Loose-Leaf for Fundamentals of Cost Accounting
5th Edition
ISBN: 9781259728914
Author: William N. Lanen Professor, Shannon Anderson Associate Professor, Michael W Maher
Publisher: McGraw-Hill Education
expand_more
expand_more
format_list_bulleted
Concept explainers
Videos
Textbook Question
Chapter 6, Problem 35E
Basic Product Costing: Ethical Issues
Old Tyme Soda produces one flavor of a popular local soft drink. It had no work in process on October 31 in its only inventory account. During November, Old Tyme started 10,000 barrels. Work in process on November 30 is 1,200 barrels. The production supervisor estimates that the ending work-in-process inventory is 30 percent complete. An examination of Old Tyme’s accounting records shows direct material costs of $18,072 and conversion costs of $20,400 for November. All production is sold as it is produced.
Required
- a. Compute cost of goods sold for November.
- b. What is the value of work-in-process inventory on November 30?
- c. The president tells the controller that stock analysts expect higher income for the month and asks the controller to change the production manager’s estimate about the ending work-in-process inventory.
- (1) If the controller wanted to comply with the president’s request, would he raise or lower the estimated percentage complete from the 30 percent estimate of the production supervisor? Explain.
- (2) What should the controller do?
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
Bremen Fitness Products produces a sports drink. On October 1, it had no work-in-process inventory. It started production of
13,800 cases of the drink in October and shipped 10,200 cases to retailers. (Bremen holds no finished goods inventory.) The
costs of the resources used by Bremen in October consist of the following.
Materials
Conversion costs (labor and overhead)
$ 87,523
247,427
Required:
The production supervisor estimates that the ending work in process is 55 percent complete on October 31. Compute the cost
of cases shipped and the amount in work-in-process ending inventory as of October 31.
Note: Do not round intermediate calculations.
Cost of cases shipped
Work-in-process ending inventory
Bremen Fitness Products produces a sports drink. On October 1, it had no work-in-process inventory. It started production of 9,000 cases of the drink in October and shipped 7,800 cases to retailers. (Bremen holds no finished goods inventory.) The costs of the resources used by Bremen in October consist of the following.
Materials
$ 87,523
Conversion costs (labor and overhead)
134,975
Required:
The production supervisor estimates that the ending work in process is 55 percent complete on October 31. Compute the cost of cases shipped and the amount in work-in-process ending inventory as of October 31. (Do not round intermediate calculations.)
Joplin Corporation produces syrups that it sells to candy makers. On November 1, it had no work-in-process inventory. It started production of 45,900 gallons of syrup in November and completed production of 44,000 gallons. The costs of the resources used by Joplin in November consist of the following:
Materials
$
67,578
Conversion costs (labor and overhead)
54,300
Required:
The production supervisor estimates that the ending work-in-process is 60 percent complete on November 30. Compute the cost of syrup completed and the cost of the syrup in work-in-process ending inventory as of November 30. (Do not round intermediate calculations.)
Cost of syrup completed
Work-in-process ending inventory
Chapter 6 Solutions
Loose-Leaf for Fundamentals of Cost Accounting
Ch. 6 - How are product costing and cost allocation...Ch. 6 - What are the three criteria for the design of cost...Ch. 6 - Why are cost flow diagrams useful in describing...Ch. 6 - What are the characteristics of the following...Ch. 6 - How are job order, process, and operation costing...Ch. 6 - Describe the predetermined overhead rate. What is...Ch. 6 - Ideally, what does an allocation base reflect...Ch. 6 - What is two-stage cost allocation?Ch. 6 - What is continuous flow processing? Give at least...Ch. 6 - What is each component of the basic cost flow...
Ch. 6 - Cost allocation is arbitrary, so there is nothing...Ch. 6 - When designing a cost system, what points should...Ch. 6 - When is the basic cost flow model used? Give an...Ch. 6 - It is your first day at a new job and you talk...Ch. 6 - Rex Santos, a cost accountant, prepares a product...Ch. 6 - Prob. 16CADQCh. 6 - Identify a particular support function in a...Ch. 6 - Prob. 18CADQCh. 6 - Cost allocation bases are ideally based on a...Ch. 6 - Prob. 20CADQCh. 6 - Why might two companies in the same industry have...Ch. 6 - Is it possible for a company to have a two-stage...Ch. 6 - Your colleague says, If a company only has one...Ch. 6 - Basic Cost Flow Model Ralphs Mini-Mart store in...Ch. 6 - Basic Cost Flow Model Assume that the following...Ch. 6 - Basic Cost Flow Model Fill in the missing items...Ch. 6 - Prob. 27ECh. 6 - Prob. 28ECh. 6 - Basic Product Costing Enviro Corporation...Ch. 6 - Basic Product Costing Saras Sodas produces a...Ch. 6 - Basic Product Costing In June, Saras Sodas...Ch. 6 - Basic Product Costing In December, Saras Sodas...Ch. 6 - Basic Product Costing Big City Bank processes the...Ch. 6 - Basic Product Costing Lukes Lubricants starts...Ch. 6 - Basic Product Costing: Ethical Issues Old Tyme...Ch. 6 - Process Costing Sanchez Company produces paints....Ch. 6 - Process Costing Graham Petroleum produces oil. On...Ch. 6 - Process Costing Joplin Corporation produces syrups...Ch. 6 - Tiger Furnishings produces two models of cabinets...Ch. 6 - Refer to the data in Exercise 6-39. Compute the...Ch. 6 - Refer to the data in Exercise 6-39. Compute the...Ch. 6 - Refer to the data in Exercise 6-39. Draw the cost...Ch. 6 - Operations Costing Howrley-David, Inc.,...Ch. 6 - Operations Costing S. Lee Enterprises produces two...Ch. 6 - Operations Costing Organic Grounds produces two...Ch. 6 - Refer to the data in Exercise 6-39. Compute the...Ch. 6 - Refer to the data in Exercise 6-39. Compute the...Ch. 6 - Refer to the data in Exercise 6-39. The president...Ch. 6 - Donovan Parents produces soccer shorts and...Ch. 6 - Owl-Eye Radiologists (OR) does various types of...Ch. 6 - Operations Costing Vermont Instruments...Ch. 6 - Operation Costing DiDonato Supplies manufactures...Ch. 6 - Account Analysis, Two-Stage Allocation, and...Ch. 6 - Product Costing, Cost Estimation, and Decision...
