Ch6 Raiborn SM

CHAPTER 6
PROCESS COSTING
EXERCISES
14. Each student will have a different answer. No solution provided.
15. a.
24,000 + 600,000 = 624,000 pounds
b. & c. Beginning WIP Inventory

Started
To account for
Completed
Ending WIP Inventory
24,000
600,000
624,000
(608,000)
16,000
Units started and completed = 608,000 24,000 = 584,000

Units
24,000
DM
24,000
CC
24,000
Beginning
WIP Inventory
Started &
584,000 584,000 584,000
completed
Ending WIP
16,000 16,000 10,400
Inventory
(65%)
EUP
624,000 624,000 618,400
16. a. & b. Beginning WIP
Inventory (30%)
Beginning
WIP
70,000
Inventory
70,000
136
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accessible website, in whole or in part.
Chapter 6
137
Started
To account
for
Started and
445,300 completed
Ending WIP
515,300 Inventory
Accounted for
Units
70,000
DM
70,000
357,500
87,800
515,300
CC
70,000
Beginning
WIP Inventory
Started &
357,500 357,500 357,500
completed
Ending WIP
87,800 87,800 30,730
Inventory
(35%)
EUP
515,300 515,300 458,230
Units
17.
a.
Beginning WIP Inventory
(40%)
Started
Units to account for
Started and completed
Transferred out
CC
10,000
350,000
360,000
10,000
334,00
0
344,00
0

(70%)
16,000
Units accounted for
360,00
10,00
0
334,0
00
11,20
0
355,2
138
Chapter 6
0
b.
00
CC
Beginning WIP Inventory (30%)

Started
Transferred out
(80%)
Units accounted for
Units
40,000
480,00
0
520,00
0
40,000
454,00
0
494,00
0
26,000
520,00
0
c.
(55%)
Started
40,00
0
454,0
00
20,80
0
514,8
00
CC
Units
15,00
0
405,0
00
420,0
00
Beginning WIP Invento- 15,000 15,000

ry
400,800 400,800
Transferred out
415,800
Chapter 6
139

(90%)
Units accounted for
d.
4,200
3,780
420,000 419,580
Units
10,800
CC

Started
359,100
369,900
Beginning WIP Invento- 10,800 10,800
ry
340,800 340,800
Transferred out
351,600
18,300
8,235
(45%)
Units accounted for
369,900 359,835
18. a.
ly
Work to be performed = 100% 45% = 55% for conversion costs on-
b. & c. Beginning WIP

Inventory
Started
24,000
600,000
Accountable for
Completed
624,000
(608,000)
16,000
Units started and completed = 608,000 24,000 = 584,000

DM
CC
140
Chapter 6

Started & completed
Ending WIP Inventory (65%)
EUP
19. a. & b. Beginning
WIP
Inventory
Started
Units
24,00
0
584,0
00
13,2
00
584,0 584,00
00
0
16,00
0
624,0
00
16,00 10,400
0
600,0 607,6
00
00
Beginning WIP
Inventory
70,000
70,00
0
445,3
00
To account 515,3
for
00
Started and
completed
Accounted for
357,50
0
87,800
515,30
0
DM
Started & completed
Units
70,000
357,500
357,50
0

EUP
87,800
515,300
CC
49,0
00
357,50
0
87,8 30,730
00
437,23
Chapter 6
141
445,30
0
20.
Units
a
.
(40%)
Started
(60%)
Transferred out
CC
10,00
0
350,0
00
360,0
00
10,00
0
334,0
00
344,0
00
6,000
16,00
0
360,0
00
11,20
0
351,2
00
Units
CC
334,0
00

Units accounted for
b.
(30%)
Started
40,000
480,000
520,000
142
Chapter 6

(70%)
Transferred out
(80%)
Units accounted for
c.
(55%)
Started
(45%)
Transferred out
(90%)
Units accounted for
40,000
28,000
454,000 454,000
494,000
26,000 20,800
520,000 502,800
Units
15,000
CC
405,000
420,000
15,000
6,750
400,800 400,800
415,800
4,200
3,780
420,000 411,330
Units
CC
d.
(35%)
Started
(65%)
Transferred out
10,800
359,100
369,900
10,800
7,020
340,800 340,800
351,600
18,300
8,235
Chapter 6
143
(45%)
Units accounted for
369,900 356,055
21. a. Beginning WIP

Beginning WIP
Inventory
15,000
Inventory
15,000
(100%; 60%;
75%)
Started
620,000 Started and
594,600
completed
To account for
635,000 Ending WIP Inventory
25,400
(100%; 35%;
60%)
Accounted for
635,000
Beginning WIP
Inventory
Started & completed
Equivalent units
Units
15,000
DM
DL
OH
15,000
15,000
15,000
594,600 594,600 594,600 594,600

25,400
25,400
8,890
15,240
635,000 635,000 618,490 624,840

Units
DM
DL
OH
b
.
Beginning WIP
Inventory
Started & completed
0
15,000
6,000
3,750
594,600 594,600
594,600 594,600
144
Chapter 6

Equivalent units
25,400
8,890
15,240
609,490
613,590
25,400
635,000 620,000
c. Equivalent units
(WA)
EUP in beginning
WIP
Inventory
Equivalent units
(FIFO)
624,840
635,000 618,490
(15,000) (9,000) (11,250)
613,590
620,000 609,490
22. a. Beginning WIP Inventory

180,000
Tons started
3,400,000
Total tons to account for
3,580,000
b. Total tons to account for
3,580,000
Tons in ending WIP Inventory
(165,000)
Tons transferred out
3,415,000
Tons in beginning WIP Inventory
(180,000)
Tons started & completed
(tons)
3,235,000
Material
Conversion
c.
Chapter 6
145
180,000
180,000
Started & completed

(100%, 40%)
WA EUP
3,235,000
3,235,000
165,000
66,000
3,481,000
3,580,000
Material
d.
(0%, 35%)
Started & completed
Conversion
63,000
3,235,0 3,235,00
00
0
(100%, 40%)
165,00
0
66,000
FIFO EUP
3,400,0 3,364,00
00
0
DM
CC
e.
WA EUP
3,580,000
3,481,000
Equivalent
units in BI
FIFO EUP
(180,000)
(117,000)
3,400,000
3,364,000
23. a. Beginning Inventory

Units started
21,600
146
Chapter 6
561,000
Units to account
for
b. Units to account
for
Units in BI
582,600
582,600
(21,600)
Units in EI
(13,700)
Units started &
completed
c.
547,300
DM
DL
OH
21,600 21,600 21,600
547,300 547,300 547,300
BI
Started &
completed
EI (75%,
3,425
1,370
25%,
10,275
10%)
EUP (WA) 579,175 572,325 570,270
d.
DM
3,240
DL
8,640
OH
11,880
BI (15%,
40%,
55%)
Started & 547,300 547,300 547,300
completed
EI (75%,
10,275
3,425
1,370
25%,
10%)
EUP
560,815 559,365 560,550
(FIFO)
Chapter 6
147
e
.
DM
EUP (WA)
Equivalent
units in BI
EUP (FIFO)
DL
OH
579,1 572,3
75
25
570,2
70
(18,36 (12,96 (9,720

0)
0)
)
559,3 560,5
560,8
65
50
15
24. a. DL cost = Conversion cost OH cost = $189,648 $85,200 =

$104,448
b.
DM
Beginning WIP
Inventory
Current period
Total costs
Divided by EUP
Cost per EUP
DL
Overhead
$ $ 19,504 $ 20,640
26,232
104,448
85,200
158,688
$184,920 $123,952 $105,840
53,600 48,800 42,000
$3.45
$2.54
$2.52
DM
25.
WA EUP
DL
48,800
Overhead
42,000
(8,000)
40,800
(7,920)
34,080
53,600
Beginning WIP
EUP
FIFO EUP
(7,200)
46,400
Current period
$104,448
cost
$158,688
$85,200
Divided by EUP
148
Chapter 6
Cost per EUP

DM
46,400
$3.42
DL
40,800
$2.56
OH
34,080
$2.50
Total
26
. a.
Beginning
$ $ 6,320
$ $ 35,940
WIP
19,600
10,020
Current
34,720
173,200
period
54,000
84,480
Total
$ $41,040
$ $209,140
73,600
94,500
b. Total
$
$
$ $209,140
costs
73,600 41,040 94,500
WA
EUP
160,000 152,000 150,000
Cost per
$0.46
$0.27
$0.63
$1.36
EUP
c. Current
costs
FIFO
EUP
Cost
per
EUP
$
54,000
$
34,720
$ $173,200
84,480
120,000 124,000 132,000

$0.45
$0.28
$0.64
$1.37
d. WA
160,000 152,000 150,000
EUP
FIFO
120,000 124,000 132,000
EUP
Beg. WIP 40,000 28,000 18,000
Chapter 6
149
EUP
Percent
complete
100%
70%
45%
2
7
.
Unit
s
Beginning WIP
Inventory
Beginning WIP
9,800 Inventory
Units started
Unit
s
81,500 Started & completed

