Topic: Current Costs in Work-in-Process
12. The Madaket Company has the following information for December of this year:

Raw materials purchases $50,000

Raw materials used 44,000
Direct labor 30,000
Actual manufacturing overhead 56,000
Cost of goods completed 120,000

Overhead rate is 150 percent of direct labor costs. The Madaket Company uses a process costing system. Calculate the total amount of cost added to Work-in-Process Inventory for December.

Topic: Cost of Completed Goods Calculation
13. The Madaket Company has the following information December of this year:

Raw materials purchases $50,000
Raw materials used 44,000
Direct labor 30,000
Actual manufacturing overhead 56,000
Work-in-Process, beginning 60,000
Work-in-Process, ending 59,000

The overhead rate is 150 percent of direct labor costs. The Madaket Company uses a job costing system. Prepare the journal entry to record the cost of goods completed and transferred to Finished Goods Inventory.

Topic: Equivalent Units in Process Calculation
14. Orlando Company manufactures a product through a process where all manufacturing costs are added uniformly. Information for October beginning work-in-process follows.

Units (35 percent complete) 10,000
Direct materials $24,000
Direct labor $30,000
Overhead $10,000

The following costs were incurred during October:

Direct materials $90,000
Direct labor 120,000
Overhead (applied) 30,000

During October, 50,000 units were completed. Also, 5,000 units that were 50 percent complete remained in process at the end of the day on October 31. Calculate the equivalent units in process and the total cost per equivalent unit using the weighted average method. (Round to the nearest dollar, if necessary.)

Topic: Process Costing Calculations
15. Orlando Company manufactures a product through a process where all manufacturing costs are added uniformly. Information for October beginning work-in-process follows.

Units (35 percent complete) 10,000
Direct materials $24,000
Direct labor $30,000
Overhead $10,000

The following costs were incurred during October:

Direct materials $90,000
Direct labor 120,000
Overhead (applied) 30,000

During October, 50,000 units were completed. Also, 5,000 units that were 50 percent complete remained in process at the end of the day on October 31. Calculate the cost of goods completed and the cost assigned to ending inventory. (Round to the nearest dollar, if necessary.)
 
Problems

Topic: Cost of Goods Manufactured
1. Presented below is selected information from the Kinderhook Company's current period accounting records (in $000s):

Sales $20,000
Raw Materials Used 5,000
Direct Labor Costs 2,000
Period Costs (Selling and Administrative) 5,000
Beginning Raw Material Inventory 600
Ending Raw Material Inventory 2,000
Net Income 400
Beginning Work-in-Process Inventory 0
Ending Work-in-Process Inventory 600
Beginning Finished Goods Inventory 1400
Ending Finished Goods Inventory 800

* NOTE: All raw materials used were direct materials.

Required: Determine the following (in dollars):
a. Raw Material Purchases
b. Gross Profit
c. Cost of Goods Manufactured
d. Manufacturing Overhead

Topic: Inventory and Cost of Sales Calculations
2. Information from The Chatham Company is given below in $000s for this period:

Sales $700
Selling and administrative costs 52
Purchases of raw materials 18
Direct labor 22
Manufacturing overhead 210
Raw materials used (all direct cost) 22
Cost of goods manufactured 136
Beginning raw materials inventory 50
Beginning work-in-process inventory 156
Beginning finished goods inventory 160
Ending finished goods inventory 150

Required: Determine the following amounts in dollars:
a. Ending Raw Materials assuming all Raw Materials costs are classified as direct costs
b. Ending Work-in-Process Inventory
c. Cost of Goods Sold

Topic: Equivalent Units Calculations
3. Jakobs Manufacturing Company began July with 50,000 units of inventory in process, 30 percent completed. During the month, 200,000 units were completed and transferred to the finished goods warehouse. Ending inventory consisted of 40,000 units, 70 percent completed. Materials were added at the beginning of the process.

