[Solution] Week 4 Workshop Problems PDF

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Lecturer/Tutor: Syrus. These are the official university workshop documents that will be useful for students who are taking Management Accounting in Semester 2 2018 and Semester 1 2019 - This is help you pass the mid-term and final examination. ...

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Workshop Solutions ACCT603 Management Accounting Semester One 2018: Week Four

Question 1 Sarver Corporation uses the weighted-average method in its process costing system. The Fitting Department is the second department in its production process. The data below summarize the department's operations in March.

The Fitting Department's cost per equivalent unit for conversion cost for March was $8.24. How much conversion cost was assigned to the units transferred out of the Fitting Department during March? Solutions Units transferred to the next department = Units in beginning work in process + Units started into production - Units in ending work in process = 7,100 + 61,000 - 4,600 = 63,500

Question 2 Oxyrom Corporation uses the FIFO method in its process costing system. Operating data for the Brazing Department for the month of November appear below:

What were the equivalent units for conversion costs in the Brazing Department for November?

Solutions

1

Units started and completed during the period = Units started into production during the period - Units in ending work in process inventory = 46,700 - 7,300 = 39,400

Question 3 Helix Corporation produces prefabricated flooring in a series of steps carried out in production departments. All of the material that is used in the first production department is added at the beginning of processing in that department. Data for May for the first production department follow:

Work in process inventory, May 1 Work in process inventory, May 31

Units 63,000 43,000

Percent Complete Materials Conversion 85% 50% 60% 30%

Materials cost in work in process inventory, May 1 Conversion cost in work in process inventory, May 1 Units started into production Units transferred to the next production department Materials cost added during May Conversion cost added during May

$ 51,800 $ 14,700 247,200 267,200 $ 352,540 $ 212,181

Required: 1. Assume that the company uses the weighted-average method of accounting for units and costs. Determine the equivalent units for May for the first process. 2. Compute the costs per equivalent unit for May for the first process.

3. Determine the total cost of ending work in process inventory and the total cost of units transferred to the next process in May. Weighted-Average Method: 1. Units transferred to the next production department Ending work in process: Materials: 43,000 units × 60% complete Conversion: 43,000 units × 30% complete Equivalent units of production

Materials 267,200

Conversion 267,200

25,800 12,900 293,000

280,100

2

2. Cost of beginning work in process Cost added during the period

$

Materials 51,800 352,540

$

Conversion 14,700 212,181

Total cost (a)

$

404,340

$

226,881

Equivalent units of production (b) Cost per equivalent unit (a) ÷ (b)

$

293,000 1.38

$

280,100 0.81

3. Materials

Conversion

Total

Ending work in process inventory: Equivalent units of production (see above) Cost per equivalent unit (see above) Cost of ending work in process inventory

25,800 $ 1.38 $ 35,604

12,900 $ 0.81 $ 10,449

$ 46,053

Units completed and transferred out: Units transferred to the next department Cost per equivalent unit (see above) Cost of units completed and transferred out

267,200 $ 1.38 $ 368,736

267,200 $ 0.81 $ 216,432

$ 585,168

Question 4 FIFO Jarvene Corporation uses the FIFO method in its process costing system. The following data are for the most recent month of operations in one of the company’s processing departments:

Units in beginning inventory Units started into production Units in ending inventory Units transferred to the next department

370 4,290 340 4,320

Materials Percentage completion of beginning inventory Percentage completion of ending inventory

Conversion

70%

30%

70%

50%

The cost of beginning inventory according to the company’s costing system was $7,836, of which $4,852 was for materials and the remainder was for conversion cost. The costs added during the month amounted to $178,099. The costs per equivalent unit for the month were:

Cost per equivalent unit

Materials $18.00

Conversion $23.00

3

Required: 1. Compute the total cost per equivalent unit for the month. 2. Compute the equivalent units of material and of conversion in the ending inventory. 3. Compute the equivalent units of material and of conversion that were required to complete the beginning inventory. 4. Determine the number of units started and completed during the month. 5. Determine the costs of ending inventory and units transferred out. Explanation: FIFO Method:

1. Computation of the total cost per equivalent unit of production: Cost per equivalent unit of production for material Cost per equivalent unit of production for conversion

$

18.00 23.00

Total cost per equivalent unit of production

$

41.00

2. Computation of equivalent units in ending inventory: Materials 340 70%

Units in ending inventory (a) Percentage completed (b) Equivalent units of production (a) × (b)

Conversion 340 50%

238

170

3. Computation of equivalent units required to complete the beginning inventory: Units in beginning inventory (a) Percentage needed to complete inventory (b)

Materials 370

Conversion 370

production of beginning 30%

Equivalent units of production (a) × (b)

111

70% 259

4. Units transferred to the next department Units from the beginning inventory

4,320 370

4

Units started and completed during the period

3,950

5. Ending work in process inventory: Equivalent units of production Cost per equivalent unit Cost of ending work in process inventory

Materials

Conversion

238 $ 18.00 $ 4,284

$ $

170 23.00 3,910

$ 8,194

$

2,984

$ 7,836

$ $

259 23.00 5,957

$ 7,955

Units transferred out: Cost from the beginning work in process inventory $ 4,852 Cost to complete the units in beginning work in process inventory: Equivalent units of production required to complete the units in beginning inventory 111 Cost per equivalent unit $ 18.00 Cost to complete the units in beginning inventory $ 1,998 Cost of units started and completed this period: Units started and completed this period 3,950 Cost per equivalent unit $ 18.00 Cost of units started and completed this period $71,100 Total cost of units transferred out

3,950 $ 23.00 $ 90,850

Total

$161,950 $

177,741

5...