# Cost Accounting Units of Production - Excel by lhi58312

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Process Cost Accounting Handout
1C      EUP using weighted Average
A company uses weighted-average process costing for the product it manufactures.
All direct materials are added at the beginning of production.
Conversion costs are applied evenly during production.
The following data apply to the past month:
Assuming no spoilage, equivalent units of conversion costs total

Total units in begin. Inventory (30% complete as to conversion costs) 1,500                 30%
Total units transferred to finished goods inventory                   7,400                100%     7,400.00
Total units in ending inventory (60% complete as to conversion costs) 2,300                 60%     1,380.00
8,780.00

2B      The following data pertain to a company's cracking-department operations in December.
Materials are added at the beginning of the process
Conversion costs are incurred uniformly throughout the process.
Assuming use of the FIFO method of process costing, the equivalent units of conversion for December were

Work-in-process, December 1                               Units        Completion
Units started                                             20,000            50%          (10,000)
Units completed & transferred to distilling dept.        170,000
Work-in-process, December 31                             180,000                         180,000
10,000              50%          5,000
EUP for Conversioncosts with LIFO                                                        175,000

3D      The following information pertains to Lap Co.'s Palo Division for the month of April:
All materials are added at the beginning of the process.
Using the weighted-average method, what is the cost per equivalent unit for materials?
Number of UnitsCost of Materials
Beginning work-in-process                                                   15,000       5,500
Started in April                                                            40,000     18,000
Units completed                                                             42,500
Ending work-in-process                                                      12,500
EUP andTotal Materials Costs                                                55,000     23,500
Cost per EUP                                                         \$         0.43
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4A      Information for Ogden's Depart. A for January, for the first stage of production is presented below.
Materials are added at the beginning of the process.
The ending work-in-process is 50% complete as to conversion costs.
How would the total costs accounted for be distributed, using the weighted- average method?
Materials Conversion
BWIP                                                                        8,000            6,000
Current costs                                                              40,000           32,000
Total costs                                                                48,000           38,000
Equivalent units using weighted-average method                            100,000           95,000
Average unit costs                                                           0.48             0.40
Goods completed (Units)                                                    90,000
EWIP (units)                                                               10,000
Total cost of completed goods                                           79,200.00
Total costs of goods in process                                         86,000.00
Ending WIP                                                               6,800.00

5A      Information for Depart. A for January, for the first stage of production is presented below.
Materials are added at the beginning of the process.
The ending work-in-process is 50% complete as to conversion costs.
How would the total costs accounted for be distributed, using the weighted- average method?
Materials Conversion
BWIP                                                                        4,000            3,000
Current costs                                                              20,000           16,000
Total costs                                                                24,000           19,000
Equivalent units using weighted-average method                            100,000           95,000
Average unit costs                                                           0.24             0.20
Goods completed (Units)                                                    90,000
EWIP (units)                                                               10,000
Total cost of completed goods                                           39,600.00
Total costs of goods in process                                         43,000.00
Ending WIP                                                               3,400.00

6B                                                             RM                 DL               OH
Unit Cost perEUP                                      \$10                \$20          \$         10
Total Units                                            200                200               200
Completion %                                          50%                50%               50%
EUP                                                    100                100               100
Cost                                                 \$1,000             \$2,000            \$1,000
Total cost of End WIP                                \$4,000
Total Cost of Goods in Process                     \$    180,000
Total cost of goods completed                      \$    176,000
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7C         Lucas Company adds materials in the beginning of the process in the Forming Department,
which is the first stage of its production cycle.
Information concerning the Forming Department in October is as follows:
Using the weighted-average method, what was the materials cost of work in-process at October 31?
Units     RM Costs
Work-in-process at October 1                                            6,000 \$     3,000
Units started during October                                          50,000 \$ 25,000
Units completed and transferred
to next Department during October.                                   44,000

Total units and cost in process                                            56,000 \$      28,000
Cost per EUP (material introduced at start of process)                            \$        0.50
Units completed                                                            44,000
Units in ending WIP                                                        12,000
Cost of ending WIP                                                                \$       6,000

8A         Barnett Company adds materials at the beginning of the process in department M.
The 8,000 units in work-in-process at May 1 were 75% complete for conversion costs.
The 6,000 units in work-in-process at May 31 were 50% complete as to conversion costs.
During May 12,000 units were completed and transferred to the next department.
Costs for work- in-process at May 1 and production activity for May are shown below.
What was the total cost per equivalent unit for May using the weighted-average method?
COSTS
Materials         Conversion
Work-in-process, 5/1                              9,600          4,800
Costs added in May                               15,600         14,400