Accounted for
Canister
s
Beginning WIP
Inventory
Started &
completed
EI
EUP
Other
Materials DL
9,80
0
76,9
00
4,60
0
91,3
00
OH
9,8
00
76,90
0
9,800
9,800
9,800
76,90
0
76,90
0
76,90
0
4,6
00
91,30
0
1,840
920
460
88,54
0
87,62
0
87,16
0
150
Chapter 6
Costs:
Beginning
WIP
Current period
Total cost
Divided by
EUP
Cost per
EUP
Canisters
$
6,535
61,94
0
$68,4
75
91,30
0
$0.
75
Other
Materials
$
6,174
86,79
3
$92,9
67
88,54
0
$1.05
DL
OH
Total
$
5,59
4
$
1,070
$
19,37
3
82,0
26
$87,
620
87,620
160,1
76
$161,
246
87,16
0
$1.85
390,9
35
$410,
308
$1.0
0
$4.65
Uni
ts
28.
a
.
Units started
Units started & completed
Total units completed
400
3,8
00
4,2
00
400
3,5
00
3,9
00
Chapter 6
151

300
4,2
00
Units accounted for

Units started &
completed
EUP
b.
Mate- Converrial
sion
400
400
Material
Beginning
WIP
Current
costs
Total cost
Divided
by
EUP
(WA)
Cost per
EUP
$ 4,349
3,5
00
3,500
180
120
4,0
20
4,080
ConverTotal
sion
$ 4,658
$ 9,007
60,775
46,750
107,525
$65,124
4,020
$51,408
4,080
$116,532
$16.20
$12.60
$28.80
152
Chapter 6
2
9
.
Beginning
WIP
Inventory
Units started
Uni
ts
Unit
s
Beginning WIP
9,800
Inventory
9,80
0
76,9
00
81,50 Started & com0

pleted
91,30 Ending WIP In0
ventory
4,60
0
91,3
00
Accounted for
Other
Materials
Canisters
Beginning
WIP
Inventory
Started &
completed
EI
EUP
Costs:
Current
period
DL
OH
3,920
5,880
7,840
76,900
76,900
76,900
76,900
4,600
81,500
1,840
82,660
920
83,700
460
85,200
Other
Can- MateDL
isters
rials
$61,940 $86,79
3 $82,02
6
OH
Total
$160,1
76 $390,93
5
Chapter 6
153
Divided by
EUP
81,50 82,660 83,700

0
$0.76
$1.0
$0.9
5
8
Cost per
EUP
85,200
$1.8
8
$4.67
Unit
s
30.
a
.
Units started
Units started & completed
Total units completed
40
0
3,80
0
4,20
0
40
0
3,50
0
3,90
0

300
4,20
0
Units accounted for
Beginning WIP
Inventory
Units started &
completed
Ending WIP
Inventory
EUP
Material
120
Conversion
60
3,500
3,500
120
180
3,740
3,740
154
Chapter 6
b.
Current
costs
Divided by
EUP
(FIFO)
Cost per
EUP
Material
$60,775
Conversion
Total
$46,750
$107,525
3,740
3,740
$16.25
$12.50
$28.75
31. a.
390,000 ($7.50 + $9.00 + $10.20) = 390,000 $26.70 =
$10,413,000
b. DM: $7.50 (55,500
100%)
DL: $9.00 (55,500
30%)
OH: $10.20 (55,500
25%)
Total of ending inventory
$416,250
149,850
141,525
$707,625
Chapter 6
155
c. Cost of goods transferred out

$10,413,
000
Ending WIP
707,625
Total cost to account $11,120,
for
625
32. a. BI cost
$
458,482.
00
Cost to complete:
DM (42,600 20%
$10.74)
DL (42,600 55%
$13.88)
OH (42,600 70%
$24.80)
$
91,504.
80
325,208
.40
739,536
.00
Total cost of BI transferred
1,156,24
9.20
$1,614,7
31.20
b. Goods started and completed = 1,570,000 42,600 = 1,527,400

Total FIFO cost per EUP = $10.74 + $13.88 + $24.80 = $49.42
Cost of goods S&C
(1,527,400 $49.42)
Total cost of goods transferred
$
1,614,731.20
75,484,108.00
$
77,098,839.20
156
Chapter 6
c.
Cost of ending inventory:

DM (28,400 35%
$10.74)
DL (28,400 15%
$13.88)
OH (28,400 25%
$24.80)
Total cost of EI
d. Total cost to account

for
Cost of goods transferred
Cost of ending inventory
Total cost to account
for
$106,755.60
59,128.80
176,080.00
$341,964.40
$77,098,839.20
341,964.40
$77,440,080.60
33. a. Because direct material (other than packaging) is 100 percent complete
at the
start of production, the number of EUP shown for direct material is also the
number of units in BI.
Material (54,000 54,000) = 100%
Packaging (0 54,000) = 0%
Labor (16,200 54,000) = 30%
Overhead (18,900 54,000) = 35%
b. Beginning WIP Inventory:
DM (other than packaging)
DL
$789,0
40
91,8
62
Chapter 6
157
Overhead
145,90
8
Complete beginning WIP
Inventory:
Packaging (54,000
100% $3.00)
DL (54,000 70%
$10.84)
Overhead (54,000
65% $7.68)
$1,026,
810
$162,0
00
409,75
2
269,56
8
Total cost to account for
841,320
$1,868,13
0
c. # of units S&C = Units completed Units in BI

# of units S&C = 370,000 54,000 = 316,000
Cost of units S&C = 316,000 ($29.50 + $3.00 + $10.84 + $7.68) =
316,000 $51.02 = $16,122,320
d. DM (other than packaging)
(12,000 100% $29.50)
Labor (12,000 30% $10.84)
Overhead (12,000 55% $7.68)
Total
34. a. Beginning
WIP
Started
$354,000
39,024
50,688
$443,712
1,000
8,400
158
Chapter 6
Units to account
for
9,400
Units
Beginning WIP
Started & completed
Ending WIP
Units accounted
for
1,000
8,100
Material
1,000
8,100
Conversion
1,000
8,100
300
9,400
240
9,340
210
9,310
Total
Material Conversion
Beginning $ 5,006.30 $ 4,133.20 $ 873.10
WIP
Current
86,354.00 62,928.00 23,426.00
period
Total
$91,360.30 $67,061.20 $24,299.10
costs
EUP
9,340
9,310
Cost per
$9.79
$7.18
$2.61
EUP
b. Cost transferred out = 9,100 $9.79 = $89,089
c. Ending WIP
DM (240
$1,723.20
$7.18)
CC (210
548.10
$2.61)
Total
$2,271.30
d.
Units
Mate- Conversion
rial
Chapter 6
159
Complete BI
(40%, 70%)
Started & completed
Ending WIP
1,000
700
400
8,100
8,100
8,100
300
210
240
Units accounted
for
9,400
Total
$ 5,006.30
9,010
8,740
Material
Conversion
Beginning WIP
Current
86,354.00 $62,928.00 $23,426.00
Period
Total
$91,360.30
costs
EUP
8,740
9,010
Cost per
$9.80
$7.20
$2.60
EUP
e. Transferred out:
Costs in BI
Cost to complete BI
DM (400 $7.20)
CC (700 $2.60)
Started & completed
(8,100 $9.80)
$5,006.30
2,880.00
1,820.00 $ 9,706.30
79,380.00
160
Chapter 6
Total cost transferred

f. Ending WIP
DM (240 $7.20)
CC (210 $2.60)
Total
g.
$89,086.30
$1,728
546
$2,274
WIP Inventory
RM Inventory
62,928
WIP Inventory
Wages Payable (or
Cash)
13,070
WIP Inventory
Factory Overhead
Control
10,356
FG Inventory
WIP Inventory
89,089
62,928
13,070
10,356
35. a. Ending WIP Invento- EUP

ry
Transferred in (4,000 4,000
100%)
Material (4,000 0%)
0
Conversion (4,000
3,200
80%)
Total cost
89,089
Cost per Total
EUP
Cost
$10 $40,000
2
6
0
19,200
$18
$59,200
b. Transferred out: 25,000 ($10 + $2 + $6) = 25,000 $18 = $450,000

c.Finished Goods In450,000
ven
Chapter 6
161
tory
WIP Inventory
Casing Dept.
450,000
36. a. Beginning
Beginning WIP
WIP
5,000
Inventory
Inventory
Transferred in 80,000 Started & completed
Units to ac85,000 Ending WIP Incount for
ventory
Units accounted
for
5,000
74,000
6,000
85,000
Units
Beginning
WIP Inventory
Started &
completed
Ending
WIP Inventory
EUP (WA)
Trans. Material Conversion

In
5,000 5,000
5,000
5,000
74,000 74,000
74,000
74,000
6,000
4,800
85,000 85,000
79,000
83,800
6,000
162
Chapter 6
b. Costs
Total

