Managerial Accounting: Ch.4 Process Costing

Quality Brick Company produces bricks in two processing departments—Molding and Firing. Information relating to the company’s operations in March follows:

1. Raw materials used in production: Molding Department, $26,000; and Firing Department, $5,500.
2. Direct labor costs incurred: Molding Department, $16,200; and Firing Department, $4,800.
3. Manufacturing overhead was applied: Molding Department, $22,700; and Firing Department, $35,600.
4. Unfired, molded bricks were transferred from the Molding Department to the Firing Department. According to the company’s process costing system, the cost of the unfired, molded bricks was $65,400.
5. Finished bricks were transferred from the Firing Department to the finished goods warehouse. According to the company’s process costing system, the cost of the finished bricks was $108,700.
6. Finished bricks were sold to customers. According to the company’s process costing system, the cost of the finished bricks sold was $105,400.

Required:

Prepare journal entries to record items (a) through (f) above. (If no entry is required for a transaction/event, select “No journal entry required” in the first account field.)

Clonex Labs, Inc., uses the weighted-average method in its process costing system. The following data are available for one department for October:

The department started 406,000 units into production during the month and transferred 415,000 completed units to the next department.

Required:

Compute the equivalent units of production for October.

Solution

Explanation
Weighted-Average Method

Superior Micro Products uses the weighted-average method in its process costing system. Data for the Assembly Department for May appear below:

Required:

Compute the cost per equivalent unit for materials, labor, overhead, and in total. (Round your answers to 2 decimal places.)

Solution

Explanation
Weighted-Average Method

Data concerning a recent period’s activity in the Prep Department, the first processing department in a company that uses process costing, appear below:

A total of 21,100 units were completed and transferred to the next processing department during the period.

Required:

1. Compute the cost of ending work in process inventory for materials, conversion, and in total.
2. Compute the cost of the units completed and transferred out for materials, conversion, and in total.
   (For all requirements, round your final answers to the nearest whole dollar amount.)

Solution

Explanation

1.

2.

Helix Corporation uses the weighted-average method in its process costing system. It 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:

Required:

1. Calculate the first production department’s equivalent units of production for materials and conversion for May.
2. Compute the first production department’s cost per equivalent unit for materials and conversion for May.
3. Compute the first production department’s cost of ending work in process inventory for materials, conversion, and in total for May.
4. Compute the first production department’s cost of the units transferred to the next production department for materials, conversion, and in total for May.

Solution

1. Calculate the first production department’s equivalent units of production for materials and conversion for May.
   

   	Materials	Conversion
   Equivalent units of production	332,600	291,300

   Explanation

   Weighted-Average Method

   	Materials	Conversion
   Units transferred to the next production department	273,600	273,600
   Equivalent units in ending work in process inventory:
   Materials: 59,000 units × 100% complete	59,000
   Conversion: 59,000 units × 30% complete		17,700
   Equivalent units of production	332,600	291,300
2. Compute the first production department’s cost per equivalent unit for materials and conversion for May. (Round your answers to 2 decimal places.)
   

   	Materials	Conversion
   Cost per equivalent unit	0.50	0.97

   Explanation

   	Materials	Conversion
   Cost of beginning work in process	61,800	18,400
   Cost added during the period	104,500	264,161
   Total cost (a)	166,300	282,561
   Equivalent units of production (b)	332,600	291,300
   Cost per equivalent unit (a) ÷ (b)	0.50	0.97
3. Compute the first production department’s cost of ending work in process inventory for materials, conversion, and in total for May. (Round your intermediate calculations to 2 decimal places.)
   

   	Materials	Conversion	Total
   Cost of ending work in process inventory	29,500	17,169	46,669
4. Compute the first production department’s cost of the units transferred to the next production department for materials, conversion, and in total for May.(Round your intermediate calculations to 2 decimal places.)
   

   	Materials	Conversion	Total
   Cost of ending work in process inventory	136,800	265,392	402,192

   Explanation for 3 & 4

   	Materials	Conversion	Total
   Ending work in process inventory:
   Equivalent units (see above)	59,000	17,700
   Cost per equivalent unit (see above)	0.50	0.97
   Cost of ending work in process inventory	29,500	17,169	46,669
   Units completed and transferred out:
   Units transferred to the next department	273,600	273,600
   Cost per equivalent unit (see above)	0.50	0.97
   Cost of units completed and transferred out	136,800	265,392	402,192

Pureform, Inc., uses the weighted-average method in its process costing system. It manufactures a product that passes through two departments. Data for a recent month for the first department follow:

The beginning work in process inventory was 85% complete with respect to materials and 70% complete with respect to labor and overhead. The ending work in process inventory was 65% complete with respect to materials and 20% complete with respect to labor and overhead.

Required:

1. Compute the first department’s equivalent units of production for materials, labor, and overhead for the month.
2. Determine the first department’s cost per equivalent unit for materials, labor, and overhead for the month. (Round your answers to 2 decimal places.)

Solution

Explanation

Weighted-Average Method

1.

2.

Alaskan Fisheries, Inc., processes salmon for various distributors and it uses the weighted-average method in its process costing system. The company has two processing departments—Cleaning and Packing. Data relating to pounds of salmon processed in the Cleaning Department during July are presented below:

A total of 500,000 pounds of salmon were started into processing during July. All materials are added at the beginning of processing in the Cleaning Department.

Required:

Compute the Cleaning Department’s equivalent units of production for materials and for labor and overhead in the month of July.

Solution

Explanation

Weighted-Average Method

*27,000 + 500,000 − 20,000 = 507,000