Units Completed                                                                          12,000
Units in ending WIP                                                                       6,000
Total Units                                                                              18,000
Total costs                                               25,200           19,200        44,400
Cost per EUP                                                                         \$     2.47

9B
10 A
A company uses the first-in, First-out method of costing in a process-costing system.
Material is added at the beginning of the process in Department A.
Conversion costs are incurred uniformly throughout the process.                                   Units        Complete
Beginning work-in process inventory on April 1 in Department A                                         50000          30%
During April, 150,000 units were started in Department B.                                             150000

Ending work-in-process inventory on April 30 in Department A was estimated to be 20% complete.
What were the total equivalent units in Department A for April for materials and conversion costs , respectively?

11          Missing Information
12          Repeat of Lucas Company
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Class Handout on Direct Costing
1          Gordon Company
ABSORPTION COSTING                                               DIRECT COSTING
Sales                                           \$       800,000 Sales                                              \$   800,000
Cost of Sales                                                   Variable Cost of Sales
Beginning Inventory                                             Begin. Inventory
Production Costs                                                Production Costs
1. Direct Materials                  300,000                    1. Direct Materials                    300,000
2. Direct Labor                      125,000                    2. Direct Labor                        125,000
Total                                620,000                    Total                                   500,000
Ending Inventory                    (124,000)                   Ending Inventory                       (100,000)
Cost of Sales                                          496,000 Var. Cost of Sales                                     400,000
Other Variable Costs:
80,000
Total Other Variable Costs........                    80,000

Gross Profit                                            304,000 Contribution Margin                                    320,000
Non-Manufacturing                                                 Fixed Manufacturing
Expenses                                                          and Other Fixed Expenses
Total Non-mfg. Expenses                                 150,000  Total Fixed Expenses                                  190,000
Net Income                                      \$       154,000   Net Income                                       \$   130,000

2A         Gyro Gear Company produces a special gear used in automatic transmissions.
Each gear sells for \$28, and the Company sells approximately 500,000 gears each year.
Unit cost data are presented below:
What is the unit cost of gears for direct-cost-inventory purposes?
Direct material:                                       \$      6.00
Direct labor                                           \$      5.00
Other costs:                                       Variable     Fixed
Manufacturing                                          \$      2.00  \$     7.00
Distribution                                           \$      4.00  \$     3.00

Unit Cost - Direct Costing                          \$     13.00
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3 A     Peterson's records for the year ended December 31, show the following.
There were no work-in-process inventories at the beginning and end of the year.
What is the finished goods inventory cost at December 31, under direct costing Method?
Solution
Net sales                                                            \$ 1,400,000
Cost of goods manufactured:                        Variable          \$ 630,000 \$ 630,000
Fixed             \$ 315,000
Operating expenses:                                Variable          \$ 98,000
Fixed             \$ 140,000
Cost of goods manufactured:                                                       \$ 630,000
Units manufactured                                                                    70,000
Cost per unit                                                                        \$ 9.00
Units sold                                                               60,000
Finished goods inventory, January 1                                    None
Finished goods inventory, December 31                                    10,000       10,000
Cost of Ending Inventory                                                          \$ 90,000
4C      Operating Income with Absorption Costing
ABSORPTION COSTING                                             DIRECT COSTING
Sales                                            \$   1,400,000 Sales                                             \$ 1,400,000
Cost of Sales                                                    Variable Cost of Sales
Beginning Inventory                                              Begin. Inventory
Production Costs                                                 Production Costs
1. Variable Costs                    630,000                       1. Variable Costs                  630,000
Total                                945,000                     Total                                630,000
Ending Inventory                     (135,000)                Ending Inventory                        (90,000)
Cost of Sales                                         810,000 Var. Cost of Sales                                     540,000
Other Variable Costs:
98,000
Total Other Variable Costs........                   98,000

Gross Profit                                          590,000 Contribution Margin                                    762,000
Non-Manufacturing                                               Fixed Manufacturing
Expenses                                                        and Other Fixed Expenses
Total Non-mfg. Expenses                               238,000 Total Fixed Expenses                                   455,000
Net Income                                       \$    352,000 Net Income                                         \$   307,000
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5D      During January Gable, produced 10,000 units of product F with cost as follows:
What is Gable's unit cost of product F for January on the direct costing basis?