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Similar questions
- Chassen Company, a cracker and cookie manufacturer, has the following unit costs for the month of June: A total of 100,000 units were manufactured during June, of which 10,000 remain in ending inventory. Chassen uses the first-in, first-out (FIFO) inventory method, and the 10,000 units are the only finished goods inventory at June 30. Under the absorption costing concept, the value of Chassens June 30 finished goods inventory would be: a. 50,000. b. 70,000. c. 85,000. d. 145,000.arrow_forwardKildeer Company makes easels for artists. During the last calendar year, a total of 30,000 easels were made, and 31,000 were sold for 52 each. The actual unit cost is as follows: The selling expenses consisted of a commission of 1.30 per unit sold and advertising copayments totaling 95,000. Administrative expenses, all fixed, equaled 183,000. There were no beginning and ending work-in-process inventories. Beginning finished goods inventory was 132,600 for 3,400 easels. Required: 1. Calculate the number and the dollar value of easels in ending finished goods inventory. 2. Prepare a cost of goods sold statement. 3. Prepare an absorption-costing income statement. Add a column for percentage of sales.arrow_forwardJoplin Corporation produces syrups that it sells to candy makers. On November 1, it had no work-in-process inventory. It started production of 43,300 gallons of syrup in November and completed production of 41,000 gallons. The costs of the resources used by Joplin in November consist of the following: Materials $ 47,512 Conversion costs (labor and overhead) 54,200 Required: The production supervisor estimates that the ending work-in-process is 60 percent complete on November 30. Compute the cost of syrup completed and the cost of the syrup in work-in-process ending inventory as of November 30. (Do not round intermediate calculations.)arrow_forward
- Joplin Corporation produces syrups that it sells to candy makers. On November 1, it had no work-in-process inventory. It started production of 43,500 gallons of syrup in November and completed production of 41,000 gallons. The costs of the resources used by Joplin in November consist of the following: Materials $ 57,200 Conversion costs (labor and overhead) 53,300 Required: The production supervisor estimates that the ending work-in-process is 60 percent complete on November 30. Compute the cost of syrup completed and the cost of the syrup in work-in-process ending inventory as of November 30.arrow_forwardRussia Spring produces premium bottled water. Russia Spring purchases artesian water, stores the water in large tanks, and then runs the water through two processes: filtration and bottling. During February, the filtration process incurred the following costs in processing 190,000 liters: E (Click to icon to view the cost data.) Russia Spring had no beginning Work-in-Process Inventory in the Filtration Department in February and uses the weighted-average method. Read the requirements. Requirement 1. Compute the February conversion costs in the Filtration Department. Determine the formula, then enter the amounts to compute the February conversion costs in the Filtration Department. Direct labor Manufacturing overhead Conversion costs + 18,950 + $ 22,050 = $ 41,000 Requirement 2. The Filtration Department completely processed 190,000 liters in February. What was the filtration cost per liter? Determine the formula, then enter the amounts to compute the filtration cost per liter. (Enter…arrow_forwardRussia Spring produces premium bottled water. Russia Spring purchases artesian water, stores the water in large tanks, and then runs the water through two processes: filtration and bottling. During February, the filtration process incurred the following costs in processing 190,000 liters: E (Click to icon to view the cost data.) Russia Spring had no beginning Work-in-Process Inventory in the Filtration Department in February and uses the weighted-average method. Read the requirements. Requirement 1. Compute the February conversion costs in the Filtration Department. Determine the formula, then enter the amounts to compute the February conversion costs in the Filtration Department. Conversion costsarrow_forward
