Cost accounting unit 5

After reading information on the operation of a process cost accounting system in Chapter 8 of the Fundamentals of Cost Accounting text, complete the following exercise and problem. In the exercise you will prepare a production cost report, and in the problem you will determine how unit costs are computed in a process cost accounting system.

Complete the following exercise and problem:

· Exercise 8-39, "Prepare a Production Cost Report," page 312.

· Problem 8-46, "Compute Equivalent Units," page 315.

8-39. Prepare a Production Cost Report: FIFO Method

( LO 8-2 , 4 , 5 )

Lansing, Inc. provides the following information for one of its department’s operations for June (no new material is added in Department T):

WIP inventory—Department T
Beginning inventory (15,000 units, 60% complete with respect to Department T costs)
Transferred-in costs (from Department S)	$ 116,000
Department T conversion costs	53,150
Current work (35,000 units started)
Prior department costs	280,000
Department T costs	209,050
The ending inventory has 5,000 units, which are 20 percent complete with respect to Department T costs and 100 percent complete for prior department costs.

Required

Prepare a production cost report using FIFO

8-46. Compute Equivalent Units

( LO 8-1 , 3 , 5 )

Select the best answer for each of the following independent multiple-choice questions.

a. Adams Company’s production cycle starts in Department A. The following information is available for July:

	Units
Work in process, July 1 (60% complete)	150,000
Started in July	720,000
Work in process, July 31 (30% complete)	80,000

Materials are added at the beginning of the process in Department A. Using the weighted-average method, what are the equivalent units of production for the month of July?

	Materials	Conversion
(1)	720,000	744,000
(2)	870,000	814,000
(3)	734,000	720,000
(4)	795,000	734,000
(5)	None of the above

B. Department B is the second stage of Boswell Corporation’s production cycle. On November 1, beginning work in process contained 50,000 units, which were 30 percent complete as to conversion costs. During November, 320,000 units were transferred in from the first stage of the production cycle. On November 30, ending work in process contained 40,000 units, which were 65 percent complete as to conversion costs. Materials are added at the end of the process. Using the weighted-average method, the equivalent units produced during November were as follows:

	Prior Department Costs	Materials	Conversion
(1)	370,000	330,000	304,000
(2)	370,000	330,000	345,000
(3)	370,000	330,000	356,000
(4)	320,000	330,000	356,000
(5)	None of the above

C. Department C is the first stage of Cohen Corporation’s production cycle. The following equivalent unit information is available for conversion costs for the month of September:

Beginning work-in-process inventory (30% complete)	20,000
Started in September	340,000
Completed in September and transferred to Department D	320,000
Ending work-in-process inventory (70% complete)	40,000

Using the FIFO method, the equivalent units for the conversion cost calculation are:

(1)	298,000
(2)	320,000
(3)	348,000
(4)	342,000
(5)	None of the above

D. Draper Corporation computed the physical flow of units for Department D for the month of December as follows:

Units completed
From work in process on December 1	40,000
From December production	140,000
Total	180,000

Materials are added at the beginning of the process. Units of WIP at December 31 were 32,000. As to conversion costs, WIP at December 1 was 70 percent complete and WIP at December 31 was 50 percent complete. What are the equivalent units produced for the month of December using the FIFO method?

	Materials	Conversion
(1)	172,000	168,000
(2)	212,000	204,000
(3)	212,000	200,000
(4)	172,000	172,000
(5)	None of the above