Question 1 - Pureform, Inc., manufactures a product that passes through two departments. Data for a recent month for the first department follow:
|
Units
|
Materials
|
Labor
|
Overhead
|
|
Work in process, beginning
|
73,000
|
$350,000
|
$28,000
|
$41,000
|
|
Units started in process
|
760,000
|
|
|
|
|
Units transferred out
|
780,000
|
|
|
|
|
Work in process, ending
|
53,000
|
|
|
|
|
Cost added during the month
|
|
$920,000
|
$390,000
|
$590,000
|
The beginning work in process inventory was 80% complete with respect to materials and 60% complete with respect to processing. The ending work in process inventory was 75% complete with respect to materials and 50% complete with respect to processing. The company uses the weighted-average method of accounting for units and costs
Requirement 1: (a) Prepare a quantity schedule for the month for the first department.
(b) Compute the equivalent units for the month for the first department.
Requirement 2: Determine the costs per equivalent unit for May.
Question 2 - Helox, Inc., manufactures a product that passes through two production processes. A quantity schedule for the month of May for the first process follows:
|
Quantity Schedule
|
|
Units to be accounted for:
|
|
|
Work in process, May 1 (materials 100% complete; conversion 40% complete)
|
5,000
|
|
Started into production
|
180,000
|
|
Total units to be accounted for
|
185,000
|
Costs in the beginning work in process inventory of the first processing department were: materials, $1,500; and conversion cost, $4,000 Costs added during the month were: materials, $54,000; and conversion cost, $352,000.
Requirement 1: Assume that the company uses the weighted-average method of accounting for units and costs. Determine the equivalent units for the month for the first process.
Requirement 2: Compute the costs per equivalent unit for the month for the first process.
Question 3 - Helox, Inc., manufactures a product that passes through two production processes. The company uses the weighted-average method of accounting for units and costs. A quantity schedule for the month of May for the first process follows:
|
Quantity Schedule
|
Equivalent Units
|
|
Materials
|
Conversion
|
|
Units accounted for as follows:
|
|
|
|
|
Transferred to the next process
|
175,000
|
175,000
|
175,000
|
|
Work in process, May 31 (materials 100% complete, conversion 30% complete)
|
10,000
|
10,000
|
3,000
|
|
Total units accounted for
|
185,000
|
185,000
|
178,000
|
|
Total Cost
|
Materials
|
Conversion
|
|
Cost to be accounted for:
|
|
|
|
|
Work in process, May 1
|
$5,500
|
$1,500
|
$4,000
|
|
Cost added by the department
|
406,000
|
54,000
|
352,000
|
|
Total cost to be accounted for
|
$411,500
|
$55,500
|
$356,000
|
|
Equivalent units
|
|
185,000
|
178,000
|
Required: Complete the cost reconciliation for the first process.
Question 4 - Sunspot Beverages, Ltd., of Fiji makes blended tropical fruit drinks in two stages. Fruit juices are extracted from fresh fruits and blended in the Blending Department. The blended juices are then bottled and packed for shipping in the Bottling Department. The following information pertains to the operations of the Blending Department for June. (The currency in Fiji is the Fijian dollar.)
|
Percent Completed
|
|
Units
|
Materials
|
Conversion
|
|
Work in process, beginning
|
20,000
|
100%
|
75%
|
|
Started into production
|
91,300
|
|
|
|
Completed and transferred out
|
96,831
|
|
|
|
Work in process, ending
|
14,469
|
100%
|
25%
|
|
Work in process, beginning
|
|
$25,200
|
$24,800
|
|
Cost added during June
|
|
$334,800
|
$238,700
|
Required: Prepare a production report for the Blending Department for June assuming that the company uses the weighted-average method.
Question 5 - You are employed by Spirit Company, a manufacturer of digital watches. The company's chief financial officer is trying to verify the accuracy of the ending work in process and finished goods inventories prior to closing the books for the year. You have been asked to assist in this verification. The year-end balances shown on Spirit Company's books are as follows:
|
Units
|
Costs
|
|
Work in process, December 31 (labor and overhead 50% complete)
|
215,000
|
$660,960
|
|
Finished goods, December 31
|
130,000
|
$1,009,800
|
Materials are added to production at the beginning of the manufacturing process, and overhead is applied to each product at the rate of 60% of direct labor cost. There was no finished goods inventory at the beginning of the year. A review of Spirit Company's inventory and cost records has disclosed the following data:
|
Units
|
Materials
|
Labor
|
|
Work in process, January 1 (labor and overhead 80% complete)
|
200,000
|
$200,000
|
$315,000
|
|
Units started into production
|
646,000
|
|
|
|
Cost added during the year
|
|
|
|
|
Materials cost
|
|
$1,300,000
|
|
|
Labor cost
|
|
|
$1,895,000
|
|
Units completed during the year
|
631,000
|
|
|
The company uses the weighted-average cost method.
Requirement 1: Determine the equivalent units and costs per equivalent unit for materials, labor, and overhead for the year.
a. The equivalent units would be:
b. The costs per equivalent unit would be
Requirement 2: Determine the amount of cost that should be assigned to the ending Work in Process and Finished Goods inventories.
Requirement 3: Prepare the necessary correcting journal entry to adjust the Work in Process and Finished Goods inventories to the correct balances as of December 31.
Requirement 4: Determine the cost of goods sold for the year assuming there is no under- or overapplied overhead.