In
8,643 $ 7,550 $
0 $ 1,093
Beginning $
WIP Inventory
Current
104,261 80,000 10,270
13,991
period
Total cost $112,904 $87,550 $10,270 $15,084
to account for
Divided
83,800
by EUP
85,000 79,000
Cost per
$1.34
$1.03
$0.13
$0.18
EUP
c.
79,000 $1.34 = $105,860
d. Transferred in (6,000
$1.03)
Conversion (4,800
$0.18)
Total ending WIP cost
37. a. Beginning
WIP
Inventory
Transferred in
$6,180
864
$7,044
Beginning WIP
5,000
Inventory
Units accounted
for
Units
Ma-
5,000
74,000
6,000
85,000
Conver-
Chapter 6
163
Tran.
In
Complete BI
Started & completed
EUP (WA)
b. Costs
5,000
74,00
0
0
74,00
0
6,000
85,00
0
6,000
80,00
0
Total Trans.
In
Beginning WIP
Inventory
sion
5,000 3,500
74,00 74,000
0
4,800
0
79,00 82,300
0
Mate- Converrial
sion
$
8,643
Current period
Divided by EUP
terial
104,2
61
$112,
904
Cost per EUP
$80,0
00
$10,2 $13,99
70
1
80,00
0
$1.00
79,00 82,300
0
$0.13 $0.17
$1.30
c. Beginning WIP costs $8,643
Cost to complete:
650
DM (5,000 $0.13)
595 $ 9,888
CC (3,500 $0.17)
96,200
(74,000 $1.30)
Cost transferred out
$106,088
164
Chapter 6
d.
Transferred $6,000
in (6,000
$1.00)
Conversion (4,800 $0.17)
816
Total ending WIP cost
$6,816
38. a. Fabrication:
Beginning
WIP
Inventory
Started
Beginning WIP
5,000
Inventory
5,000

Units accounted
for
33,200
6,800
45,000
Units Material Conversion

5,000 5,000
5,000
Beginning WIP
Inventory
Started & com- 33,200 33,200
pleted
Ending WIP
6,800 6,800
Inventory
EUP (WA)
45,000 45,000
33,200
4,080
42,280
Units started in Assembly = Units transferred out of Fabrication = 5,000 +

33,200 = 38,200
Assembly:
Chapter 6
165
Beginning
WIP
Inventory
Started
Beginning WIP
2,000
Inventory
2,000

Units accounted
for
Units
32,100
6,100
40,200
Material Conversion
Trans.
In
2,000 2,000
Beginning
WIP Inventory
Started & 32,100 32,100
completed
Ending
6,100 6,100
WIP Inventory
EUP (WA) 40,200 40,200
2,000
2,000
32,100
32,100
915
34,100
35,015
b. Fabrication:
Unit
s
Beginning WIP
Inventory
Mate- Converrial
sion
5,00
0 3,750
0
33,2 33,20 33,20
00
0
0
Started & completed

6,80 6,800 4,080
0
166
Chapter 6
EUP (FIFO)
45,0 40,00 41,03

00
0
0
Assembly:
Units

In
2,000
0
2,000
1,300
Beginning
WIP Inventory
Started & 32,100 32,100
completed
Ending
6,100 6,100
WIP Inventory
EUP
40,200 38,200
(FIFO)
Inventory
Started
Total

EUP
32,100
32,100
915
34,100
34,315
0 Started & com- 2,400

pleted
2,500 Ending WIP
100
Inventory
2,500 Units accounted 2,500
for
Material Labor Overhead
2,400 2,400
2,400
100
25
2,500 2,425
35
2,435
Chapter 6
167
Cost of goods
transferred out:
Direct material:
Dacron (250
$10)
Denim (480
$8)
Cotton (1,670
$12)
Direct labor
(2,400 $9)
Overhead (2,400
$6)
Total
b. Cost of ending WIP Inventory:
Direct material:
Dacron (50 $10)
Denim (20 $8)
Cotton (30 $12)
Direct labor (25 $9)
Overhead (35 $6)
Total
$ 2,500
3,840
20,040
$26,380
21,600
14,400
$62,380
$500
160
360
$1,02
0
225
210
$1,45
168
Chapter 6
5
Inventory
Started
Total
0
130
130

EUP
Cost of goods completed:
Direct material:
Glass (65 $24)
Metal (12 $15)
Natural (28 $7)
Conversion (105
$23)
Total
Started & completed

Units accounted
for
105
25
130
Material Conversion
105
105
25
15
130
120
$1,560
180
196
b. Cost of ending WIP Inventory:

Direct material:
Glass (5 $24)
$120
Metal (13 $15)
195
Natural (7 $7)
49
Conversion (25 60%
$23)
$1,936
2,415
$4,351
$364
345
Chapter 6
169
Total
$709
41. a. Beginning WIP Inventory

Started
Started & completed
Units accounted for
12,000
310,000
322,000
12,000
302,000
8,000
322,000
Ingred. Packaging Conversion
0
12,000
3,600

Started and completed 302,000
Ending WIP Invento8,000
ry
EUP
310,000
302,000
0
302,000
4,800
314,000
310,400
b. Standard cost of goods completed: 314,000 $0.67 = $210,380

c.
Cost of ending WIP

Inventory:
Ingredients (8,000
$0.25)
Conversion (4,800
$0.37)
Total
42. a. DM (180,000 100%

$0.10)
$2,000
1,776
$3,776
$18,000
170
Chapter 6
CC (180,000 45%
$0.11)
Total cost in BI
8,910
$26,910
b. DM (144,000 100%
$0.10)
CC (144,000 65%
$0.11)
Total cost in EI
$14,400
c.
180,000

Started
10,296
$24,696
1,300,000
1,480,000
Total units to account for 1,480,000

(144,000)
Units transferred out
1,336,000
Cost transferred out = 1,336,000 $0.21 = $280,560
d.
Material
To complete BI
(units)
0
Started & com- 1,156,000
pleted
Ending inventory
144,000
Equivalent units
(FIFO)
1,300,000
Multiply by unit
cost
0.10
La-
OH
bor
99,000
99,000
1,156,000
1,156,000
93,600
93,600
1,348,600
1,348,600
0.02
0.09
Chapter 6
171
Standard cost of
period
Actual cost of
period
Variance
$
130,000
(184,000)
$
(54,000) U
26,972
(27,126)
$
(154) U
$
121,374
(118,500)
$
2,874 F
e.
Work in Process
130,000
Inventory
Material Variance
54,000
Raw Material In184,000
ventory
Work in Process Inventory
Labor Variance
Wages Payable (or
Cash)
26,972
Work in Process Inventory

Manufacturing
Overhead
Overapplied Overhead
121,374
43. a
& b.
154
27,126
118,500
2,874
Units Mate- Conrial version
Beginning inventory
(60%; 70%)
16,00
0
Gallons started
172
Chapter 6
360,0
00
Gallons to account for
376,0
00
Beginning inventory
completed
Gallons started and
completed
6,400
4,800
16,00
0
349,2 349,20
349,2
00
0
00
Total gallons transferred

365,2
00
Ending inventory (40%;
20%)
Normal spoilage*
3,200
1,600
8,000
2,800
Gallons accounted for

(FIFO EUP)
0
0
358,8 355,60
376,0
00
0
00
*All spoilage is normal; the 2,800 gallons is less than 0.02 360,000.
44. Normal spoilage allowed = 120,000 pounds 0.08 = 9,600 pounds
Units
Beginning inventory
Pounds started
Pounds to account for
Material
Conversion
36,000
120,000
156,000
Chapter 6
173
Beginning WIP 36,000

0
Inventory
Started and
90,000 90,000
completed
Ending WIP
21,600 21,600
Inventory
Normal spoil8,400
0
age
Pounds ac156,000 111,600
counted for
(FIFO)
Total
Beginning inventory cost
Current costs
Total costs
Divided by
EUP
Cost per EUP
19,800
90,000
3,240
0
113,040
Material
Conversion
$
39,060
$ 33,912
$24,800
72,972
$97,772
113,040
111,600
$0.65
$0.35
$0.30
Cost Assignment
Transferred out:
Beginning WIP Inventory cost $24,800
Conversion cost to complete
5,940
(19,800 $0.30)
Total cost of beginning inven- $30,740
tory
Started & completed (90,000 58,500 $89,240
$0.65)
Ending WIP Inventory:
174
Chapter 6
Material (21,600 $0.35)

Conversion (3,240 $0.30)
Total cost accounted for
45. a.
$ 7,560
972
8,532
$97,772
Units to account for = 20,000 + 120,000 = 140,000 units
Chapter 6
175
b. Units to account for

Units completed
Units in ending WIP
Inventory
Spoiled units
140,000
(116,400)
(16,000)
7,600
Normal loss = 120,000 0.03 = 3,600 units

Abnormal loss = 7,600 3,600 = 4,000 units
c.
Units
Material
Conversion
Transferred out 116,400 116,400

Ending inven16,000 16,000
tory
Normal spoil3,600
0
age
Abnormal
4,000
4,000
spoilage
Units account- 140,000 136,400
ed for
116,400
3,200
Beginning inventory
Units started
20,000
120,000
140,000
0
4,000
123,600
The normal spoilage is considered continuous because it is shrinkage.

