Concept explainers
EXERCISE 4A-6 Equivalent
Refer to the data for Alaskan Fisheries, Inc., in Exercise 4-10.
Required:
Compute the Cleaning Department's equivalent units of production for materials and for labor and overhead for July.
Requirement 1:-
- Equivalent units of production for materials and conversion for July
Answer to Problem 6E
Solution:
- Equivalent units of production
Particulars | Direct Materials | Conversion Cost |
Opening Units in WIP (A) | 10,000 | 10,000 |
% of Completion of Opening WIP (B) | 100% | 30% |
% of Opening WIP completed this period [C = 100%-B] | 0% | 70% |
Equivalent units in beginning WIP [D=A×C] | 0 | 7,000 |
Units started and completed in current period (E) | 150,000 | 150,000 |
Units closing WIP (F) | 20,000 | 20,000 |
% of completion of closing WIP (G) | 100% | 40% |
Equivalent units in closing WIP (H=F×G) | 20,000 | 8,000 |
Total equivalent units [D+E+H] | 170,000 | 165,000 |
Explanation of Solution
Explanation:-
Given:
Following data available for the month of July:-
Particulars | Direct Materials | Conversion Cost |
Opening Units in WIP | 10,000 | 10,000 |
% of Completion of Opening WIP | 100% | 30% |
Units started into production | 170,000 | 170,000 |
Units closing WIP | 20,000 | 20,000 |
% of completion of closing WIP | 100% | 40% |
Cost of Opening WIP | $8,500 | $4,900 |
Cost added during the month | $139,400 | $244,200 |
Formula used:
Calculation:
Particulars | Direct Materials | Conversion Cost |
(i) Total equivalent units | 170,000 | 165,000 |
Requirement 2:-
- Cost per equivalent unit for materials and conversion for July
Answer to Problem 6E
Solution:
- Cost per equivalent unit
Particulars | Direct Materials | Conversion Cost |
Cost of Opening WIP (A) | $8,500 | $4,900 |
Cost added during the period (B) | $139,400 | $244,200 |
Equivalent units of production (C) | 170,000 | 165,000 |
Cost per Equivalent Unit [A+B]÷C | $0.87 | $1.51 |
Explanation of Solution
Explanation:-
Given:
Following data available for the month of July:-
Particulars | Direct Materials | Conversion Cost |
Opening Units in WIP | 10,000 | 10,000 |
% of Completion of Opening WIP | 100% | 30% |
Units started into production | 170,000 | 170,000 |
Units closing WIP | 20,000 | 20,000 |
% of completion of closing WIP | 100% | 40% |
Cost of Opening WIP | $8,500 | $4,900 |
Cost added during the month | $139,400 | $244,200 |
Formula used:
Calculation:
Particulars | Direct Materials | Conversion Cost |
(ii) Cost per Equivalent Unit | $0.87 | $1.51 |
Requirement 3:-
iii. Cost of ending work in process inventory for materials, conversion, and in total for July
Answer to Problem 6E
Solution:
iii. Cost of Closing WIP
Particulars | Direct Materials | Conversion Cost |
Equivalent units in closing WIP (A) | 20,000 | 8,000 |
Cost per Equivalent Unit (B) | $0.87 | $1.51 |
Cost of Closing WIP (A×B) | $17,400 | $12,080 |
Total Cost of Closing WIP = 17,400 +12,080 =29,480
Explanation of Solution
Explanation:-
Given:
Following data available for the month of July:-
Particulars | Direct Materials | Conversion Cost |
Opening Units in WIP | 10,000 | 10,000 |
% of Completion of Opening WIP | 100% | 30% |
Units started into production | 170,000 | 170,000 |
Units closing WIP | 20,000 | 20,000 |
% of completion of closing WIP | 100% | 40% |
Cost of Opening WIP | $8,500 | $4,900 |
Cost added during the month | $139,400 | $244,200 |
Formula used:
Calculation:
Particulars | Direct Materials | Conversion Cost |
(iii) Cost of Closing WIP | $17,400 | $12,080 |
Requirement 4:-
iv. Cost of units transferred out to the next department for materials, conversion and in total for July
Answer to Problem 6E
Solution:
iv. Cost of units transferred out to other department
Particulars | Direct Materials | Conversion Cost |
Opening Units in WIP (A) | 10,000 | 10,000 |
% of Completion of Opening WIP (B) | 100% | 30% |
% of Opening WIP completed this period [C = 100%-B] | 0% | 70% |
Equivalent units in beginning WIP [D=A×C] | 0 | 7,000 |
Units started and completed in current period (E) | 150,000 | 150,000 |
Equivalent units which are transferred out (F=D+E) | 150,000 | 157,000 |
Cost per Equivalent Unit (G) | $0.87 | $1.51 |
Cost of transferred units (F×G) | $130,500 | $237,070 |
Total Cost of transferred units = 130,500 +237,070 =367,570
Explanation of Solution
Explanation:-
Given:
Following data available for the month of July:-
Particulars | Direct Materials | Conversion Cost |
Opening Units in WIP | 10,000 | 10,000 |
% of Completion of Opening WIP | 100% | 30% |
Units started into production | 170,000 | 170,000 |
Units closing WIP | 20,000 | 20,000 |
% of completion of closing WIP | 100% | 40% |
Cost of Opening WIP | $8,500 | $4,900 |
Cost added during the month | $139,400 | $244,200 |
Formula used:
Calculation:
Particulars | Direct Materials | Conversion Cost |
(iv) Cost of transferred units | $130,500 | $237,070 |
Requirement 5:-
To present:
v. Cost Reconciliation report
Answer to Problem 6E
Solution:
v. Cost reconciliation report
Cost to be accounted for | Amount (in $) |
Cost of Opening WIP | 13,400 |
Cost added during the period | 383,650 |
Cost to be accounted for | 397,050 |
Costs Accounted for | Amount (in $) |
Cost of Closing WIP | 29,480 |
Cost of transferred units | 367,570 |
Costs Accounted for | 397,050 |
Explanation of Solution
Explanation:-
Given:
Following data available for the month of July:-
Particulars | Direct Materials | Conversion Cost |
Opening Units in WIP | 10,000 | 10,000 |
% of Completion of Opening WIP | 100% | 30% |
Units started into production | 170,000 | 170,000 |
Units closing WIP | 20,000 | 20,000 |
% of completion of closing WIP | 100% | 40% |
Cost of Opening WIP | $8,500 | $4,900 |
Cost added during the month | $139,400 | $244,200 |
Formula used:
Calculations:
While calculating cost of transferred units we should subtract cost of closing WIP from sum cost of
opening WIP and cost added during the period as closing units are not yet transferred.