Direct materials                        40,000           40,000
Direct labor                            32,000           32,000
95,000
Direct costs of MFG                                      85,000
Units Produced                                           10,000
Unit cost                                           \$      8.50
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6          Indiana Corporation began its operations on January 1, and produces a single product that sells for \$9.00 per unit.
Indiana uses an actual (historical) cost system.
100,000 units were produced and 90,000 units were sold in the year.
There was no work-in-process inventory at December 31.
Manufacturing costs and selling and administrative expenses for the year were as follows:
What would be Indiana's operating income using the direct-costing method?
Units Produced                           100,000
Units Sold                                90,000
Selling price per unit          \$            9.00
Fixed costs Variable costs Variable costs
Raw materials                                                     \$        1.75 per unit produced
Direct labor                                                      \$        1.25 per unit produced
Factory overhead                                    \$ 100,000 \$            0.50 per unit produced
Selling and administrative                          \$ 70,000 \$             0.60 per unit sold

ABSORPTION COSTING                                                 DIRECT COSTING
Sales                                               \$      810,000 Sales                                                           \$   810,000
Cost of Sales                                                        Variable Cost of Sales
Beginning Inventory                                                  Begin. Inventory
Production Costs                                                     Production Costs
1. Direct Materials                      175,000                     1. Direct Materials                            175,000
2. Direct Labor                          125,000                     2. Direct Labor                                125,000
Total                                    450,000                     Total                                          350,000
Ending Inventory                         (45,000)                    Ending Inventory                                   (35,000)
Cost of Sales                                              405,000   Var. Cost of Sales                                                315,000
Other Variable Costs:
54,000
Total Other Variable Costs........                                 54,000

Gross Profit                                               405,000 Contribution Margin                                                 441,000
Non-Manufacturing                                                      Fixed Manufacturing
Expenses                                                               and Other Fixed Expenses
Total Non-mfg. Expenses                                    124,000     Total Fixed Expenses                                            170,000
Net Income                                          \$      281,000      Net Income                                                 \$   271,000

7B

8C

9B
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Prob.
Allocating Costs to Departments
1
Support Departments              Operating Departments
Maintenance               Power      Education     Technology
Cost before allocation                \$99,000          \$54,000

