Concept explainers
Concept introduction:
Process costing systems is a system to assign the costs where the production goes through different processes. A product may take several processes to complete and when these processes are separable, the process costing system is applied to ascertain the cost of each process.
Weighted average method:
Weighted average method is one of the methods of process costing, under this method the cost of beginning work in process is mixed with the current period cost and weighted cost and equivalent units are calculated. In other words, the weighted average method does not teat the beginning work in process cost separately.
To calculate:
a. Physical units’ reconciliation
b. Number of equivalent units
c. Cost per equivalent units
d. Cost reconciliation
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Managerial Accounting
- Seacrest Company uses a process-costing system. The company manufactures a product that is processed in two departments: A and B. As work is completed, it is transferred out. All inputs are added uniformly in Department A. The following summarizes the production activity and costs for November: Required: 1. Using the weighted average method, prepare the following for Department A: (a) a physical flow schedule, (b) an equivalent unit calculation, (c) calculation of unit costs (Note: Round to four decimal places.), (d) cost of EWIP and cost of goods transferred out, and (e) a cost reconciliation. 2. CONCEPTUAL CONNECTION Prepare journal entries that show the flow of manufacturing costs for Department A. Use a conversion cost control account for conversion costs. Many firms are now combining direct labor and overhead costs into one category. They are not tracking direct labor separately. Offer some reasons for this practice.arrow_forwardHolmes Products, Inc., produces plastic cases used for video cameras. The product passes through three departments. For April, the following equivalent units schedule was prepared for the first department: Costs assigned to beginning work in process: direct materials, 90,000; conversion costs, 33,750. Manufacturing costs incurred during April: direct materials, 75,000; conversion costs, 220,000. Holmes uses the weighted average method. Required: 1. Compute the unit cost for April. 2. Determine the cost of ending work in process and the cost of goods transferred out.arrow_forwardCost of production report The debits to Work in ProcessRoasting Department for Morning Brew Coffee Company for August, together with information concerning production, are as follows: All direct materials are placed in process at the beginning of production. A. Prepare a cost of production report, presenting the following computations: 1. Direct materials and conversion equivalent units of production for August 2. Direct materials and conversion costs per equivalent unit for August 3. Cost of goods finished during August 4. Cost of work in process at August 31 B. Compute and evaluate the change in cost per equivalent unit for direct materials and conversion from the previous month (July).arrow_forward
- 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.arrow_forwardUsing the same data found in Exercise 6.22, assume the company uses the FIFO method. Required: Prepare a schedule of equivalent units, and compute the unit cost for the month of December. Fordman Company has a product that passes through two processes: Grinding and Polishing. During December, the Grinding Department transferred 20,000 units to the Polishing Department. The cost of the units transferred into the second department was 40,000. Direct materials are added uniformly in the second process. Units are measured the same way in both departments. The second department (Polishing) had the following physical flow schedule for December: Costs in beginning work in process for the Polishing Department were direct materials, 5,000; conversion costs, 6,000; and transferred in, 8,000. Costs added during the month: direct materials, 32,000; conversion costs, 50,000; and transferred in, 40,000.arrow_forwardA company manufactures a liquid product called Crystal. The basic ingredients are put into process in Department 1. In Department 2, other materials are added that increase the number of units being processed by 50%. The factory has only two departments. Calculate the following for each department: (a) unit cost for the month for materials, labor, and factory overhead, (b) cost of the units transferred, and (c) cost of the ending work in process.arrow_forward
- Aero Aluminum Inc. uses a process cost system. The records for May show the following information: Required: Prepare a cost of production summary for each department. (Hint: When preparing the Converting production summary, refer to the Rolling production summary for the costs transferred in during the month.)arrow_forwardUse the following information for Problems 6-62 and 6-63: Millie Company produces a product that passes through an assembly process and a finishing process. All manufacturing costs are added uniformly for both processes. The following information was obtained for the assembly department for June: a. WIP, June 1, had 24,000 units (60% completed) and the following costs: b. During June, 70,000 units were completed and transferred to the finishing department, and the following costs were added to production: c. On June 30, there were 10,000 partially completed units in process. These units were 70% complete. 6-62 Weighted Average Method, Single-Department Analysis Refer to the information for Millie Company above. Required: Prepare a production report for the assembly department for June using the weighted average method of costing. The report should disclose the physical flow of units, equivalent units, and unit costs and should track the disposition of manufacturing costs.arrow_forwardUse the following information for Problems 6-62 and 6-63: Millie Company produces a product that passes through an assembly process and a finishing process. All manufacturing costs are added uniformly for both processes. The following information was obtained for the assembly department for June: a. WIP, June 1, had 24,000 units (60% completed) and the following costs: b. During June, 70,000 units were completed and transferred to the finishing department, and the following costs were added to production: c. On June 30, there were 10,000 partially completed units in process. These units were 70% complete. 6-63 (Appendix 6A) First-In, First-Out Method; Single-Department Analysis; One Cost Category Refer to the information for Millie Company above. Required: Prepare a production report for the assembly department for June using the FIFO method of costing. The report should disclose the physical flow of units, equivalent units, and unit costs and should track the disposition of manufacturing costs. (Note: Carry the unit cost computation to four decimal places.)arrow_forward
- Kokomo Kayak Inc. uses the process cost system. The following data, taken from the organizations books, reflect the results of manufacturing operations during the month of March: Production Costs Work in process, beginning of period: Costs incurred during month: Production Data: 18,000 units finished and transferred to stockroom. Work in process, end of period, 3,000 units, two-thirds completed. Required: Prepare a cost of production summary for March.arrow_forwardDublin 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_forwardHeap 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_forward
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