Process Costing Case

ACCOUNTING 132 Spring 2019

Process Costing Case - 20 points Dr. Huff

Homeglow Furniture Company makes coffee tables for home use. The process involves work in two departments: Assembly, where the tables are constructed, and Staining, where a finish is applied to the wood.

In the Assembly Department, Direct Material is added at the beginning of the process, Conversion Costs are added evenly throughout the process, and Inspection is performed at the end of the process (Normal Spoilage is 5% of good units). In the Staining Department, Direct Material is added at the beginning of the process, Conversion Costs are added evenly throughout the process, no inspection is made in this department. The FIFO method of process costing is used. (Round cost per equivalent unit to 4 decimal places where necessary.)

You are hired by the company at the beginning of October. You are to complete the production cost worksheets for both departments for the months of August and September. You are also asked to make the end-of-the month journal entry (not the recording of DM and CC) for each department for each month and to summarize the activity in each Work-In-Process account over the two month period using T-accounts. (Round to whole dollars in the Assignment of Costs section.) Assume that the regular day-to-day entries for the requisition of DM and the application of CC have been made by an accounting staff member.

Assembly Department - August Assembly Department - September

BI 300 units (cc=40%) BI

Started 1,800 units Started 2,350 units

Completed and Completed and

Trans. Out 1,920 units Trans. Out 2,240 units

EI 95 units (cc=60%) EI 78 units (cc=50%)

Costs: Costs:

BI - DM $ 16,500 BI -

CC $ 5,640

Current Current

DM $108,000 DM $137,475

CC $ 87,390 CC $110,403

Staining Department - August Staining Department - September

BI 470 units (cc=20%) BI

Completed 2,264 units Completed 2,221 units

and Tr Out and Tr Out

EI 126 units (cc=50%) EI 145 units (cc=20%)

Costs: Costs:

BI - Transf. $37,060

DM $26,540

CC $ 4,210

Current Current

DM $ 30,720 DM $ 35,392

CC $122,815 CC $115,911

Check Figures:

Assembly - August Ending Inventory - CC $ 2,565

Assembly - September Ending Inventory - CC $ 1,833

Staining - August Ending Inventory – Transf-In $ 13,733

Staining - September Ending Inventory – Transf-In $ 16,064

Requirements:

This assignment should be prepared as a computer assignment by building a template.

Prepare one template for each department. Use a data section and a report page. The amounts in the report page should be calculated using formulas. (See the general computer instructions on Blackboard if you have questions.)

Order for turn-in:

1. Data section and report for the Assembly Department for August

2. Data section and report for the Assembly Department for September.

3. Cell Formulas page for the Assembly Department.

4. Data section and report for the Staining Department for August.

5. Data section and report for the Staining Department for September.

6. Cell Formulas page for the Staining Department.

7. Journal entries. (A maximum of 5 and a minimum of 4)

8. T-accounts ONE for each department covering the two months of activity.