176
Chapter 6
d. Using the method of neglect, the cost of normal spoilage is automatically

spread among all of the remaining units produced (including the abnormal
spoilage).
e. Cost of abnormal spoilage is written off as a period cost (loss).
Units
Material
Conversion
BI completed
40,000
0
Started & com- 405,000 405,000
pleted*
Ending inven10,000 10,000
tory
Normal spoil2,000
0
age
Abnormal
8,000
8,000
spoilage
EUP (FIFO)
465,000 423,000
6,000
405,000
46.
a.
Beginning inventory
Pounds started
Pounds to account for
40,000
425,000
465,000
2,500
0
5,600
419,100
*Amount necessary to balance the calculation.

The normal spoilage is treated under the method of neglect.
b. Ending inventory:
Material (10,000 $0.08) $ 800
Conversion (2,500
$0.15)
375
Total cost
$1,175
Chapter 6
177
c. Abnormal spoilage:
Material (8,000 $0.08)
Conversion (5,600
$0.15)
Total cost (treated as a
loss)
$ 640
840
$1,480
178
Chapter 6
PROBLEMS
Units
47.
a.
Material
Conversion
Beginning
200,000
WIP Inventory
Units start- 1,000,000
ed
Units to ac- 1,200,000
count for
Beginning
200,000 200,000
WIP Inventory
Started &
700,000 700,000
completed
Ending WIP 300,000 300,000
Inventory
Units ac1,200,000 1,200,000
counted for
200,000
700,000
210,000
1,110,000
b. BI conversion cost = $671,875 1.6 =

$1,075,000
Current period conversion cost = $3,976,250
1.6 = $6,362,000
Cost in
BI
Current
cost
Total
Total
Material Conversion
$ 2,275,000 $1,200,000 $1,075,000
14,162,000
7,800,000
6,362,000
$16,437,000 $9,000,000 $7,437,000

Chapter 6
179
cost to
account
for
Divided
by EUP
Cost per
EUP
$14.20
1,200,000
$7.50
c.Transferred out
1,110,000
$6.70
$12,780,000
(900,
000
$14.2
0)
Ending inventory:
Material (300,000 $2,250,000
$7.50)
Conversion
1,407,000
3,657,000
(210,000 $6.70)
$16,437,000
48. a.
(1)
Material
BI units
Units started &
completed
EI unit
EUP
(2)
BI
Labor
Overhead
100,000 100,000 100,000
1,100,000 1,100,000 1,100,000
400,000 240,000 240,000
1,600,000 1,440,000 1,440,000
Total
Materi- Labor
Overal
head
$
$
$
$
1,115,5 750,000 215,000 150,500
00
Current
180
Chapter 6
12,628, 5,650,0 4,105,0 2,873,5

500
00
00
00
Total
$13,744 $6,400, $4,320, $3,024,
,000
000
000
000
Divided by
EUP
1,600,0 1,440,0 1,440,0
00
00
00
Cost per
$9.10
$4.00
$3.00
$2.10
EUP
(3) Beginning FG Inventory
CGM (1,200,000
$9.10)
Goods available for
sale
Ending FG Inventory
CGS
0
10,920,000
$10,920,000
(124,000)
$10,796,000
b. Finished Goods 10,920,000

Inventory
Work in Pro10,920,000
cess Inventory
Cost of Goods
10,796,000
Sold
Finished
10,796,000
Goods Inventory
49. a. Gallons trans242,000
ferred out
Gallons in ending
23,500
WIP
Total gallons to
265,500
account for
Chapter 6
181
Gallons in beginning WIP

Gallons started
(36,000)
229,500
b.
Material
Beginning WIP In36,000

ventory
Started & complet- 206,000
ed
Ending WIP Inven- 23,500
tory
WA EUP
265,500
Material
BI costs
$
183,510
Labor
Overhead
36,000 36,000
206,000 206,00
0
3,525
2,350
245,525 244,35
0
Labor
Overhead
$
$
98,526 78,273
Current costs
Total cost
EUPFIFO
Cost per EUP
1,136,0
25
$1,319,
535
265,500
$4.97
451,450 723,19
5
$ $801,4
549,976
68
245,525 244,35
0
$2.24 $3.28
Total cost to account for = $1,319,535 + $549,976 + $801,468 =

$2,670,979
Transferred out = 242,000 ($4.97 + $2.24 + $3.28) = 242,000 $10.49 =
$2,538,580
182
Chapter 6
c.
DM (23,500
$
4
.
9
7
)
DL (3,525 $2.24)
OH (2,350
$3.28)
Total EI
50.
a.
$116,795
7,896
7,708
$132,399
Delacroix Co.
Cost of Production Report
For the Month of March 2013
Production Data
Beginning Inventory
Units started
Units to account
for
Beginning WIP
Inventory
Started & completed
Units accounted
for
Units Material Labor Overhead

800
11,400
12,200
800
11,00
0
400
12,20
0
800
800
800
11,00 11,00 11,000

0
0
320
280
360
12,08 12,16 12,120
0
0
Chapter 6
183
Cost Data
Total
Beginning WIP
Inventory
Mate- Labor Overrial

head
$
$
$
$
21,13 6,748 8,680 5,710
8
Current costs
Divided by EUP
Cost per EUP
505,4
22
$526,
560
$43.5
0
Cost Assignment
Transferred out (11,800
units $43.50)
Ending Inventory:
Material (280 $22)
Labor (360 $5.50)
Overhead (320 $16)
259,0
12
$265,
760
12,08
0
$22.0
0
WIP Inventory
188,21
0
$193,9
20
12,120
$16.00
$513,3
00
$6,160
1,980
5,120
13,260
$526,5
60

b. Raw Material Inventory
Accounts Payable (for
RM purchases)
58,20
0
$66,8
80
12,16
0
$5.50
XXX
XXX
259,01
184
Chapter 6
2
Raw Material Inventory
259,01
2
WIP Inventory
Wages Payable
58,200
WIP Inventory
188,21
0
58,200
Factory Overhead Control

Various accounts (for actual OH)
Finished Goods Inventory
188,21
0
XXX
XXX
513,30
0
WIP Inventory
Cost of Goods Sold (for the
cost of sales)
c Raw Material Inventory
.
Beg. XX Is259,01
X sued
2
Purc XX
h.
X
513,30
0
XXX
XXX
WIP Inventory
Be 21,13 CG
g.
8 M
D
259,0
M
12
DL 58,20
0
513,3
00
Chapter 6
185
OH 188,2
10
En 13,26
d.
0
End. XX
X
Wages Payable
DL
58,20
0

Actual
Applied
XXX
188,210
FG Inventory
Be XXX C
XXX
g.
GS
CG 513,3
M
00
En XXX
d.
Accounts Payable
RM Purch.
XXX
Cost of Goods Sold

CGS
XXX
51.
a.
Beginning WIP
Inventory
Units started
20,000
321,600
186
Chapter 6
Units to account
for
Beginning WIP
Inventory
Started & completed
Units accounted
for
341,600
20,000
12,000
305,600 305,600
305,600
16,000
b.
16,000
12,800
341,600 321,600
330,400
Total
Material Conversion
53,580
Beginning
$
WIP cost
Current cost
1,055,808 $778,272
Total cost to $1,109,388
account for
Divided by
EUP
321,600
Cost per EUP
$3.26
$2.42
c.Beginning WIP
$277,536
330,400
$0.84
$53,580
I
n
v
e
n
t
o
r
y
Complete WIP
CC (12,000
$0.84)
10,080 $
63,660
Chapter 6
187
Started & completed

(305,600
$3.26)
Cost transferred
out
996,256
$1,059,916
d.
DM (16,000 $2.42)
CC (12,800 $0.84)
Total cost of ending WIP
Inventory
52. a. Gallons transferred out

Gallons in ending
WIP
Total gallons to account for
Gallons in beginning WIP
Gallons started
$38,720
10,752
$49,472
242,000
23,500
265,500
(36,000)
229,500
b.
Material
Beginning
WIP Inventory
Started &
completed
Ending WIP
Inventory
EUPFIFO
Labor
0
16,200
Overhead
10,800
206,000
206,000
206,000
23,500
3,525
2,350
229,500
225,725
219,150
188
Chapter 6
Material
Labor Overhead
Current costs $1,136,025 $451,450 $723,195
EUPFIFO 229,500
225,725 219,150
Cost per
$4.95
$2.00
$3.30
EUP
Beginning WIP ($183,510 + $98,526 + $78,273)
Complete beginning WIP Inventory
DL (16,200 $2.00) $32,400
CC (10,800 $3.30)
35,640
68,040
Total cost of BI trans$428,349
ferred
$360,309
c. Total cost per EUP = $4.95 + $2.00 + $3.30 = $10.25

$ 428,349
Started & completed (206,000 2,111,500
$10.25)
Total cost of goods completed
$2,539,849
d.
e.
$2,539,849 242,000 = $10.50 (rounded)

