Q1. Dickerson Company uses a process costing system. The following information relates to one month's activity in the company's Mixing Department.
|
Units
|
Conversion Percent Complete
|
|
Beginning work-in-process inventory
|
10,000
|
20%
|
|
Units started
|
21,000
|
|
|
Units completed and transferred out
|
26,000
|
|
|
Ending work-in-process inventory
|
5,000
|
80%
|
The conversion cost of the beginning inventory was $6,500. During the month, $112,000 in additional conversion cost was incurred.
Required:
a. Assume that the company uses the FIFO method. Compute:
1. The equivalent units of production for conversion for the month.
2. The cost per equivalent unit for conversion for the month.
3. The total cost transferred out during the month.
4. The cost assigned to the ending work-in-process inventory.
b. Assume that the company uses the weighted-average cost method. Compute:
1. The equivalent units of production for conversion for the month.
2. The cost per equivalent unit for conversion for the month.
3. The total cost transferred out during the month.
4. The cost assigned to the ending work-in-process inventory.
Q2. The following data has been provided by Radiotronics Inc., a company that uses the FIFO method in its process costing system. The data concern the company's Wiring Department for the month of March.
|
Cost in beginning work-in-process inventory
|
$2,260
|
|
Units started and completed this month
|
4,650
|
|
Materials
|
Conversion
|
|
Cost per equivalent unit
|
$33.30
|
$21.20
|
|
Equivalent units required to complete the units in beginning work-in-process inventory
|
300
|
230
|
|
Equivalent units in ending work-in-process inventory
|
380
|
297
|
Required: Determine the cost of ending work-in-process inventory and the cost of the units transferred out of the department during March using the FIFO method.
Q3. Matchbox Manufacturing has a traditional costing system in which it applies manufacturing overhead to its products using a predetermined overhead rate based on direct labor-hours (DLHs). The company has two products, Utility and Super, about which it has provided the following data:
|
Utility
|
Super
|
|
Direct materials per unit
|
$34.10
|
$52.70
|
|
Direct labor per unit
|
$16.10
|
$39.10
|
|
Direct labor-hours per unit
|
0.70
|
1.70
|
|
Annual production
|
30,000
|
10,000
|
The company's estimated total manufacturing overhead for the year is $1,527,600 and the company's estimated total direct labor-hours for the year is 38,000.
The company is considering using a variation of activity-based costing to determine its unit product costs for external reports. Data for this proposed activity-based costing system appear below:
|
Activities and Activity Measures
|
Estimated Overhead Cost
|
|
Assembling products (DLHs)
|
$608,000
|
|
Preparing batches (batches)
|
197,600
|
|
Axial milling (MHs)
|
722,000
|
|
Total
|
$1,527,600
|
|
Utility
|
Super
|
Total
|
|
Assembling products
|
21,000
|
17,000
|
38,000
|
|
Preparing batches
|
456
|
1,520
|
1,976
|
|
Axial milling
|
570
|
874
|
1,444
|
Required:
a. Determine the manufacturing overhead cost per unit of each of the company's two products under the traditional costing system.
b. Determine the manufacturing overhead cost per unit of each of the company's two products under activity-based costing system.
Q4. The manager of the Personnel Department at King Enterprises has been reading about time-driven ABC and wants to apply it to her department. She has identified four basic activities where her employees spend the most time: Interviewing; Hiring, Assessment, and Separation Processing. The Department employs five staff who perform these activities. The manager provides the following estimates for the amount of time it takes to complete each of these activities:
- Interviewing: 40 minutes;
- Hiring: 60 minutes;
- Assessment: 85 minutes;
- Separation processing: 95 minutes.
Employees in Personnel work 35 hour weeks with four weeks for vacation. Of the 35 hours, five are reserved for administrative tasks, training, and so on. The costs of the personnel department, including any allocated costs from other staff functions is $1,404,000. During the year, Personnel conducted 1,200 interviews, made 405 hires, made 2,850 assessments, and had 235 separations.
Required:
a. What is the cost per minute for activities in Personnel?
b. What is the cost of interviewing and hiring one employee?
c. How many minutes of unused capacity did Personnel have for the year?
d. What was the cost of the unused capacity in Personnel?