Helsinki Inc. produces premium bottled water. Helsinki purchases artesian water, stores the water in large tanks, and then runs the water through two processes: Filtration, where workers microfilter and ozonate the water Bottling, where workers bottle and package the filtered water During December, the filtration process incurs the following costs in processing 200,000 liters: Wages of workers operating the filtration equipment $11,100 Wages of workers operating ozonation equipment $12,850 Manufacturing overhead allocated to filtration $24,050 Water $120,000 We now consider Helsinki's second process-Bottling. In the Bottling Department, workers bottle the filtered water and pack the bottles into boxes. Conversion costs are incurred evenly throughout the Bottling process, but packaging materials are not added until the end of the process. December data from the Bottling Department is given below: Beginning work in process inventory (40% of the way through the process) 9,000 liters Transferred in from Filtration 160,000 liters Completed and transfer red out to Finished Goods Inventory in December 154,000 liters Ending work in process inventory (65% of the way through the bottling process) 22,000 liters The Filtration Department completed and transferred out 160,000 liters at a total cost of $136,000. Costs in beginning work in process inventory Transferred in $1,760 Direct materials $0 Direct labor $600 Mfg overhead $520 Total beginning WIP on Dec 1 $2880 Costs added during December Transferred in $136,000 Direct materials $30,800 Direct labor $33, 726 Mfg overhead $25,742 Total costs added in Dec $226,268. Complete Steps 3 and 4 of the process costing procedure: Summarize total costs to account for and then compute the cost per equivalent unit for both direct materials and conversion costs. This is the step 3 and 4 you need to complete: Step 3 Average cost alludes to the per-unit creation cost of the product conveyed in the association during the period. It is the assessed complete expense, including allotted upward, to deliver a group of products partitioned by the allotted number of units created. The marginal expense of creation is the adjustment of the complete creation cost that comes from making or delivering one extra unit. Therefore, the cost per completely filtered and ozonated liter is higher than that computed in question 2. Average Filtration and Ozonated Cost Per Liter=Cost of Water+Wages of Workers (Filtration)+Wages of Workers (Ozonated)+Manufacturing Overhead Allocated to FiltrationLiters of Water Processed=$120,000+$11,100+$12,850+$24,050/(160,000 Liters)+40,000 (Liters50%) =$168,000 /180,000 Liters =$0.93 Per Liter Step 4 Calculation of equivalent units Direct Material Units Conversion cost units Unita completed and transferred out 160,000 160,000 Percentage of completion 100% 100% Equivalent units 160,000 160,000 Ending work in progress 40,000 40,000 Percentage of Completion 100% 80% Equivalent units 40,000 32,000 Total Equivalent units 200,000 192,000

Helsinki Inc. produces premium bottled water. Helsinki purchases artesian water, stores the water in large tanks, and then runs the water through two processes: Filtration, where workers microfilter and ozonate the water Bottling, where workers bottle and package the filtered water During December, the filtration process incurs the following costs in processing 200,000 liters: Wages of workers operating the filtration equipment $11,100 Wages of workers operating ozonation equipment $12,850 Manufacturing overhead allocated to filtration $24,050 Water $120,000 We now consider Helsinki's second process-Bottling. In the Bottling Department, workers bottle the filtered water and pack the bottles into boxes. Conversion costs are incurred evenly throughout the Bottling process, but packaging materials are not added until the end of the process. December data from the Bottling Department is given below: Beginning work in process inventory (40% of the way through the process) 9,000 liters Transferred in from Filtration 160,000 liters Completed and transfer red out to Finished Goods Inventory in December 154,000 liters Ending work in process inventory (65% of the way through the bottling process) 22,000 liters The Filtration Department completed and transferred out 160,000 liters at a total cost of $136,000. Costs in beginning work in process inventory Transferred in $1,760 Direct materials $0 Direct labor $600 Mfg overhead $520 Total beginning WIP on Dec 1 $2880 Costs added during December Transferred in $136,000 Direct materials $30,800 Direct labor $33, 726 Mfg overhead $25,742 Total costs added in Dec $226,268. Complete Steps 3 and 4 of the process costing procedure: Summarize total costs to account for and then compute the cost per equivalent unit for both direct materials and conversion costs. This is the step 3 and 4 you need to complete: Step 3 Average cost alludes to the per-unit creation cost of the product conveyed in the association during the period. It is the assessed complete expense, including allotted upward, to deliver a group of products partitioned by the allotted number of units created. The marginal expense of creation is the adjustment of the complete creation cost that comes from making or delivering one extra unit. Therefore, the cost per completely filtered and ozonated liter is higher than that computed in question 2. Average Filtration and Ozonated Cost Per Liter=Cost of Water+Wages of Workers (Filtration)+Wages of Workers (Ozonated)+Manufacturing Overhead Allocated to FiltrationLiters of Water Processed=$120,000+$11,100+$12,850+$24,050/(160,000 Liters)+40,000 (Liters50%) =$168,000 /180,000 Liters =$0.93 Per Liter Step 4 Calculation of equivalent units Direct Material Units Conversion cost units Unita completed and transferred out 160,000 160,000 Percentage of completion 100% 100% Equivalent units 160,000 160,000 Ending work in progress 40,000 40,000 Percentage of Completion 100% 80% Equivalent units 40,000 32,000 Total Equivalent units 200,000 192,000