DM (23,500 $116,325
$
4
.
9
5
)
DL (3,525
7,050
$2.00)
Chapter 6
189
OH (2,350
$3.30)
Total EI
53. a.
7,755
$131,130
Delacroix Co.
For the Month of March 2013
Production Data:
Units
Beginning in800
ventory
Units started
11,400
Units to ac12,200
count for
Beginning
WIP Inventory
Started &
completed
Ending
inventory
Units accounted
for
Material
Labor
Overhead
800
440
280
480
11,000
11,000
11,000
11,000
400
280
360
320
12,200
11,720
11,640
11,800
Cost DaTotal
Materi- Labor Overhead
ta:
al
Cost in BI $ 21,138
Current
505,422 $259,012 $58,200 $188,210
costs
Total cost $526,560
190
Chapter 6
to account for
Divided
by EUP
Cost per
EUP
11,720
$43.05
$22.10
11,800
11,640
$5.00
$15.95
Cost Assignment
Transferred out:
Beginning WIP In- $21,138
ventory
Cost to complete:
Material (440
9,724
$22.10)
Labor (280 $5.00)
1,400
Overhead (480
7,656 $ 39,918
$15.95)
Started & completed
473,550
(11,000 $43.05)
Material (280
$
$22.10)
6,188
Labor (360 $5.00)
1,800
Overhead (320
13,092
$15.95)
5,104
Total cost accounted
$526,560
for
b. WA and FIFO process costing differ because of how the work performed
in the prior period on beginning WIP Inventory is treated. WA includes
such work in the determination of equivalent units of production, whereas
FIFO does not. In addition, because WA includes the beginning inventory
work in EUP, this method also includes the cost of beginning inventory in
the determination of cost per EUP (whereas FIFO excludes it). These two
Chapter 6
191
items cause the cost per EUP to differ and, thus, the cost of the goods
transferred out as well as the cost of ending inventory.
54. a.
Phunky Phingers
Cost of Production Report (WA Method)
For the Month of November 2013
Production Data:
Beginning WIP
Inventory
Units started
Units to account
for
Units
12,000
90,000
102,000
Units
Mate- LaOH
rial
bor
12,000 12,000 12,000
Beginning WIP 12,000

Inventory
Started & com- 70,000 70,000 70,000 70,000
pleted
Ending WIP
20,000 20,000 8,000 16,000
Inventory
Units account- 102,000 102,000 90,000 98,000
ed for
Cost Data:
Total
Beginning
WIP Inventory
Current
costs
Cost to account for
$
19,564
Material Labor
OH
$
$ 1,908 $ 4,636
13,020
45,792
70,824
206,616 90,000
$
$47,700 $75,460
226,180 $103,020
192
Chapter 6
Divided by
EUP
Cost per
EUP
102,000
$2.31
90,000
$0.53
98,000
$0.77
$1.01
Cost Assignment:
$189,420
$2.31)
Ending inventory:
Material (20,000
$20,200
$1.01)
Direct labor (8,000
4,240
$0.53)
Overhead (16,000
12,320
36,760
$0.77)
$226,180
for
b.
Phunky Phingers
Cost of Production Report (FIFO Method)
For the Month of November 2013
Production Data:
Units
12,000
Beginning WIP
Inventory
Units started
90,000
Units to account 102,000
for
Units
Mate- Labor Overrial

head
Chapter 6
193
Beginning WIP
Inventory
Started & completed
Units accounted
for
12,0
0
00
70,0 70,000
00
20,000
20,00
0
102,0 90,000
00
8,400 4,800
70,00 70,00
0
0
16,00
8,000
0
86,40 90,80
0
0
Cost Data:
Total
Beginning WIP
Inventory
Current costs
Cost to account
for
Labor
Overhead
$
19,564
$90,00
206,61
0
6
$45,7 $70,8
92
24
$226,1
80
Divided by EUP
Cost per EUP
Material
90,000
$2.31
Cost Assignment:
Transferred out:
Complete beginning WIP
DL (8,400 $0.53)
$1.00
86,40 90,80
0
0
$0.53 $0.78
$19,564
4,452
194
Chapter 6
OH (4,800 $0.78)
$ 27,760
3,744
Started & completed

161,700
(70,000 $2.31)
Material (20,000 $1.00)
$20,000
Direct labor (8,000 $0.53)
4,240
Overhead (16,000 $0.78)
12,480
36,720
$226,180
55. a.
Springtime Paints
For Month Ended May 31, XXXX
Production da- Units

ta:
Beginning WIP 4,000
Inventory
Units started
21,000
Units to ac25,000
count for
DIRECT
MATERIALS
Units Chemi- Cans Concals
version
Beginning WIP
Inventory
Started & completed
4,00 4,000
0
16,0 16,000
00
5,000
5,00
0
4,000
4,000
16,00
0
16,00
0
4,000
Chapter 6
195
Units accounted
for
Cost data:
Beginning inventory
25,0 25,000
00
20,00
0
24,00
0
DIRECT
MATERIALS
Total Chemi- Cans Concals
version
$
$
$
$
51,90 45,100
0 6,800
0
Current costs
Cost to account
for
Divided by
EUP
281,9 228,90
00
0
$333, $274,0
800
00
25,000
Cost per equivalent unit
$13. $10.96
51
7,000
$
7,000
20,00
0
$0.35
46,00
0
$52,8
00
24,00
0
$2.20
Cost assignment:
Transferred out
$270,200
($13.51 20,000)
Ending WIP
Chemicals (5,000 $54,800
196
Chapter 6
$10.96)
Conversion (4,000
$2.20)
for
b.
8,800
63,600
$333,800
Springtime Paints
For Month Ended May 31, XXXX
Production data: Units

Beginning WIP
Inventory
4,000
Units started
21,000
for
DIRECT MATERIALS
Chem- Cans
ConUnit icals
version
s
Beginning WIP
Inventory
Started & completed
Units accounted
for
4,000
16,00
0
5,000
25,00
0
16,00
0
4,000
16,00
0
3,000
16,00
0
5,000
21,00
0
0
20,00
0
4,000
23,00
0
Cost data:
DIRECT MATERIALS
Total Chem- Cans Conicals
version
Chapter 6
197
Beginning inventory
$
51,90
0
Current costs
Cost to account
for
Divided by EUP
Cost per equivalent unit
281,9
00
$333,
800
$13.2
5
Cost assignment:
Transferred out
Complete beginning
WIP
Cans (4,000
$0.35)
Conversion (3,000
$2.00)
Started & completed
(16,000 $13.25)
Chemicals (5,000
$10.90)
Conversion (4,000
$2.00)
$228,
900
$
7,000
$46,0
00
21,00
0
$10.9
0
20,00
0
$0.35
23,00
0
$2.00
$ 51,900
1,400
6,000
$ 59,300
$271,3
212,0
00
00
$ 54,500
8,000
62,500
198
Chapter 6
$333,8
00
c. The WA calculations are easier to make, but this method tends to obscure
current period costs because the cost per EUP includes both current costs
and prior costs that were in beginning inventory. This method is most appropriate when conversion costs, inventory levels, and raw material prices
are stable.
The FIFO method is based on current period work only. This method is
most appropriate when conversion costs, inventory levels, or raw material
prices fluctuate. This method should also be appropriate when accuracy in
current equivalent unit costs is important or when a standard cost system is
used.
(CMA adapted)
56.
Octavia Corp. Curing Dept.

For the Month Ended May 31, 2013
Production
Data:
Units
DM
DL
OH
TI
Beginning
WIP
8,000
Inventory
Units started 40,000
Units to ac- 48,000
count for
Beginning
WIP
Inventory
8,000
8,000
8,000 8,000
8,000
Chapter 6
199
Started &
36,000
36,000
completed
36,000 36,000
36,000
Ending WIP
Inventory 4,000
2,000
4,000 2,800
1,600
Units ac48,000
46,000
counted for
48,000 46,800
45,600
Cost Data:
Total
TI
DM
DL
OH
Beginning
WIP
$ 278,872 $ 200,160 $ 42,504 $ 31,360 $ 4,848
Inventory
Current
2,739,020 1,620,000 333,300 517,880 267,840
costs
Cost to
ac$3,017,892 $1,820,160 $375,804 $549,240 $272,688
count
for
Divided
by
48,000 46,800 46,000 45,600
EUP
Cost per
$63,87
$37.92
$8.03
$11.94
$5.98
EUP
Cost Assignment:
Transferred out
$2,810,280
(44,000 $63.87)
TI (4,000 $37.92) $151,680
DM (2,800 $8.03)
22,484
200
Chapter 6
DL (2,000
$11.94)
OH (1,600 $5.98)
for
23,880
9,568
207,612
$3,017,892
(CMA adapted)
Chapter 6
57.
201
Octavia Corp. Curing Dept.