Required: Calculate the equivalent units in process for:
a. Materials equivalent units under the weighted average process cost method
b. Conversion equivalent units under the weighted average process cost method

Topic: Units in Process and Equivalent Units Calculations
4. Westen Company manufactures a product that passes through two processes. The following information is available for the first department for August:

• Beginning work-in-process consisted of 24,000 units that were 85 percent complete with respect to conversion.
• Ending work-in-process consisted of 14,000 units that were 30 percent complete with respect to conversion.
• 140,000 units were started in process during the month.
• All materials are added at the beginning of the process.

Required:
a. Prepare a detailed summary of units in process during the month.
b. Compute equivalent units in process for Materials and Conversion using the weighted average method.

Topic: Process Costing Calculations
5. Chamberlin Corporation produces a product that passes through two departments. For October, the following equivalent unit schedule was prepared for the first department:

Materials Conversion
Units completed 250,000 250,000
Units EWIP x fraction complete:
Materials (24,000 x 100 percent) 24,000
Conversion (24,000 x 30 percent) _______ 7,200
Equivalent units in process 274,000 257,200

Costs assigned to beginning work-in-process:
Materials $78,440
Conversion 31,728

Manufacturing costs incurred during the month:
Materials $75,000
Conversion 60,000

Required:
a. Compute the unit cost for January using the weighted average method. (Round unit costs to 2 decimal places.)
b. Determine the cost of goods transferred out.
c. Determine the cost of ending work-in-process.

Topic: Process Costing
6. Brierley Company manufactures a product that passes through two processes: Mixing and Packaging. The costs incurred for the Mixing Department for September follow:

Work-in-process, Sept. 1:
Units (40 percent complete) 15,000
Direct materials 8,000
Direct labor 6,000
Overhead 4,752

During Sept., 100,000 units were completed and transferred to Packaging. The following costs were incurred by the Mixing Department during September:

Direct materials 100,000
Direct labor 60,000
Overhead 24,000

There were 8,000 units that were 70 percent complete remaining in the Mixing Department at Sept. 30. Use the weighted average method and round unit costs to 2 decimal places.

Required:
a. Determine the equivalent units in process for Sept.
b. Determine the Total Costs To Account For in Sept.
c. Determine the costs per equivalent unit assuming all costs are added uniformly during the mixing process.
d. Determine the Accounting for Total Costs.

Topic: Costing in Various Type Organizations
1. Compare the challenge of determining unit production costs among service, merchandising and manufacturing organizations. Specifically, in which type of organizations is obtaining accurate inventory costs a more important issue? In which type of organization does obtaining accurate inventory costs present the greatest challenge?

Topic: Types of Organizations
LO: 1
2. Briefly discuss and give examples of the three classifications of organizations discussed in this chapter.

Topic: Differences between Job-Order and Process Costing
LO: 3, 5
3. Describe the difference between job-order and process costing in terms of the primary cost objective and time period for which costs are accumulated. 

: Absorption and Variable Costing

True False

Topic: Costing for External Purposes
1. Variable costing is not accepted for external financial reporting?
Topic: Absorption Costing
2. Full Costing is another name for absorption costing?
Topic: Variable Costing
3. Fixed non-manufacturing costs are classified as period costs under variable costing, but not under absorption costing?

Topic: Absorption/Variable Costing
4. Inventory values calculated using variable costing as opposed to absorption costing will generally be higher.

Topic: Variable Costing
5. Under variable costing, fixed manufacturing costs are classified a period expense.

Topic: Advantage of Variable Costing
6. The ability to present an income statement in a contribution format is one of the primary advantages of the absorption costing approach.

Topic: Absorption/Variable Income Differences
7. When production is less than sales volume, net income under absorption costing will be greater than net income using variable costing procedures.

Topic: Fixed Costs as Expense
8. Variable assumes fixed overhead costs only expire when product is sold.

Topic: Opponents of Variable Costing
9. Opponents of variable costing argue that in the long run all costs are variable.