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter17: Activity Resource Usage Model And Tactical Decision Making

Section: Chapter Questions

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Helsinki Inc. produces premium bottled water. Helsinki purchases artesian water, stores the water in large tanks, and then runs the water through two processes:

Filtration, where workers microfilter and ozonate the water
Bottling, where workers bottle and package the filtered water

During December, the filtration process incurs the following costs in processing 200,000 liters:

Wages of workers operating the filtration equipment $11,100
Wages of workers operating ozonation equipment $12,850
Manufacturing overhead allocated to filtration $24,050
Water $120,000

We now consider Helsinki's second process-Bottling. In the Bottling Department, workers bottle the filtered water and pack the bottles into boxes. Conversion costs are incurred evenly throughout the Bottling process, but packaging materials are not added until the end of the process.

December data from the Bottling Department is given below:

Beginning work in process inventory (40% of the way through the process) 9,000 liters
Transferred in from Filtration 160,000 liters
Completed and transfer red out to Finished Goods Inventory in December 154,000 liters
Ending work in process inventory (65% of the way through the bottling process) 22,000 liters

The Filtration Department completed and transferred out 160,000 liters at a total cost of $136,000.

Costs in beginning work in process inventory

Transferred in $1,760
Direct materials $0
Direct labor $600
Mfg overhead $520
Total beginning WIP on Dec 1 $2880

Costs added during December

Transferred in $136,000
Direct materials $30,800
Direct labor $33, 726
Mfg overhead $25,742
Total costs added in Dec $226,268.

Complete Steps 3 and 4 of the process costing procedure: Summarize total costs to account for and then compute the cost per equivalent unit for both direct materials and conversion costs.

This is the step 3 and 4 you need to complete:

Step 3

Average cost alludes to the per-unit creation cost of the product conveyed in the association during the period. It is the assessed complete expense, including allotted upward, to deliver a group of products partitioned by the allotted number of units created. The marginal expense of creation is the adjustment of the complete creation cost that comes from making or delivering one extra unit. Therefore, the cost per completely filtered and ozonated liter is higher than that computed in question 2.

Average Filtration and Ozonated Cost Per Liter=Cost of Water+Wages of Workers (Filtration)+Wages of Workers (Ozonated)+Manufacturing Overhead Allocated to FiltrationLiters of Water Processed=$120,000+$11,100+$12,850+$24,050/(160,000 Liters)+40,000 (Liters50%)

=$168,000 /180,000 Liters

=$0.93 Per Liter

Step 4

Calculation of equivalent units	Direct Material Units	Conversion cost units
Unita completed and transferred out	160,000	160,000
Percentage of completion	100%	100%
Equivalent units	160,000	160,000
Ending work in progress	40,000	40,000
Percentage of Completion	100%	80%
Equivalent units	40,000	32,000
Total Equivalent units	200,000	192,000

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