563Cost of Production Report: Accounting for Spoiled Units and Increase in ProduchonProblem 13-6: Preparation of Cost of Production Report wiehNormal Lost Units.The Molave Company uses FIFO process cost accounting system. On Aprn1, the firm had 2,000 units in process in the Assembly Department, thesecond of the three producing departments. All materials had been addedto this beginning inventory, but labor and overhead were only 60% com-plete. Costs applicable to the beginning work in process inventory 1o1-low:Transferred In costs from prior departmentMaterialsLaborOverheadP83,60015,16022,84817,760During the month of April, an additional 30,000 units were transferredinto the department with total prior department costs of P1,296,172. Also,during April, additional costs were incurred in the department as fol-lows:MaterialsLaborOverheadP226,593576,468449,838A total of 30,720 units were transferred out to the third department dur-´ing the month, 1,350 units were still in production at the end of the monthand 380 units were lost in production. They were considered normal spoil-age. All materials had been added to the ending work in process inven-tory, but labor and overhead were only 80% complete.Required:1.Compute the equivalent production units ignoring spoiled units.2.Prepare a cost of production report for the Assembly Department.Show an adjustment of transferred in prior department costs for lostunits. Assume the lost units occur at the beginning of production inthe department and that all lost units came from the work trans-ferred into the department during April.

Equivalent units of production are an indication to show the work in process inventory at the end of…

The Molave Company uses FIFO process cost accounting system. On April 1, the firm had 2,000 units in process in the Assembly Department, the second of the three producing departments. All materials had been added to this beginning inventory, but labor and overhead were only 60% com- plete. Costs applicable to the beginning work in process inventory fol- low:

The Molave Company uses FIFO process cost accounting system. On April 1, the firm had 2,000 units in process in the Assembly Department, the second of the three producing departments. All materials had been added to this beginning inventory, but labor and overhead were only 60% com- plete. Costs applicable to the beginning work in process inventory fol- low:

Survey of Accounting (Accounting I)

8th Edition

ISBN:9781305961883

Author:Carl Warren

Publisher:Carl Warren

Chapter10: Accounting Systems For Manufacturing Operations

Section: Chapter Questions

Problem 10.4.3C: Factory overhead rate Fabricator Inc., a specialized equipment manufacturer, uses a job order cost...