Cost to be accounted for and costs accounted for are reconciled at 397,050.
Want to see more full solutions like this?
Chapter 4 Solutions
MANAGERIAL ACCOUNTING W/CONNECT
- Cost 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_forwardRefer to the data in Problem 6.31. Assume that the FIFO method is used. Required: 1. Prepare a physical flow schedule. 2. Calculate equivalent units of production for direct materials and conversion costs. 3. Compute unit cost. Round to three decimal places. 4. Calculate the cost of goods transferred to Painting at the end of the month. Calculate the cost of ending inventory.arrow_forwardCosts per equivalent unit and production costs Based on the data in Exercise 17-14, determine the following: A. Cost of beginning work in process inventory completed in November B. Cost of units transferred to the next department during November C. Cost of ending work in process inventory on November 30 D. Costs per equivalent unit of direct materials and conversion included in the November 1 beginning work in process E. The November increase or decrease in costs per equivalent unit for direct materials and conversion from the previous montharrow_forward
- Units 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_forwardRecording issuing of materials Materials issued for the current month are as follows a. Determine the amount of materials transferred lo Work in Process and Factory Overhead for the current month. b.Illustrate (he effect on the accounts and financial statements of the materials transferred in (a).:arrow_forwardRequired information Exercise 11-25 & 11-26 (Algo) (LO 11-1) [The following information applies to the questions displayed below.] Mack Precision Tool and Die has two production departments, Fabricating and Finishing, and two service departments, Repair and Quality Control. Direct costs for each department and the proportion of service costs used by the various departments for the month of March follow: Proportion of Services Used by Department Fabricating Finishing Repair Quality Control Direct Costs Repair Quality Control Fabricating Finishing $ 148,600 114,200 49,200 92,000 0 0.2 0.5 0.3 0.8 0 0.1 0.1 Exercise 11-26 (Algo) Allocating Service Department Costs First to Production Departments and Then to Jobs (LO 11-1) Assume that both Fabricating and Finishing work on just two jobs during the month of March: MP-47 and MP-48. Costs are allocated to jobs based on labor-hours in Fabricating and machine-hours in Finishing. The number of labor-hours and machine-hours worked in each…arrow_forward
- please provide handwritten solutionsarrow_forwardUnits of production data for the two departments of Atlantic Cable and Wire Company for July of the current fiscal year are as follows: Attachment Each department uses the average cost method.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_forward(a) Develop a physical flow schedule for the mixing department for the month of May. (b) Calculate the equivalent units of production for materials and conversion of the mixing department for the month of May. (c) Calculate the unit cost for materials and conversion of the mixing department for the month of May. (d) Calculate the costs of units transferred out and the cost of EWIP for the mixing department for the month of May. (e) Develop a cost reconciliation for the mixing department for the month of May.arrow_forward
- Goode Company has the following production data for selected months. EndingWork in Process Month BeginningWork in Process UnitsTransferred Out Units % Complete as toConversion Cost January –0– 40,300 10,300 42 % March –0– 41,800 9,000 75 July –0– 48,800 20,700 21 Compute equivalent units of production for materials and conversion costs, assuming materials are entered at the beginning of the process. Materials Conversion Costs January March Julyarrow_forwardplease answer within the format by providing formula the detailed workingPlease provide answer in text (Without image)Please provide answer in text (Without image)Please provide answer in text (Without image)arrow_forwardvd subject-Accountingarrow_forward
- Managerial AccountingAccountingISBN:9781337912020Author:Carl Warren, Ph.d. Cma William B. TaylerPublisher:South-Western College PubPrinciples of Cost AccountingAccountingISBN:9781305087408Author:Edward J. Vanderbeck, Maria R. MitchellPublisher:Cengage LearningCornerstones of Cost Management (Cornerstones Ser...AccountingISBN:9781305970663Author:Don R. Hansen, Maryanne M. MowenPublisher:Cengage Learning
- Survey of Accounting (Accounting I)AccountingISBN:9781305961883Author:Carl WarrenPublisher:Cengage LearningManagerial Accounting: The Cornerstone of Busines...AccountingISBN:9781337115773Author:Maryanne M. Mowen, Don R. Hansen, Dan L. HeitgerPublisher:Cengage Learning