Allocation of Maintenance

Allocation of Power

2

Allocating costs for Joint Products

3

4

5

6

7

8

Process Cost Accounting
9

10

11

12

13

14

15

Process Cost Accounting
16
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Equivalent Units
Flow of Production                                                 Physical Units Materials Conv. Costs
1     Beginning Work in Process                                                  15,000
2     Units Started in Production                                                40,000
3     Total Units to Account For                                                 55,000
4     Units Completed & Transferred Out                                          42,500         42,500
5     Ending Work-In Process Inventory                                           12,500         12,500
6     Units accounted for                                                        55,000                        -
7     Equivalent units of Production- AVERAGE                                                   55,000
8     Less: Equivalent Units in beginning WIP
9     Equivalent units of Production - FIFO
10     Costs                                                                   Totals       Materials Conv. Costs
11     Beginning Work In Process                                                   5,500
12     Costs added this period                                                    18,000
13     Total                                                                      23,500            -           -
14     Divide by Equivalent Units of Production-Line 7 or 9                                         -           -
15     Cost per Unit
16     Apply Costs to Finished Units and Ending W.I.P.
17                                                                             Totals           Units     Unit Cost
18     Units Completed this Period-If using average method                              -                       -
19     Cost of Ending Work In Process
20      Raw Materials                                                                   -                       -
21      Conversion Costs                                                                -                       -
22      Total cost of ending Work-In-Process                                            -
23
24
25
26     Total Costs Accounted For                                           \$            -
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Ogden Corporation
Step 1           Step 2- Equiv. Units
Flow of Production                                               Physical Units Materials Conv. Costs
1     Beginning Work in Process
2     Units Started in Production
3     Total Units to Account For                                              100,000
4     Units Completed & Transferred Out                                        90,000          90,000      90,000
5     Ending Work-In Process Inventory                                         10,000          10,000       5,000
6     Units accounted for                                                     100,000         100,000      95,000
7     Equivalent units of Production- AVERAGE                                                 100,000      95,000
8     Less: Equivalent Units in beginning WIP
9     Equivalent units of Production - FIFO
10     Costs to account for (Step 3)                                         Totals       Materials Conv. Costs
11     Beginning Work In Process                                                14,000           8,000       6,000
12     Costs added this period                                                  72,000          40,000      32,000
13     Total costs to Account For                                               86,000          48,000      38,000
14     Compute cost per EUP (Step 4)
15     Divide by Equivalent Units of Production-Line 7 or 9                                    100,000      95,000
16     Cost per Unit                                                              0.88            0.48         0.40
17     Apply Costs to F.G. & Ending W.I.P. (Step 5)                          Totals            Units      Unit Cost
18     Units Completed this Period-If using average method                   79,200.00    90,000.00            0.88
19     Cost of Ending Work In Process
20      Raw Materials                                                         4,800.00    10,000.00            0.48
21      Conversion Costs                                                      2,000.00        5,000.00         0.40
22      Total cost of ending Work-In-Process                                  6,800.00
23
24
25
26     Total Costs Accounted For                                         \$   86,000.00
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Charlotte Corporation                                                      Equivalent Units
Units Material Conversion
Beginning Work in Process                                              1,000        60%         20%
Started production in month                                            9,000
Completed production in month                                          9,500
Ending work in Process                                                   500        90%         40%
Costs Incurred
Beginning Inventory                             \$     2,600 \$         1,200 \$       600 \$       800
Costs during month                              \$ 105,135 \$          19,635 \$ 38,000 \$ 47,500
\$ 107,735 \$          20,835 \$ 38,600 \$ 48,300
[Note: Last year Unit Costs: RM \$2, DL \$3, OH \$4. This year Unit Costs: RM \$2.10, DL \$4, OH \$5]
Step 1           Step 2- Equiv. Units
Flow of Production                                               Physical Units Materials Conv. Costs
1     Beginning Work in Process                                                 1,000
2     Units Started in Production                                               9,000
3     Total Units to Account For                                               10,000
4     Units Completed & Transferred Out                                         9,500           9,500       9,500
5     Ending Work-In Process Inventory                                            500             450         200
6     Units accounted for                                                      10,000           9,950       9,700
7     Equivalent units of Production- AVERAGE                                                   9,950       9,700
8     Less: Equivalent Units in beginning WIP                                                    (600)        (200)
9     Equivalent units of Production - FIFO                                                     9,350       9,500
10     Costs to account for (Step 3)                                         Totals       Materials Conv. Costs
11     Beginning Work In Process                                         \$       2,600 \$         1,200 \$     1,400
12     Costs added this period                                                 105,135          19,635      85,500
13     Total costs to Account For                                        \$     107,735 \$        20,835 \$ 86,900
14     Compute cost per EUP (Step 4)
15     Divide by Equivalent Units of Production-Line 7 or 9                                      9,950       9,700
16     Cost per Unit-if using Average (All production)                   \$       11.05 \$          2.09 \$       8.96
17     Cost per Unit-if using FIFO (Units started this period)           \$       11.10 \$          2.10 \$       9.00
18     Apply Costs to F.G. & Ending W.I.P. (Step 5)                          Totals            Units      Unit Cost
19     Units Completed this Period-If using average method               \$ 105,000.96            9,500 \$     11.05
20     Cost of Ending Work In Process
21      Raw Materials                                                           942.29          450.00         2.09
22      Conversion Costs                                                      1,791.75          200.00         8.96
23      Total cost of ending Work-In-Process                             \$    2,734.04
24
25
26     Total Costs Accounted For                                         \$ 107,735.00

17

18

19
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20

21     Direct Costing Questions
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Gordon Company began its operations on January 1, 2002, and produces a single product.
Gordon uses an actual (historical) cost system.

Fixed cost       Variable cost
Raw materials                                              \$3.00     per unit produced
Direct labor                                               \$1.25     per unit produced
Factory overhead                    \$120,000               \$0.75     per unit produced
Selling and administrative           \$70,000               \$1.00     per unit sold

Selling Price per unit                    \$10
Units Produced                        100,000
Units sold                              80,000
Ending inventory                        20,000
Operating income for 2002 under the variable (direct) costing method is:

ABSORPTION COSTING                                                DIRECT COSTING
Sales                                             \$       800,000 Sales                                                \$   800,000
Cost of Sales                                                         Variable Cost of Sales
Beginning Inventory                                                   Begin. Inventory
Production Costs                                                      Production Costs
1. Direct Materials                    300,000                        1. Direct Materials                  300,000
2. Direct Labor                        125,000                        2. Direct Labor                      125,000
Total                                  620,000                        Total                                500,000
Ending Inventory                      (124,000)                       Ending Inventory                     (100,000)
Cost of Sales                                             496,000     Var. Cost of Sales                                   400,000
Other Variable Costs:
80,000
Total Other Variable Costs........                    80,000

