Shade Company adopted a standard cost system several years ago. The standard costs for direct labor and direct materials for its single product are as follows: Materials (5 kilograms x $12 per kilogram) = $60 per unit; direct labor (3.5 hours per unit × $20 per hour) = $70 per unit. All materials are issued at the beginning of processing. The operating data shown below were taken from the records for December: In-process beginning inventory In-process ending inventory-80% complete as to labor Units completed during the period Budgeted output Purchases of materials (in kilograms) Total actual direct labor cost incurred Direct labor hours worked (AQ) Materials purchase-price variance Increase in materials inventory in December The direct labor rate variance for December was: None 1,040 units 6,860 units 7,440 units 44,000 $ 542,178 27,300 hours $5,280 favorable 3,550 kilograms

Shade Company adopted a standard cost system several years ago. The standard costs for direct labor and direct materials for its single product are as follows: Materials (5 kilograms x $12 per kilogram) = $60 per unit; direct labor (3.5 hours per unit × $20 per hour) = $70 per unit. All materials are issued at the beginning of processing. The operating data shown below were taken from the records for December: In-process beginning inventory In-process ending inventory-80% complete as to labor Units completed during the period Budgeted output Purchases of materials (in kilograms) Total actual direct labor cost incurred Direct labor hours worked (AQ) Materials purchase-price variance Increase in materials inventory in December The direct labor rate variance for December was: None 1,040 units 6,860 units 7,440 units 44,000 $ 542,178 27,300 hours $5,280 favorable 3,550 kilograms

Managerial Accounting

15th Edition

ISBN:9781337912020

Author:Carl Warren, Ph.d. Cma William B. Tayler

Publisher:Carl Warren, Ph.d. Cma William B. Tayler

Chapter3: Process Cost Systems

Section: Chapter Questions

Problem 1CMA: During December, Krause Chemical Company had the following selected data concerning the manufacture...

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Narwhal Swimwear has a beginning work in process inventory of 13,500 units and transferred in 130,000 units before ending the month with 14,000 units that were 100% complete with regard to materials and 30% complete with regard to conversion costs. The cost per unit of material is $5.80 and the cost per unit for conversion is $8.20 per unit. Using the weighted-average method, what is the amount of material and conversion costs assigned to the department for the month?
At the end of the first year of operations, 21,500 units remained in the finished goods inventory. The unit manufacturing costs during the year were as follows: Determine the cost of the finished goods inventory reported on the balance sheet under (a) the absorption costing concept and (b) the variable costing concept.
During March, the following costs were charged to the manufacturing department: $22,500 for materials; $45,625 for labor; and $50,000 for manufacturing overhead. The records show that 40,000 units were completed and transferred, while 10,000 remained in ending inventory. There were 45,000 equivalent units of material and 42,500 units of conversion costs. Using the weighted-average method, prepare the companys process cost summary for the month.
Loanstar had 100 units in beginning inventory before starting 950 units and completing 800 units. The beginning work in process inventory consisted of $2,000 in materials and $500O in conversion costs before $8.500 of materials and $11,200 of conversion costs were added during the month. The ending WIP inventory was 100% complete with regard to materials and 40% complete with regard to conversion costs. Prepare the journal entry to record the transfer of inventory from the manufacturing department to the finished goods department.
During March, the following costs were charged to the manufacturing department: $14886 for materials; $14,656 for labor; and $13,820 for manufacturing overhead. The records show that 30,680 units were completed and transferred, while 2,400 remained in ending inventory. There were 33,080 equivalent units of material and 31,640 of conversion costs. Using the weighted-average method, what is the cost of inventory transferred and the balance in work in process inventory?
The packaging department began the month with 500 units that were 100% complete with regard to material and 85% complete with regard to conversion. It received 9,500 units from the processing department and ended the month with 750 units that were 100% complete with regard to materials and 30% complete with regard to conversion. With a $5 per unit cost for conversion and a $5 per unit cost for materials, what is the cost of the units transferred out and remaining in ending inventory?
Potter Company has installed a JIT purchasing and manufacturing system and is using back-flush accounting for its cost flows. It currently uses a two-trigger approach with the purchase of materials as the first trigger point and the completion of goods as the second trigger point. During the month of June, Potter had the following transactions: 40,500 labor plus 222,750 overhead. There were no beginning or ending inventories. All goods produced were sold with a 60 percent markup. Any variance is closed to Cost of Goods Sold. (Variances are recognized monthly.) Required: Prepare the journal entries for the month of June using backflush costing, assuming that Potter uses the sale of goods as the second trigger point instead of the completion of goods.
The standard cost summary for the most popular product of Phenom Products Co. is shown as follows, together with production and cost data for the period. One gallon each of liquid lead and varnish are added at the start of processing. The balance of the materials is added when the process is two-thirds complete. Labor and overhead are added evenly throughout the process. There were no units in process at the beginning of the month. Required: Calculate equivalent production for materials, labor, and overhead. (Be sure to refer to the standard cost summary to help determine the percentage of materials in ending work in process.) Calculate materials and labor variances and indicate whether they are favorable or unfavorable, using the diagram format shown in Figure 8-4. Determine the cost of materials and labor in the work in process account at the end of the month.
During December, Krause Chemical Company had the following selected data concerning the manufacture of Xyzine, an industrial cleaner: All materials are added at the beginning of processing in this department, and conversion costs are added uniformly during the process. The beginning work in process inventory had 120 of raw materials and 180 of conversion costs incurred. Materials added during December were 540, and conversion costs of 1,484 were incurred. Krause uses the first-in, first-out (FIFO) process cost method. The equivalent units of production used to compute conversion costs for December were: a. 110 units. b. 104 units. c. 100 units. d. 92 units.
Rexar had 1,000 units in beginning inventory before starting 9.500 units and completing 8,000 units. The beginning work in process inventory consisted of $5,000 in materials and $8,500 in conversion costs before $16,000 of materials and $18,500 of conversion costs were added during the month. The ending WIP inventory was 100% complete with regard to materials and 40% complete with regard to conversion costs. Prepare the journal entry to record the transfer of inventory from the manufacturing department to the finished goods department.
The packaging department began the month with 750 units that were 100% complete with regard to material and 25% complete with regard to conversion. It received 9,500 units from the processing department and ended the month with 500 units that were 100% complete with regard to materials and 75% complete with regard to conversion. With a $7 per unit material cost and a $4 per unit cost for conversion, what is the cost of the units transferred out and remaining in ending inventory?
Dura-Conduit Corporation manufactures plastic conduit that is used in the cable industry. A conduit is a tube that encircles and protects the underground cable. In the process for making the plastic conduit, called extrusion, the melted plastic (resin) is pressed through a die to form a tube. Scrap is produced in this process. Information from the cost of production reports for three months is as follows, assuming that inventory remains constant: Assume that there is one-half pound of resin per foot of the finished product. a. Determine the resin materials cost per foot of finished product for each month. Round to the nearest whole cent. b. Determine the ratio of the number of resin pounds output in conduit by the number of pounds input into the process for each month. Round percentages to one decimal place. c. Interpret the resin materials cost per foot for the three months. Use the information in (a) and (b) to explain what is happening. d. Determine the conversion cost per foot of finished product for each month and interpret the result.