in both departments): Overhead in both departments is applied as a percentage of direct labor costs. In the Mixing Department, overhead is 200 percent of direct labor. In the Tableting Department, the overhead rate is 150 percent of direct labor. Required: 1. Prepare a production report for the Mixing Department using the weighted average method. Follow the five steps outlined in the chapter. Round unit cost to three decimal places. 2. Prepare a production report for the Tableting Department. Materials are added at the beginning of the process. Follow the five steps outlined in the chapter. Round unit cost to four decimal places.
Mystic Bottling Company bottles popular beverages in the Bottling Department. The beverages are produced by blending concentrate with water and sugar. The concentrate is purchased from a concentrate producer. The concentrate producer sets higher prices for the more popular concentrate flavors. A simplified Bottling Department cost of production report separating the cost of bottling the four flavors follows: Attachment Beginning and ending work in process inventories are negligible, so they are omitted from the cost of production report. The flavor changeover cost represents the cost of cleaning the bottling machines between production runs of different flavors. Prepare a memo to the production manager, analyzing this comparative cost information. In your memo, provide recommendations for further action, along with supporting schedules showing the total cost per case and cost per case by cost element.Round all supporting calculations to the nearest cent.
Mack's Juices produces and bottles a line of fruit juices. The manufacturing process entails mixing and adding juices and other ingredients at the bottling plant, which is a part of Blending Division. The finished product is packaged in a company-produced glass bottle and packed in cases of 24 bottles each. Because the appearance of the bottle heavily influences sales volume, Mack's developed a unique bottle production process at the company’s container plant, which is a part of Packaging Division. Blending Division uses all of the container plant’s production. Each division (Blending and Packaging) is considered a separate profit center and evaluated as such. As the new corporate controller, you are responsible for determining the proper transfer price to use for the bottles produced for Blending Division. At your request, Packaging Division’s general manager asked other bottle manufacturers to quote a price for the number and sizes demanded by Blending Division. These competitive…
Old Country Links, Incorporated, produces sausages in three production departments—Mixing, Casing and Curing, and Packaging. In the Mixing Department, meats are prepared and ground and then mixed with spices. The spiced meat mixture is then transferred to the Casing and Curing Department, where the mixture is force-fed into casings and then hung and cured in climate-controlled smoking chambers. In the Packaging Department, the cured sausages are sorted, packed, and labeled. The company uses the weighted-average method in its process costing system. Data for September for the Casing and Curing Department follow: Units Percent Completed Mixing Materials Conversion Work in process inventory, September 1 1 100% 60% 50% Work in process inventory, September 30 1 100% 20% 10% Mixing Materials Conversion Work in process inventory, September 1 $ 2,325 $ 70 $ 137 Cost added during September $ 275,435 $ 28,882 $ 138,966 Mixing cost represents the costs of the…
Old Country Links, Incorporated, produces sausages in three production departments—Mixing, Casing and Curing, and Packaging. In the Mixing Department, meats are prepared and ground and then mixed with spices. The spiced meat mixture is then transferred to the Casing and Curing Department, where the mixture is force-fed into casings and then hung and cured in climate-controlled smoking chambers. In the Packaging Department, the cured sausages are sorted, packed, and labeled. The company uses the weighted-average method in its process costing system. Data for September for the Casing and Curing Department follow: Percent Completed Units Mixing Materials Conversion Work in Process Inventory Sept. 1 1 100% 90% 80% Work in Process Inventory Sept. 30 1 100% 80% 70% Mixing Materials Conversion Work in process inventory, September 1 $ 1,670 $ 90 $ 605 Cost added during September $ 81,460 $ 6,006 $ 42,490 Mixing cost represents the costs of the spiced…
Old Country Links, Incorporated, produces sausages in three production departments—Mixing, Casing and Curing, and Packaging. In the Mixing Department, meats are prepared and ground and then mixed with spices. The spiced meat mixture is then transferred to the Casing and Curing Department, where the mixture is force-fed into casings and then hung and cured in climate-controlled smoking chambers. In the Packaging Department, the cured sausages are sorted, packed, and labeled. The company uses the weighted-average method in its process costing system. Data for September for the Casing and Curing Department follow: Units Percent Completed Mixing Materials Conversion Work in process inventory, September 1 1 100% 90% 80% Work in process inventory, September 30 1 100% 80% 70% Mixing Materials Conversion Work in process inventory, September 1 $ 1,670 $ 90 $ 605 Cost added during September $ 81,460 $ 6,006 $ 42,490 Mixing cost represents the costs of the spiced…