Gross Profit                                              304,000 Contribution Margin                                      320,000
Non-Manufacturing                                                 Fixed Manufacturing
Expenses                                                          and Other Fixed Expenses
Total Non-mfg. Expenses                                   150,000 Total Fixed Expenses                                     190,000
Net Income                                        \$       154,000 Net Income                                           \$   130,000
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1   B
2   C
Test Corporation has a job order cost system.
The following debits (credits) appeared in the general ledger
account work-in-process for the month of March:
March 1, balance                                       \$    12,000
March 31, direct materials                             \$    40,000
March 31, direct labor                                 \$    30,000
March 31, factory overhead                             \$    27,000
March 31, to finished goods                            \$ (100,000)
Test applies overhead to production at a predetermined
rate of 90% based on the direct-labor cost.
Job No. 232, the only job still in process at the end of March,
has been charged with factory overhead of \$2,250.
How much direct materials were charged to Job No. 232?
a. \$2,250 b. \$2,500 c. \$4,250 d. \$9,000
March 1, balance                                     \$       12,000
March 31, direct materials                                   40,000
March 31, direct labor                                       30,000
March 31, to finished goods                               (100,000)
Balance                                                       9,000
Labor Cost                                2,500
Labor and Overhead in Job 232                                 4,750
Materials cost in Job 232                            \$        4,250

3   B

4   A   For the calendar year, a manufacturer estimates that
Budgeted direct labor hours                             16,000              \$    4.00 Rate
Actual overhead for the year:                        \$100,000
Actual direct labor hours worked in year:               20,000
Actual direct labor hours in January:                    1,500                  1,500
Direct labor costs in January:                          \$8,000
How much overhead was applied to production in January?                         6,000
a. \$6,000 b. \$7,500 c. \$8,000 d. \$32,000 e. \$40,000

5   D   Journal entry for job order cost system

6   B   Company B
Total direct labor                        60,000
Labor in uncompleted jobs           \$     12,000
Overhead in uncompleted jobs        \$     16,000

7   D
8   B
9   A   To charge an amount to an account
means to debt the account for that amount.
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10 B Georgia Company incurred \$100,000 in overhead costs during the most recent
fiscal year. At year-end, before the application of overhead costs to ending
inventories, direct costs had been identified as follows:
Direct          Direct
Labor         Materials
Finished goods          \$20,000         \$80,000
Work in process         30,000         120,000
Overhead is applied at the rate of 75% of direct labor cost. At what
amount should the inventories be valued at year-end, respectively?
a. \$100,000 and \$250,000. b. \$115,000 and \$172,500.
c. \$140,000 and \$210,000. d. \$170,000 and \$200,000.
e. \$130,500 and \$157,000.
Finished goods          \$80,000         \$20,000           75%          15,000.00 \$115,000
Work in process         120,000          30,000           75%          22,500.00 \$172,500
11 E
12 B   Elliot Company manufactures tools to customer specifications.
The following data pertain to Job 1501 for February:
Direct materials                            \$4,200
used
Direct-labor                                   300
hours worked
Direct-labor rate                                 8
per hour hours
Machine                                        200
used factory
Applied                                          15
overhead rate manufacturing cost recorded on Job 1501 for February?
What is the total
Elliot Company                                                           Cost
Direct materials used                                \$       4,200 \$       4,200
Direct-labor hours worked                                      300
Direct-labor rate per hour                           \$         8.00
\$     2,400
Machine hours used                                             200
Applied factory overhead rate per machine hour       \$           15
\$     3,000
\$     9,600
13 D   X Company used an overhead rate during 2006 of \$2 per direct labor hour,
based on an estimate of 20,000 direct labor hours to be worked during the year.
Actual costs and activity during 2005 were.
Actual manufacturing overhead cost incurred                               \$38,000
Actual direct labor hours worked                                           18,000
The under -or overapplied overhead for 2005 would be:
a. \$1,000 underapplied. b. \$2,000 overapplied.
c. \$3,000 underapplied. d. \$2,000 underapplied.
Actual manufacturing overhead cost incurred                                        \$ 38,000
Actual direct labor hours worked                                           18,000
14 A   Blackwood uses a job order cost system and applies factory
overhead to production orders on the basis of direct-labor cost.
Overhead rates for 2006 are 200% for department A and 50% for department B.
Job 123, started and completed during 2006, was charged with the following costs:
Dept. A         Dept. B
Direct materials                       \$    25,000 \$          5,000
Direct labor                                      ? \$        30,000