Production
Data:
Units
TI
DM
DL
OH
Beginning
WIP
8,000
Inventory
Units start- 40,000
ed
Units to ac- 48,000
count for
Beginning
WIP
8,000
0 1,600 4,800 5,600
Inventory
Started &
complet- 36,000 36,000 36,000 36,000 36,000
ed
Ending
WIP
4,000 4,000 2,800 2,000 1,600
Inventory
Units ac40,000 40,400 42,800 43,200
counted for
Cost Data:
Total
TI
DM
DL
OH
Beginning
202
Chapter 6
WIP
Inventory
Current
costs
$
278,87
2
$1,620,
2,739,0
000
20
Cost to
account $3,017,
for
892
Divided
by EUP
Cost per
EUP
40,000
$67.05 $40.50
$333,
300
$517,
880
$267,
840
40,40
0
$8.25
42,80
0
$12.1
0
43,20
0
$6.20
Cost Assignment:
Transferred out:
Beginning WIP In$ 278,872
ventory
Complete beginning
inventory:
DM (1,600
$ 13,200
$8.25)
DL (4,800
58,080
$12.10)
OH (5,600
34,720
106,000
$6.20)
Started & completed
2,413,800
(36,000 $67.05)
Total cost of transferred
$2,798,672
out
TI (4,000
$162,000
Chapter 6
203
$40.50)
DM (2,800
$8.25)
DL (2,000
$12.10)
OH (1,600
$6.20)
for
23,100
24,200
9,920
219,220
$3,017,892
(CMA adapted)
58.a.
Always Christmas Cutting Dept.

For the Month Ended October 31, 2013
Production Data:
Units
Beginning WIP
Inventory
Units started
8,000
36,000
44,000
Units
Beginning WIP
Inventory
Material
8,000
Conversion
8,000
8,000
Started & com-
32,400
32,400
204
Chapter 6
pleted
Ending WIP
Inventory
Units accounted for
32,400
3,600
2,520
3,600
44,000
42,920
44,000
Cost Data:
Total
Beginning WIP
Inventory
Material
$ $
373,000 293,000
Conversion
$
80,000
Current costs
Divided by EUP
Cost per EUP
2,672,4 1,379,0 1,293,4

40
00
40
$3,045,
$1,373,
440 $1,672,
440
000
44,000 42,920
$70
$32
$38
Cost Assignment:
Transferred out
(40,400 $70)
Ending inventory:
Material (3,600
$38)
Conversion (2,520
$32)
$2,828,000
$136,800
80,640
217,440
$3,045,440
Chapter 6
b.
205
Always Christmas Boxing Dept.

For the Month Ended October 31, 2013
Production Units Trans. Material Conversion

Data:
In
Beginning
WIP
2,500
Inventory
Units start- 40,400
ed
Units to
42,900
account
for
Beginning
WIP
2,500 2,500
Inventory
Started & 39,200 39,200
completed
Ending
1,200 1,200
WIP Inventory
Units ac42,900 42,900
counted
for
2,500
2,500
39,200
39,200
840
41,700
42,540
206
Chapter 6
Cost
Data:
Total
Trans. In Material Conversion
Cost in $ 173,413 $ 166,420 $
0 $ 6,993
BI
Current 3,457,760 2,828,000 383,640
246,120
costs
Total to $3,631,173 $2,994,420 $383,640 $253,113
acct.
for
Divided
42,900 41,700
42,540
by
EUP
Cost
$84.95
$69.80
$9.20
$5.95
per
EUP
Cost Assignment:
$3,542,415
$84.95)
Ending inventory:
Transferred in
$83,760
(1,200 $69.80)
Conversion (840
4,998
88,758
$5.95)
$3,631,173
59. a. Striping Dept.:
Beginning inventory
Current costs:
DM
DL
OH ($80,000 0.8)
$ 20,000
90,000
80,000
64,000
Chapter 6
207
Total
Less ending inventory
Costs transferred to
Adhesion
$254,000
(17,000)
$237,000
b. Adhesion Dept.: (let CC = conversion costs)

BI + TI + DM + CC TO = EI
$70,000 + $237,000 + $22,600 + CC $480,000 = $20,600
CC $150,400 = $20,600
CC = $171,000
DL + OH = CC
DL + 0.8DL = CC
1.8DL = $171,000
DL = $95,000
OH = $95,000 0.80 = $76,000
c. CGM is equal to the cost of goods transferred into FG Inventory
($880,000).
OH = 0.8DL $90,000 = 0.8DL
DL = $112,500
BI + TI + DM + DL + OH CGM = $40,000
$150,000 + $480,000 + DM + $112,500 + $90,000 $880,000 = $40,000
DM $47,500 = $40,000
DM = $87,500
d.
WIP Inventory
Adhesion
WIP Inventory
Striping
237,000
WIP Inventory
Packaging
WIP Inventory
480,000
237,000
480,000
208
Chapter 6
Adhesion

WIP Inventory
Packaging
880,000
Cost of Goods Sold

720,000
880,000
720,000
60. a. Cutting Department:

Beginning WIP Invento- 1,300
ry
Units started
4,800
6,100
Started & completed
EUP
1,300
260
325
3,700
1,100
6,100
3,700
440
4,400
3,700
220
4,245
Coating
Department:
Beginning
WIP Inventory
Units Trans. Material Conversion

In
900
Chapter 6
209
Units started
5,000
Units to ac- 5,900
count for
Beginning
900
0
WIP Inventory
Started &
3,600 3,600
completed
Ending WIP 1,400 1,400
Inventory
EUP
5,900 5,000
900
360
3,600
3,600
560
4,500
4,520
b. Cutting Department:
Total
Beginning WIP $16,065
Inventory
Current costs
56,425
Total cost to
account for
$72,490
Divided by
EUP
Cost per EUP
$13
Material
Conversion
$35,200
$21,225
4,400
4,245
$8
$5
c. Cost transferred out of Cutting (FIFO):

Cost of BI
$16,065
Cost to complete BI
Material (260 $8)
$
2,080
Conversion (325
1,625
210
Chapter 6
$5)
S&C (3,700 $13)
Total cost of goods
transferred
Ending WIP:
DM (440 $8)
48,100
51,805
$67,870
$
3,520
CC (220 $5)
4,620
1,100
Total
$72,490
d. Coating
Department:
Total

In
Cost in BI $13,514
Current
84,120 $67,870 $4,950
costs
Total
$97,634
Divided
4,500
by EUP
5,000
Cost per $17.17 $13.57*
$1.10
EUP
*Rounded
$11,300
4,520
$2.50
Chapter 6
211
e. Cost Assignment:
Transferred out
Beginning inventory cost
Cost to complete:
Material (900 $1.10)
Conversion (360
$2.50)
Units S&C (3,600
$17.17)
Total cost transferred out
Ending inventory:
Transferred in (1,400
$13.57)
Conversion (560
$2.50)
Cost accounted for (off due
to rounding)
61. a.
Extrusion
16,000
Units produced
Material
costs
Conversion
cost
Unit cost
990
900 $15,404
61,812
$77,216
$18,998
1,400
20,398
$97,614
Form
Trim
Finish
5,000
2,000
$
24.50
$
12.00
$
15,00
0
$
3.00
$
69,00
0
$
13.80
$12,0
00
$
12.00
$392,0
00
11,00
0
$
44,00
0
$
4.00
$132,
000
$192,0
00
Unit cost
$13,514
Plastic Standard
$
6.00
$42,0
00
$
21.00
Deluxe
Executive
212
Chapter 6
Unit costs:
Sheets Model
Model
Model
Extrusion mate- $ 12.00 $ 12.00 $ 12.00 $ 12.00
rial
Form material
4.00
4.00
4.00
Trim material
3.00
3.00
Finish material
6.00
Extrusion con24.50
24.50
24.50
24.50
version
Form conversion
12.00
12.00
12.00
Trim conversion
13.80
13.80
Finish conver
21.00
sion
Total unit cost

$ 36.50 $ 52.50 $ 69.30 $ 96.30
Times units pro 6,000 3,000
2,000
duced
5,000
Total product
$182,500 $315,000 $207,900 $192,600
cost
b.
EQUIVALENT UNITS
Material Conversion
Entering trim operation:
2,000 Deluxe
units
1,000 Deluxe
units
2,000 Executive
units
Total equivalent
units
Deluxe model WIP
costs:
Extrusion material
%
Qty. %
100 2,00 100
0
100 1,00
60
0
100 2,00 100
0
5,00
0
Unit
Total
Cost
Costs
$12,000
$12.0
Qty.
2,00
0
600
2,00
0
4,60
0
Chapter 6
213
0
Form material
4,000
4.00
Trim material
(100%)
Extrusion conversion
Form conversion
3.00
3,000
24,500
24.50
12,000
12.00
Trim conversion
(60%)
Work in process
costs
9,000*
9.00*
$64,500
$64.5
0
*Conversion cost = ($30,000 + $39,000) 4,600 = $15 per equivalent unit.

