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Concept explainers
(1)
It is a method of cost accounting, which is used where the production is continuous, and the product needs various processes to complete. This method is used to ascertain the cost of the product at each process or stage of production.
Equivalents units for production
The activity of a processing department in terms of fully completed units is known as equivalent units. It includes the completed units of direct materials and conversion cost of beginning work in process, units completed and transferred out, and ending work in process.
Production cost report
A production cost report is a comprehensive report prepared for each department separately at the end of a particular period, which represents the physical flow and cost flow of product for the concerned department.
To Determine: The equivalents units for production of direct materials and conversion costs for the month of July for Company DC.
(2)
To Prepare: The
(3)
Increase or decrease in the cost per equivalent per unit for direct materials and conversion cost between December and January.
(4)
To Discuss: The uses of cost of production report.
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Chapter 17 Solutions
Bundle: Financial & Managerial Accounting, 14th + Working Papers for Warren/Reeve/Duchac's Corporate Financial Accounting, 14th + Working Papers, ... & Managerial Accounting, 14th + CengageNOWv2,
- Heap Company manufactures a product that passes through two processes: Fabrication and Assembly. The following information was obtained for the Fabrication Department for September: a. All materials are added at the beginning of the process. b. Beginning work in process had 80,000 units, 30 percent complete with respect to conversion costs. c. Ending work in process had 17,000 units, 25 percent complete with respect to conversion costs. d. Started in process, 95,000 units. Required: 1. Prepare a physical flow schedule. 2. Compute equivalent units using the weighted average method. 3. Compute equivalent units using the FIFO method.arrow_forwardData for the two departments of Kimble Pierce Company for June of the current fiscal year are as follows: Production begins in the Drawing Department and finishes in the Winding Department. If all direct materials are placed in process at the beginning of production, determine the direct materials and conversion equivalent units of production for June for (a) the Drawing Department and (b) the Winding Department.arrow_forwardThe Converting Department of Worley Company had 2,400 units in work in process at the beginning of the period, which were 35% complete. During the period, 10,800 units were completed and transferred to the Packing Department. There were 1,900 units in process at the end of the period, which were 60% complete. Direct materials are placed into the process at the beginning of production. Determine the number of equivalent units of production with respect to direct materials and conversion costs.arrow_forward
- Softkin Company manufactures sun protection lotion. The Mixing Department, the first process department, mixes the chemicals required for the repellant. The following data are for the current year: Direct materials are added at the beginning of the process. Ending inventory is 95 percent complete with respect to direct labor and overhead. Required: Prepare a production report for the Mixing Department for the current year.arrow_forwardUnits of production data for the two departments of Atlantic Cable and Wire Company for July of the current fiscal year are as follows: Each department uses the weighted average method. For each department, assume that direct Materials are placed in process during production. a. Determine the number of whole units to be accounted for and to be assigned costs and the equivalent units of production for the Drawing Department. b. Determine the number of whole units to be accounted for and to be assigned costs and the equivalent units of production for the Winding Department.arrow_forwardDuring 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.arrow_forward
- Dublin Brewing Co. uses the process cost system. The following data, taken from the organizations books, reflect the results of manufacturing operations during October: Production Costs Work in process, beginning of period: Costs incurred during month: Production Data: 13,000 units finished and transferred to stockroom Work in process, end of period, 2,000 units one-half completed Required: Prepare a cost of production summary for October.arrow_forwardK-Briggs Company uses the FIFO method to account for the costs of production. For Crushing, the first processing department, the following equivalent units schedule has been prepared: The cost per equivalent unit for the period was as follows: The cost of beginning work in process was direct materials, 40,000; conversion costs, 30,000. Required: 1. Determine the cost of ending work in process and the cost of goods transferred out. 2. Prepare a physical flow schedule.arrow_forwardThe records of Stone Inc. reflect the following data: Work in process, beginning of month4,000 units one-fourth completed at a cost of 2,500 for materials, 1,400 for labor, and 1,800 for overhead. Production costs for the monthmaterials, 130,000; labor, 70,000; and factory overhead, 82,000. Units completed and transferred to stock45,000. Work in process, end of month5,000 units, one-half completed. Compute the months unit cost for each element of manufacturing cost and the total per unit cost. (Round unit costs to three decimal places.)arrow_forward
- 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.arrow_forwardMenlo Materials is divided into five departments, Mixing, Blending, Finishing, Factory Office, and Building Maintenance. The first three departments are engaged in production work. Factory Office and Building Maintenance are service departments. During the month of June, the following factory overhead was incurred for the departments: The bases for distributing service department expenses to the other departments follow: Building Maintenance—On the basis of floor space occupied by the other departments as follows: Mixing, 10,000 sq ft; Blending, 4,500 sq ft; Finishing, 10,500 sq ft; and Factory Office, 7,000 sq ft. Factory Office—On the basis of number of employees as follows: Mixing, 30; Blending, 20; and Finishing, 50. Required: Prepare a schedule showing the distribution of the service departments’ expenses using the direct distribution method.arrow_forwardWork in process account data for two months; cost of production reports Hearty Soup Co. uses a process cost system to record the costs of processing soup, which requires the cooking and filling processes. Materials are entered from the cooking process at the beginning of the filling process. The inventory of Work in ProcessFilling on April 1 and debits to the account during April were as follows: During April, 800 units in process on April 1 were completed, and of the 7,800 units entering the department, all were completed except 550 units that were 90% completed. Charges to Work in ProcessFilling for May were as follows: During May, the units in process at the beginning of the month were completed, and of the 9,600 units entering the department, all were completed except 300 units that were 35% completed. Instructions 1. Enter the balance as of April 1, in a four-column account for Work in ProcessFilling. Record the debits and the credits in the account for April. Construct a cost of production report, and present computations for determining (A) equivalent units of production for materials and conversion, B) costs per equivalent unit, (C) cost of goods finished, differentiating between units started in the prior period and units started and finished in April, and (d) work in process inventory. 2. Provide the same information for May by recording the May transactions in the four-column work in process account. Construct a cost of production report, and present the May computations (A through D) listed in part (1). 3. Comment on the change in costs per equivalent unit for March through May for direct materials and conversion costs.arrow_forward
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