Concept explainers
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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Chapter 20 Solutions
Accounting (Text Only)
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- Question Content Area Ramapo Company produces two products, Blinks and Dinks. They are manufactured in two departments, Fabrication and Assembly. Data for the products and departments are as follows: Product Number ofUnits Direct Labor HoursPer Unit Machine HoursPer Unit Blinks 944 2 6 Dinks 1,973 3 6 All of the machine hours take place in the Fabrication department, which has an estimated overhead of $87,500. All of the labor hours take place in the Assembly department, which has an estimated total overhead of $109,600. Ramapo Company uses a single plantwide overhead rate (rounded to the nearest cent) to apply all factory overhead costs based on direct labor hours. The factory overhead allocated per unit of Blinks is a.$219.22 b.$50.50 c.$21.71 d.$75.74arrow_forwardAssume that a company has recently switched to JIT manufacturing. Each manufacturing cell produces a single product or major subassembly. Cell workers have been trained to perform a variety of tasks. Additionally, many services have been decentralized. Costs are assigned to products using direct tracing, driver tracing, and allocation. For each cost listed, indicate the most likely product cost assignment method used before JIT and after JIT. Set up a table with three columns: Cost Item, Before JIT, and After JIT. You may assume that direct tracing is used whenever possible, followed by driver tracing, with allocation being the method of last resort. Inspection costs Power to heat, light, and cool plant Minor repairs on production equipment Salary of production supervisor (department/cell) Oil to lubricate machinery Salary of plant supervisor Costs to set up machinery Salaries of janitors Power to operate production equipment Taxes on plant and equipment Depreciation on production…arrow_forwardAlcoa 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 processedgoods 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:Attachmentarrow_forward
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- Support department cost allocation Hooligan Adventure Supply produces and sells various outdoor equipment. The Molding and Assembly production departments are supported by the Personnel and Maintenance departments. Personnel costs are allocated to the production departments based on the number of employees, and Maintenance costs are allocated based on number of service calls. Information about these departments is detailed in the following table: Line Item Description PersonnelDepartment MaintenanceDepartment MoldingDepartment AssemblyDepartment Number of employees 28 10 41 49 Number of service calls 57 41 168 112 Department cost $15,000 $11,400 $72,000 $69,000 1. Which of the following statements matches the sequential method of cost allocations?a. Support departments are often allocated in order from lowest to the highest cost with preference given to the departments that serve few support…arrow_forwardSupport Department Cost Allocation—Direct Method Charlie’s Wood Works produces wood products (e.g., cabinets, tables, picture frames, and so on). Production departments include Cutting and Assembly. The Janitorial and Security departments support the Cutting and Assembly departments. The Assembly Department spans about 44,800 square feet and holds assets valued at about $64,800. The Cutting Department spans about 35,200 square feet and holds assets valued at about $151,200. Charlie’s Wood Works allocates support department costs using the direct method. If costs from the Janitorial Department are allocated based on square feet and costs from the Security Department are allocated based on asset value. a. Determine the percentage of Janitorial costs that should be allocated to the Assembly Department. % b. Determine the percentage of Security costs that should be allocated to the Cutting Department. %arrow_forwardAssigning Costs to Units—FIFO Method Data concerning a recent period’s activity in the Assembly Department, the first processing department in a company that uses the FIFO method in its process costing, appear below: A total of 26,000 units were completed and transferred to the next processing department during the period. Beginning work in process inventory consisted of 2,000 units and ending work in process inventory consisted of 1,000 units. Required: 1. Compute the Assembly Department’s cost of ending work in process inventory for materials, conversion, and in total for the period. 2. Compute the Assembly Department’s cost of units transferred out to the next department for materials, conversion, and in total for the period.arrow_forward
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