(CMA adapted)
62. a.
Components in produced inventory:

DM
Logos
Streamers
Handles
Plain
60,000
W/logos & streamers 418,000 418,000 418,000
W/logos, streamers, & handles25,000 25,000 25,000
25,000
W/streamers
15,200
15,200
W/streamers & handles 2,800
2,800 2,800
W/handles
5,000
5,000
Total components
526,000443,000 461,00032,800
Ending WIP Inventory (all 9,000 units had the direct material):
Plain = 9,000 0.70 = 6,300
With logo = 9,000 0.25 = 2,250
With streamers = 9,000 0.05 = 450
Units
214
Chapter 6
BI
15,000
Started
520,000
Units to account for535,000
Units
DM
Logos
Streamers
BI
15,000
Started and completed511,000
Completed
526,000 526,000443,000461,00032,800
EI
9,000 9,000 2,250
450
0
Units accounted for535,000535,000445,250461,45032,800
BI cost
$ 17,285$ 13,250$ 4,035$
0$
0
Current period 888,274 468,250 298,735 119,977 1,312
Total DM cost $905,559$481,500$302,770$119,977$ 1,312
EUP
535,000 445,250461,450 32,800
Material cost per EUP
$0.90 $0.68
$0.26
$0.04
Conversion
Units
EUP
BI
15,000
Started and completed511,000
Completed
526,000 526,000
EI (95% complete) 9,000 8,550
Units accounted for535,000534,550
Conversion costs = $5,703 + $282,954 = $288,657
Conversion cost per EUP = $288,657 534,550 = $0.54
Total cost to account for = $905,559 + $288,657 = $1,194,216
Cost of ending WIP towels:
Plain towels
DM (6,300 $0.90)
$5,670.00
CC (6,300 0.95 $0.54) 3,231.90 $ 8,901.90
Handles
Chapter 6
215
Towels with logos

DM [2,250 ($0.90 + $0.68)] $3,555.00
CC (2,250 0.95 $0.54) 1,154.25 4,709.25
Towels with streamers
DM [450 ($0.90 + $0.26)]$ 522.00
CC (450 0.95 $0.54) 230.85
752.85
Total cost of ending WIP Inventory
$14,364.00
b.
Production
Inv.
Plain
60,000 58,000 2,000
W/logos & streamers 418,000 417,500
500
W/logos, streamers, & handles25,00024,800 200
W/streamers
15,200 15,175
25
W/streamers & handles 2,800 2,730
70
W/handles
5,000 4,350
650
Sales
Ending
Plain
2,000 ($0.90 + $0.54)$2,880.00
W/logos & streamers
500 ($1.84 + $0.54)1,190.00
W/logos, streamers, & handles200 ($1.88 + $0.54)484.00
W/streamers
25 ($1.16 + $0.54) 42.50
W/streamers & handles
70 ($1.20 + $0.54) 121.80
W/handles
650 ($0.94 + $0.54) 962.00
Total cost of ending FG Inventory
$5,680.30
c. Plain
58,000 ($0.90 + $0.54) $ 83,520.00
W/logos & streamers
417,500 ($1.84 + $0.54) 993,650.00
W/logos, streamers, & handles
24,800 ($1.88 + $0.54)
60,016.00
W/streamers
15,175 ($1.16 + $0.54)
25,797.50W/streamers & handles
2,730 ($1.20 + $0.54)
4,750.20
W/handles
4,350 ($0.94 + $0.54)
6,438.00
216
Chapter 6
$1,174,171.70
Cost of ending WIP Inventory$ 14,364.00
Cost of ending FG Inventory 5,680.30
Cost of goods sold
1,174,171.70
Total cost accounted for $1,194,216.00
d. The conversion cost for all towels should not be the same amount. Each of
the different add-ons creates additional costs for labor and overhead. As
such, Randazzo should be dividing these costs into different cost pools and
assigning them based on alternative bases. Activity-based costing would be
useful in this company.
63.
a.
Beginning invento- 10,000
ry
Units started
180,000
Units to account for 190,000
Beginning invento- 10,000
0
ry completed
Units started &
140,000 140,000
completed
Units completed
150,000
Ending inventory
40,000 40,000
EUP
190,000 180,000
b.
3,000
140,000
24,000
167,000
Donbrowski Co.
For the Month of May 2013
Production Data:
Chapter 6
217
Beginning inventory
Units started
Beginning inventory completed
Units started &
completed
Ending inventory
EUP

10,000
180,000
190,000
10,000
3,000
140,000 140,000
140,000
40,000
40,000
24,000
190,000 180,000
167,000
Cost Data (all at

standard):
Total
BI: DM (10,000
$5.50)
CC (7,000
$12.50)
Current costs:
DM (180,000
$5.50)
CC (167,000
$12.50)
Materi- Conal
version
$
$
55,000 55,000
87,500
$
87,500
990,000
990,00
0
2,087,5
2,087,5
00
00
$3,220, $1,045, $2,175,
000
000
000
Cost Assignment
218
Chapter 6

$18)
Ending inventory:
Material (40,000
$5.50)
Conversion (24,000
$12.50)
Total costs assigned
$2,700,000
$220,000
300,000
520,000
$3,220,000
c. Total variance = Total actual cost Total standard cost = $3,137,000

$3,077,500 = $59,500 unfavorable
Material:
Current actual cost
$1,001,000
Standard cost (180,000
$5.50)
Direct material variance
Conversion:
Current actual cost
Standard cost (167,000
$12.50)
Conversion cost variance
Cost of Goods Sold
Direct Material
Variance
(990,000)
$
11,000 U
$
2,136,000
(2,087,500)
$
48,500 U
59,500
11,000
Chapter 6
219
Conversion Cost
Variance
Units
64.
a.
48,500
Material
Labor
Overhead
BI
14,800
Units start- 385,000
ed
Units to ac- 399,800
count for
BI completed
Units S&C
Units completed
EI
EUP
14,800
8,880
4,440
380,700 380,700 380,700

395,500
380,700
4,300
4,300
2,580
399,800 385,000 392,160
3,655
388,795
b. Total BI cost:
DM (14,800 $8.25)$122,100
DL (5,920 $1.60) 9,472
OH (10,360 $4.90) 50,764
Total cost of BI
$182,336
c. Cost transferred out = 395,500 $14.75 = $5,833,625
Cost in EI:
DM (4,300 $8.25) $35,475.00
DL (2,580 $1.60) 4,128.00
OH (3,655 $4.90) 17,909.50
Total cost of BI
$57,512.50
220
Chapter 6
d. Standard DM cost = 385,000 $8.25 = $3,176,250.00

Standard DL cost = 392,160 $1.60 = $627,456.00
Standard OH cost = 388,795 $4.90 = $1,905,095.50
DM
DL
OH
Current period costs
$ 3,201,032.00$ 625,510.00
$
1,904,390.00
Standard costs
(3,176,250.00) (627,456.00)
(1,905,095.50)
Variance
$
24,782.00 U $ 1,946.00 F $
705.50 F
65. a. Beginning pounds
2,000
Started
250,000
Pounds to account
for
Pounds transferred
Pounds in EI
Pounds of shrinkage
252,000
(238,200)
(6,000)
7,800
b. Normal shrinkage = 250,000 0.01 = 2,500 pounds

For accounting purposes, normal shrinkage is simply ignored, which means
its costs will be spread over all good units produced.
c. Abnormal shrinkage = 7,800 2,500 = 5,300 pounds
The cost of abnormal shrinkage is treated as a loss of the period.
Total
Material Conversion
d.
Chapter 6
221
Beginning WIP
2,000
Inventory
Started
250,000
for
Beginning WIP
Inventory
Started & completed
Normal loss
Abnormal loss
EUP (WA)
e.
2,000
2,000
2,000
236,200 236,200
236,200
6,000
6,000
1,800
2,500
5,300
5,300
252,000 249,500
5,300
245,300
Total
Material Conversion
$ 1,957 $ 1,807 $
150
Beginning
WIP costs
Current costs
264,588 240,208
24,380
Total costs
$266,545 $242,015 $ 24,530
Divide by
245,300
EUP
249,500
Cost per EUP
$1.07
$0.97
$0.10
$254,874
$1.07)
Ending inventory:
$5,820
Material (6,000
$0.97)
180
6,000
Conversion (1,800
$0.10)
Abnormal spoilage (5,300
5,671
$1.07)
222
Chapter 6
$266,545
f. The easiest way to reduce shrinkage loss is to buy higher quality turkey at a
higher input cost per pound. The higher quality would have a lower fat
content and would shrink less. Because of the reduced shrinkage, conversion cost per pound of finished product might decline, and the company
would probably be able to sell its product at a higher price.
g. The approximate cost of April turkey was $1.13 per pound ($1,807 BI cost
of turkey 1,600 EUP pounds in BI), while the average cost per pound in
May was approximately $0.97 per pound. It is highly likely that buying the
lower-priced ground turkey was the cause of the abnormally high spoilage
rate. The information on the cost differences between April and May is not
clear when using weighted average process costing.
66. a.
Garys Tools Grinding Department