- Sanchez & Company produces paints. On July 1, it had no work-in-process inventory. It starts production of 107,000 gallons of paint in July and completes 82,000 gallons. The costs of the resources used by Sanchez in July consist of the following: Materials Conversion costs 192,775 287,800 (labor and overhead) Required: The production supervisor estimates that the ending work-in-process is 81 percent complete. Compute the cost of paint transferred to finished goods and the amount in work-in-process ending inventory as of July 31arrow_forwardCedargrove Cider processes and bottles apple cider for sale through retail and big box grocery outlets. It had no work in process on May 31 in its only inventory account. The company started 20,200 cases during June. On June 30, work in process is 5,100 cases. The production supervisor estimates that the ending work-in-process inventory is 60 percent complete. Cost records at Cedargrove recorded June production costs of $94,850 in materials cost and $118,500 in conversion costs. All production is sold as it is produced. Required: Compute cost of goods sold for June. What is the value of work-in-process inventory on June 30? The president tells the controller that the company has already met its income target for the quarter, which ends on June 30, but whether the target can be met next quarter is in doubt. The president asks the controller to change the production manager’s estimate about the ending work-in-process inventory to increase the probability the company can meet the…arrow_forwardDuffield Lubricants produces oil-based machine lubricants. On December 1, it had no work-in-process inventory. It starts production of 166,000 gallons of lubricant in December and completes 99,600 gallons. The costs of the resources used by Duffield in December consist of the following. Materials $ 187,568 Conversion costs (labor and overhead) 771,248 Required: The production supervisor estimates that the ending work in process is 40 percent complete. Compute the cost of lubricant transferred to finished goods and the amount in work-in-process ending inventory as of December 31. Note: Do not round intermediate calculations.arrow_forward
- Servix, Inc., produces water pumps. Each water pump contains a small valve that costs $ 5. During May, 600 valves were drawn from the supply room and installed in water pumps in the production process. Eighty percent of these units were completed and transferred into finished goods warehouses. Of the units completed, thirty percent were still unsold at the end of the month. There were no beginning inventories. 52.The cost of valves in cost of goods sold for May would be: a. $1,680 b. $2,100 c.$900 d. $72arrow_forwardBeverage Drink Company processes direct materials up to the splitoff point where two products, A and B, are obtained. The following information was collected for the month of July: Production: A 1500 liters, B 500 liters. The joint cost was $10000. There were no inventory balances of A and B. Product A may be processed further to yield 1500 liters of Product Z5 for an additional processing cost of $2 per liter. Product Z5 is sold for $20 per liter. There was no beginning inventory and ending inventory was 150 liters. Product B may be processed further to yield 500 liters of Product W3 for an additional processing cost of $4. Product W3 is sold for $30 per liter. There was no beginning inventory and ending inventory was 50 liters. --using constant gross-margin percentage NRV method, gross margin of X: Select one: a. $6500 b. $14600 c. $5400 O d. $18900 + 3 ...arrow_forwardDeliver Company produces and sells only two products that are referred to as ROMS and PLATS. Production is “for order" only, and no finished goods inventories are maintained; work in process inventories are negligible. The following data have been extracted relating to last month: ROMS PLATS Sales Manufacturing costs: Materials Labor Overhead Selling expenses Administrative expenses An analysis has been made of the manufacturing overhead. Although the items listed above are traceable to the products, $37,050 of the overhead assigned to ROMS and $76,000 of that assigned to PLATS is fixed. The balance of the overhead is variable. Selling expenses consist entirely of commissions paid as a percentage of sales. Direct labor is completely variable. Administrative expenses in the data above are fixed and cannot be traced to the products but have been arbitrarily allocated to the products. $190,000 $190,000 $19,000 $58,900 $74,100 $26,000 $51,900 $87,000 $9,500 $18,000 $17,100 $12,000…arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
Cornerstones of Cost Management (Cornerstones Ser...AccountingISBN:9781305970663Author:Don R. Hansen, Maryanne M. MowenPublisher:Cengage Learning
Managerial AccountingAccountingISBN:9781337912020Author:Carl Warren, Ph.d. Cma William B. TaylerPublisher:South-Western College Pub
Financial And Managerial AccountingAccountingISBN:9781337902663Author:WARREN, Carl S.Publisher:Cengage Learning,
Cornerstones of Cost Management (Cornerstones Ser...
Accounting
ISBN:9781305970663
Author:Don R. Hansen, Maryanne M. Mowen
Publisher:Cengage Learning
Managerial Accounting
Accounting
ISBN:9781337912020
Author:Carl Warren, Ph.d. Cma William B. Tayler
Publisher:South-Western College Pub
Financial And Managerial Accounting
Accounting
ISBN:9781337902663
Author:WARREN, Carl S.
Publisher:Cengage Learning,
Chapter 6 Merchandise Inventory; Author: Vicki Stewart;https://www.youtube.com/watch?v=DnrcQLD2yKU;License: Standard YouTube License, CC-BY
Accounting for Merchandising Operations Recording Purchases of Merchandise; Author: Socrat Ghadban;https://www.youtube.com/watch?v=iQp5UoYpG20;License: Standard Youtube License