Accounting
27th Edition
ISBN: 9781337272094
Author: WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher: Cengage Learning,
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Chapter 20, Problem 20.2EX
Flowchart of accounts related to service and processing departments
Alcoa Inc. is the world's largest producer of aluminum products. One product that Alcoa manufactures is aluminum .sheet products for the aerospace industry. The entire output of the Smelting Department is transferred to the Rolling Department. Part of the fully processed goods from the Rolling Department are sold as rolled sheet, and the remainder of the goods are transferred to the Converting Department for further processing into sheared sheet.
Prepare a diagram using T accounts showing the flow of costs from the processing department accounts into the finished goods accounts and then into the cost of goods sold account. The relevant accounts are as follows:
Cost of Goods Sold
Materials
Factory Overhead—Smelting Department
Factory Overhead—Rolling Department
Factory Overhead—Converting Department
Finished Goods—Rolled sheet
Finished Goods—Sheared Sheet
Work in Process—Smelting Department
Work in Process—Rolling Department
Work in Process—Converting Department
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AccountingQ&A LibraryPrepare the necessary report together with a detailed schedule of ending work in process inventory; make journal entries to indicate the costs put to production and the departmental transfer. The Precision Products Company manufactures a single product being used for heavy industrial machineries. It operates on 3 shifts under 2 departments, Cutting Dept and Smoothing Dept. Materials are added to the product in each department; however, the number of units produced are not increased in the process. The following records for each department were obtained from the books of Precision Products Company for the month of January, 2019. Cutting Department Smoothing Department Work in process, January 1, 2019 Units transferred from preceding department 80,000 Units started in production 100,000 Units completed and transferred out 80,000 60,000 Units in process, January 31 20,000 18,000 Units spoiled in production 2,000 Spoiled units are 50%…
ABC Cost Hierarchy
The following activities occur at Greenwich Corporation, a company that manufactures a variety of products.
a. Receive raw materials from suppliers.
b. Manage parts inventories.
c. Do rough milling work on products.
d. Interview and process new employees in the personnel department.
e. Design new products.
f. Perform periodic preventive maintenance on general-use equipment.
g. Use the general factory building.
h. Issue purchase orders for a job.
Required:
Classify each of the activities above as either a unit-level, batch-level, product-level, or organization-sustaining activity.
Sequential (Step) Method of Support Department Cost Allocation
Chekov Company has two support departments, Human Resources and General Factory, and two producing departments, Fabricating and Assembly.
Support Departments
Producing Departments
HumanResources
GeneralFactory
Fabricating
Assembly
Direct costs
$165,000
$380,000
$114,200
$90,000
Normal activity:
Number of employees
—
40
70
150
Square footage
1,800
—
5,500
13,200
The costs of the Human Resources Department are allocated on the basis of number of employees, and the costs of General Factory are allocated on the basis of square footage. Now assume that Chekov Company uses the sequential method to allocate support department costs. The support departments are ranked in order of highest cost to lowest cost.
Required:
1. Calculate the allocation ratios (rounded to four significant digits) for the four departments using the sequential method. If an amount is zero, enter "0". Use the rounded…
Chapter 20 Solutions
Accounting
Ch. 20 - Which type of cost system, process or job order,...Ch. 20 - In job order cost accounting, the three elements...Ch. 20 - Prob. 3DQCh. 20 - Why is the cost per equivalent unit often...Ch. 20 - What is the purpose for determining the cost per...Ch. 20 - Rameriz Company is a process manufacturer with two...Ch. 20 - What is the most important purpose of the cost of...Ch. 20 - Prob. 8DQCh. 20 - Prob. 9DQCh. 20 - Prob. 10DQ
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