For the Month Ended August 31, 2013
Units
Beginning
WIP
1,000
Inventory
Transferred 50,800
in
Units to
account 51,800
Chapter 6
223
for
Units
DM
DL
OH
Trans.
In
Beg. WIP
Inventory 1,000 1,000 1,000 1,000 1,000
Started &
completed 48,000 48,000 48,000 48,000 48,000
Ending WIP
Inventory 1,800 1,800
0
720 1,170
Normal
650
650
0
650
650
spoilage
Abnormal
350
0
350
spoilage
350
350
EUP (WA)
51,800 51,800 49,000 50,720 51,170
Total
DM
DL
OH
Trans.
In
Beg. WIP
Inventory
Current
costs
$
7,355
$
0
$
325
$
980
Divided by
EUP
235,5 149,35 12,250

57
0
$242, $155,4 $12,25
912
00
0
51,800 49,000
Cost per
EUP
$4.72
5
23,76
7
$24,0
92
50,72
0
$0.47
5
50,19
0
$51,1
70
51,17
0
$1.00
Total costs
$
6,050
$3.00
$0.25
224
Chapter 6
Cost Assignment:
Transferred out:
Good units (49,000 $231,525
$4.725)
Normal spoilage (650
2,909 $234,434
$4.475)
Ending inventory:
Transferred in (1,800 $ 5,400
$3.00)
Labor (720 $0.475)
342
Overhead (1,170
1,170
6,912
$1.00)
Abnormal spoilage (350
1,566
$4.475)
Total costs accounted
$242,912
for
b. Loss on Abnormal Spoilage
Work in Process InventoryGrinding
1,566
67. a. Beginning invento- 3,000

ry
Transferred in
45,000
Units to account for 48,000
Transferred out
Ending inventory
Bikes lost
Units accounted for
40,000
4,000
4,000
48,000
(1) Bikes passing through Assembly

Minus bikes in EI (have not
reached the
48,000
1,566
Chapter 6
225
inspection point, so there

is no way
to determine acceptability)
Bikes reaching the inspection
point
Normal defective rate
(4,000)
44,000
0.05
Normal number of defective

bikes
2,200
(2) Total bikes lost

4,000
(2,200)
Normal number of defective bikes

Abnormal number of defective bikes
b.
Units
Transferred out
Ending
WIP
Inventory
Normal
loss
Abnormal
loss
EUP
(WA)
c.
1,800

In
40,000 40,000 40,000
40,000
4,000
4,000
2,000
800
2,200
2,200
2,200
2,200
1,800
1,800
1,800
1,800
48,000 48,000 46,000
44,800
Total
Trans. In
Material Conversion
226
Chapter 6
Begin$ 102,790 $ 82,200 $ 6,660

ning WIP
Current
1,576,070 1,237,800
96,840
costs
Total
$1,678,860 $1,320,000 $103,500
cost
Divided
48,000 46,000
by EUP
Cost per
$35.45
$27.50
$2.25
EUP
$ 13,930
241,430
$255,360
44,800
$5.70
d. (1) Normal defective bikes: 2,200 $35.45 = $77,990

(2) Abnormal defective bikes: 1,800 $35.45 = $63,810
(3) Good bikes completed: 40,000 $35.45 = $1,418,000
(4)
Transferred in (4,000
$27.50)
Material (2,000 $2.25)
Conversion (800 $5.70)
Total
$110,000
4,500
4,560
$119,060
e. Total cost transferred = Cost of good bikes + Normal spoilage cost =

$1,418,000 + $77,990 = $1,495,990 (or an average cost per bike of $37.40)
f. Normal spoilage cost is an expected cost of producing good units. As such,
it is not an extra cost but thought to be inherent in producing good units.
Normal spoilage may occur because of material or labor quality, machine
malfunctions, or human error. Management should do cost-benefit studies
to determine if it is economically sensible to reduce spoilage. Three ques 2013 Cengage Learning. All Rights Reserved. May not be scanned, copied, duplicated, or posted to a publicly
Chapter 6
227
tions should be addressed: (1) What does the spoilage actually cost? (2)
Why does it occur? (3) How can it be controlled?
(CMA adapted)
68. Maximum normal spoilage = 70,000 0.03 = 2,100 units

LaToya Company
Units
Beginning WIP
Inventory
Units started
Units to account
for
Beginning WIP
Inventory
Started & completed
Normal spoilage
Abnormal spoilage
Units accounted
for
Mate- Conversion
rial
5,600
74,400
80,000
5,600
5,600
5,600
64,400
64,400
64,400
7,500
7,500
2,500
2,100
400
2,100
400
2,100
400
80,000
80,000
75,000
Total
Material
Conversion
228
Chapter 6

Current costs
Cost to account for
Divided by EUP
Cost per EUP
7,632 $ 6,400
$ 1,232
106,168 74,400
$113,800 $80,800
80,000
$1.45
$1.01
31,768
$33,000
75,000
$0.44
Cost Assignment:
Units completed
$101,500
(70,000 $1.45)
Normal spoilage:*
Direct material
$2,121
(2,100 $1.01)
Conversion (2,100
924
3,045 $104,545
$0.44)
Ending inventory:
Direct material
$ 7,575
(7,500 $1.01)
Conversion (2,500
1,100
8,675
$0.44)
Abnormal spoilage:*
Direct material
$
404
(400 $1.01)
Conversion (400
176
580
$0.44)
$113,800
for
*Spoilage was found at the end of the production process when units are fully complete; thus, computations could have been made at the full cost of
$1.45 per unit. Had the spoilage been found earlier, the DM and conversion
would not have been at the same stage of production and separate calculations would have been needed.
Chapter 6
229
69. Maximum normal spoilage = 70,000 0.03 = 2,100 units

LaToya Company
Units
Units started
Started & completed
Normal spoilage
Abnormal spoilage
Units accounted
for
Mate- Conversion
rial
5,600
74,400
80,000
5,600
2,800
64,400 64,400 64,400

7,500
7,500
2,500
2,100 2,100
630
400
400
120
80,000 74,400 70,450
230
Chapter 6
Total
Beginning
WIP Inventory
Current costs
Mate- Conversion
rial
7,632
106,168
$31,768
$74,400
Total cost to
account for
Divided by
EUP
Cost per EUP
$113,800
74,400
$1.45
70,450
$0.45*
$1.00
*Rounded
Cost Assignment:
Transferred out:
Beginning WIP Inven$ 7,632.00
tory cost
Cost to complete
Conversion (2,800
1,260.00
$0.45)
Total cost of BI
$ 8,892.00
Started & completed
93,380.00
(64,400 $1.45)
Normal spoilage:*
Direct material (2,100 $2,100.00
$1.00)
Conversion (630
283.50
2,383.50
$0.45)
Total cost transferred out
$104,655.50
Direct material (7,500 $7,500.00
Chapter 6
231
$1.00)
Conversion (2,500
1,125.00
8,625.00
$0.45)
Abnormal spoilage:
Direct material (400 $ 400.00
$1.00)
Conversion (120
54.00
454.00
$0.45)
$113,734.50
(off due to rounding)

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CHAPTER 6

24,000 + 600,000 = 624,000 pounds

b. & c. Beginning WIP Inventory

Units started and completed = 608,000 24,000 = 584,000

Ending WIP Inventory

Units accounted for

Beginning WIP Inventory (30%)

Beginning WIP Invento- 15,000 15,000

Ending WIP Inventory

Beginning WIP Inventory (35%)

Work to be performed = 100% 45% = 55% for conversion costs on-

b. & c. Beginning WIP

Units started and completed = 608,000 24,000 = 584,000

Beginning WIP Inventory (55%)

Ending WIP Inventory (35%)

Ending WIP Inventory (70%)

Beginning WIP Inventory

21. a. Beginning WIP

594,600 594,600 594,600 594,600

635,000 635,000 618,490 624,840

Ending WIP Inventory

22. a. Beginning WIP Inventory

Started & completed

23. a. Beginning Inventory

(18,36 (12,96 (9,720

24. a. DL cost = Conversion cost OH cost = $189,648 $85,200 =

Cost per EUP

120,000 124,000 132,000

81,500 Started & completed

Ending WIP Inventory

Units accounted for

Beginning WIP Inventory

81,50 Started & com0

81,50 82,660 83,700

Ending WIP Inventory

Units accounted for

c. Cost of goods transferred out

Total cost of BI transferred

b. Goods started and completed = 1,570,000 42,600 = 1,527,400

Cost of ending inventory:

d. Total cost to account

Total cost to account for

c. # of units S&C = Units completed Units in BI

Total cost transferred

35. a. Ending WIP Invento- EUP

b. Transferred out: 25,000 ($10 + $2 + $6) = 25,000 $18 = $450,000

Trans. Material Conversion

Trans. Material Conversion

79,000 $1.34 = $105,860

Cost per EUP

40,000 Started & completed

Units Material Conversion

Units started in Assembly = Units transferred out of Fabrication = 5,000 +

38,200 Started & completed

Units to account for

Started & completed

45,0 40,00 41,03

Trans. Material Conversion

Started and completed

0 Started & com- 2,400

Started and completed

Started & completed

b. Cost of ending WIP Inventory:

41. a. Beginning WIP Inventory