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Activity-based costing and product cost distortion The management of Four Finger Appliance Company in Exercise 14 has asked you to u.sc activity-based costing instead of direct labor hours to allocate factory overhead costs to the two products. You have determined that 81,000 of factory overhead from each of the production departments can be associated with setup activity (162,000 in total). Company records indicate that blenders required 135 setups, while the toaster ovens required only 45 setups. Each product has a production volume of 7,500 units. A. Determine the three activity rates (assembly, test and pack, and setup). B. Determine the total factory overhead and factory overhead per unit allocated to each product using the activity rates in (A).
Factory overhead rate Fabricator Inc., a specialized equipment manufacturer, uses a job order cost system. The overhead is allocated to jobs on the basis of direct labor hours. The overhead rate is now $3,000 per direct labor hour. The design engineer thinks that this is illogical. The design engineer has stated the following: Our accounting system doesn't make any sense to me. It tells me that every labor hour carries an additional burden of $3,000. This means that while direct labor makes up only 5% of our total product cost, it drives all our costs. In addition, these rates give my design engineers incentives to "design out" direct labor by using machine technology. Yet, over the past years as we have had less and less direct labor, the overhead rate keeps going up and up. I won't be surprised if next year the rate is $4,000 per direct labor hour. I'm also concerned because small errors in our estimates of the direct labor content can have a large impact on our estimated costs. Just a 30~minute error in our estimate of assembly time is worth $ 1,500. Small mistakes in our direct labor time estimates really swing our bids around. I think this puts us at a disadvantage when we are going after business. What do you think is a possible solution?
Factory overhead rate Fabricator Inc., a specialized equipment manufacturer, uses a job order cost system. The overhead is allocated to jobs on the basis of direct labor hours. The overhead rate is now $3,000 per direct labor hour. The design engineer thinks that this is illogical. The design engineer has stated the following: Our accounting system doesn't make any sense to me. It tells me that every labor hour carries an additional burden of $3,000. This means that while direct labor makes up only 5% of our total product cost, it drives all our costs. In addition, these rates give my design engineers incentives to "design out" direct labor by using machine technology. Yet, over the past years as we have had less and less direct labor, the overhead rate keeps going up and up. I won't be surprised if next year the rate is $4,000 per direct labor hour. I'm also concerned because small errors in our estimates of the direct labor content can have a large impact on our estimated costs. Just a 30~minute error in our estimate of assembly time is worth $ 1,500. Small mistakes in our direct labor time estimates really swing our bids around. I think this puts us at a disadvantage when we are going after business. What did the engineer mean about the large overhead rate being a disadvantage when plating bids and seeking new business?
44. SHINING Apparel completed 3, 600 expensive bags during the 1st quarter of the current year. The following costs per unit are presented below: Direct materials P200Direct Labor 180Factory overhead, included P10 allowance for spoilage 180Final inspection revealed that 600 bags were spoiled which were sold as export overrun at 40% of production costs. The good units were delivered and billed the customer at 120% above cost.If the spoilage is common to all jobs, the amount billed to the customer is: a. • P1,680,000 b. • P2,100,000 c. • P2,016,000 d. • P3,696,000
36. Belo Products provided the following information: · Raw materials on hand- P85,000· Raw materials used (including indirect materials of P35,000)- P258,000· Labor (including indirect labor of P22,000; selling of P45,000; and administrative of P60,000)- P275,00 · Manufacturing overhead costs (including indirect materials and indirect labor)- P135,000 · Abnormal wasted materials and labor - P25,000· Finished goods on hand- P160,000 How much inventory should be reported in the statement of financial position?
[10:19 am, 29/01/2021] Taha 2: Arvin Corporation uses the weighted-average method in its process costing system. Work in process inventory at start in a particular department consisted of 11,000 units, 100% complete with respect to materials cost and 30% complete with respect to conversion costs. The total cost work in process inventory at start was Rs. 22,400. A total of 45,000 units were transferred out of the department during June. The costs per equivalent unit were computed to be Rs. 1.20 for materials and Rs.3.40 for conversion costs. The total cost of the units completed and transferred out of the department was:[10:19 am, 29/01/2021] Taha 2: Compute the amount of raw materials used during August if Rs. 75,000 of raw materials were purchased during the month and the inventories were as follows: Inventories Balance August 1 Balance August 31 Raw Materials 5,000 3,000 Work in Process 13,000 16,000 Finished Goods 25,000 27,000
40 Assume the following production data taken from the records of CONEY Manufacturing Co: Transferred out 130,000 units Started in process 150,000 units Ending work in process (2/8 complete) 45,000 units 40% of the materials are added when the processing is halfway complete with the balance added when 80% complete. Beginning work in process, if any, needs 3/5 to be completed. There are no spoiled units. What is the Equivalent Units of Production for Conversion Cost using the FIFO method? What is the Equivalent Units of Production for Direct Materials using the Weighted Average method?
6. chase co, manufactures printer circuit cards. all direct materials are added at the inception of the production process. during january, the accounting department noted that there was no beginning inventory. direct materials of $301,000 were used in production during the month. work-in-process records revealed that 12,000 card units were started in january, 6000 card units were complete, and 4000 card units were spoiled as expected. ending work-in-process card units are complete in respect to direct materials costs. spoilage is not detected until the process is complete. what is the direct material cost assigned to good units completed? (please round interim calculations to the nearest cent, and final calculations to the nearest whole dollar.)
Q14 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 × $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 None In-process ending inventory—80% complete as to labor 1,020 units Units completed during the period 6,820 units Budgeted output 7,380 units Purchases of materials (in kilograms) 43,000 Total actual direct labor cost incurred $ 538,748 Direct labor hours worked (AQ) 27,100 hours Materials purchase-price variance $ 4,300 favorable Increase in materials inventory in December 3,050 kilograms The actual total cost of direct materials used in production during December was: Multiple Choice $478,481.…
33. The direct materials are added at the start of the production process while conversion costs are added uniformly throughout the process. June is the first month of operations, and therefore there was no beginning inventory. Direct materials cost for the month totaled P895,000, while conversion costs equaled P4,225,000. Accounting records indicate that 475,000 chips were started in June, and that 425,000 chips were completed.Ending Inventory was 50% complete as to conversion costs.Question: What was the total costs assigned to ending work in process?
Choos the correct letter of answer: Beginning work in process was P125,000. Manufacturing costs incurred for the month were P835,000. There were P200,000 of partially finished goods remaining in work in process inventory at the end of the month. What was the cost of goods manufactured during the month?A. P1,160,000B. P 910,000C. P 760,000D. Cannot be determined. Beginning finished goods inventory wasP130,000. The cost of goods manufacturedfor the month was P760,000. And the endingfinished goods inventory was P150,000.What was the cost of goods sold for themonth?A. P 20,000.B. P740,000.C. P780,000.D. P760,000.
22. SONA Co. received an order for 1,000 units of item AY-14. Because of the order’s exacting specifications, it is anticipated that defective and spoiled work will exceed the normal rate. The materials cost per unit is P140; labor cost, P200; and factory overhead for this order is to be applied at 80% of the labor cost. During production, 150 units were found to be defective and required the following total additional costs; materials, P3,000, labor, P7,500 and factory overhead at 80% of direct labor cost. On final inspection, 50 units were classified as seconds and sold for P200 each, the proceeds being credited to the order. The customer has agreed to accept the good units.How much is the unit cost of the finished products?