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Equivalent units, Conversion Cost, Ending Inventory

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E3-4

Douglas Manufacturing Company has two production departments: Cutting and Assembly. July 1 inventories are Raw Materials $4,200, Work in Process-Cutting $2,900, Work in Process-Assembly $10,600, and Finished Goods $31,000. During July, the following transactions occurred.
1. Purchased $62,500 of raw materials on account.
2. Incurred $56,000 of factory labor. (Credit Wages Payable.)
3. Incurred $70,000 of manufacturing overhead; $40,000 was paid and the remainder is unpaid.
4. Requisitioned materials for Cutting $15,700 and Assembly $8,900.
5. Used factory labor for Cutting $29,000 and Assembly $27,000.
6. Applied overhead at the rate of $15 per machine hour. Machine hours were Cutting 1,680 and Assembly 1,720.
7. Transferred goods costing $67,600 from the Cutting Department to the Assembly Department.
8. Transferred goods costing $134,900 from Assembly to Finished Goods.
9. Sold goods costing $150,000 for $200,000 on account.
Journalize the transactions. (For multiple debit/credit entries, list amounts from largest to smallest eg 10, 5, 3, 2.)
Description/Account Debit Credit
1.

2.

3.

4.

5.

6.

7.

8.

9.

(To record cost of goods sold.)

(To record sales.)

E3-7

The Sanding Department of Ortiz Furniture Company has the following production and manufacturing cost data for March 2008, the first month of operation.
Production: 12,000 units finished and transferred out; 3,000 units started that are 100% complete as to materials and 20% complete as to conversion costs.
Manufacturing costs: Materials $33,000; labor $27,000; overhead $36,000.
Prepare a production cost report. (If answer is zero, please enter 0. Do not leave any fields blank. Enter answer for unit costs to 2 decimal places, e.g. 5.25. Use rounded amounts for future calculations.)
ORTIZ FURNITURE COMPANY
Sanding Department
Production Cost Report
For the Month of March 31, 2008
Equivalent Units
Quantities Physical Units Materials Conversion Costs
Units to be accounted for
Work in process, March 1

Started into production

Total units

Units accounted for
Transferred out

Work in process, March 31

Total units

Costs Materials Conversion Costs Total
Unit costs
Costs in March $
$
$

Equivalent units

Unit costs $
$
$

Cost to be accounted for
Work in process, March 1 $

Started into production

Total costs $

Cost Reconciliation Schedule
Costs accounted for
Transferred out $

Work in process, March 31
Materials $

Conversion costs

Total costs $

E3-9

Podsednik Company has gathered the following information.
Units in beginning work in process -0-
Units started into production 36,000
Units in ending work in process 6,000
Percent complete in ending work in process:
Conversion costs 40%
Materials 100%
Costs incurred:
Direct materials $72,000
Direct labor $81,000
Overhead $97,200

Compute equivalent units of production for materials and for conversion costs.
Materials

Conversion costs

Determine the unit costs of production.
Unit cost-Materials $

Unit cost-Conversion costs $

Show the assignment of costs to units transferred out and in process.
Units transferred out $

Units in ending work in process $

E3-14

Container Shipping, Inc. is contemplating the use of process costing to track the cost of its operations. The operation consists of three segments (departments): receiving, shipping, and delivery. Containers are received at Container's docks and sorted according to the ship they will be carried on. The containers are then loaded onto a ship, which carries them to the appropriate port of destination. The containers are then off-loaded and delivered to the receiving company.
Container shipping wants to begin to use process costing in the shipping department. Direct materials represent the fuel costs to run the ship, and "Containers in transit" represents work in process. Listed below is information about the shipping department's first month's activity.
Containers in Transit April 1 0
Containers loaded 800
Containers in Transit April 30 350 40% of direct materials and
30% of conversion costs

Determine the physical flow of containers for the month.
Total containers =

Compute the equivalent units for direct materials and conversion costs: (Round answers to 0 decimal places, e.g. 125.)
Direct Materials

Conversion Costs

P3-2A

Ortega Industries Inc. manufactures in separate processes furniture for homes. In each process, materials are entered at the beginning, and conversion costs are incurred uniformly. Production and cost data for the first process in making two products in two different manufacturing plants are as follows.
Cutting Department
Plant 1 Plant 2
Production Data-July T12-Tables C10-Chairs
Work in process units, July 1 -0- -0-
Units started into production 20,000 16,000
Work in process units, July 31 3,000 500
Work in process percent complete 60 80

Cost Data-July
Work in process, July 1 $ -0- $ -0-
Materials 380,000 288,000
Labor 234,400 125,900
Overhead 104,000 96,700
Total $718,400 $510,600

For each plant:
1. Compute the physical units of production. (If answer is zero, please enter 0. Do not leave any fields blank.)
Physical Units T12 Tables C10 Chairs
Units to be accounted for
Work in process, July 1

Started into production

Total units

Units accounted for
Transferred out

Work in process, July 31

Total units

2. Compute equivalent units of production for materials and for conversion costs.
Materials Conversion Costs
T12 Tables

C10 Chairs

3. Determine the unit costs of production.
T12 Tables $

C10 Chairs $

4. Show the assignment of costs to units transferred out and in process.
T12 Tables
Costs accounted for
Transferred out $

Work in process, July 31
Materials $

Conversion costs

Total costs $

C10 Chairs
Costs accounted for
Transferred out $

Work in process, July 31
Materials $

Conversion costs

Total costs $

Prepare the production cost report for Plant 1 for July 2008. (If answer is zero, please enter 0. Do not leave any fields blank.)
ORTEGA INDUSTRIES INC.
Cutting Department-Plant 1
Production Cost Report
For the Month Ended July 31, 2008
Equivalent Units
Quantities Physical Units Materials Conversion Costs
Units to be accounted for
Work in process, July 1

Started into production

Total units

Units accounted for
Transferred out

Work in process, July 31

Total units

Costs Materials Conversion Costs Total
Unit costs
Costs in July $
$
$

Equivalent units

Unit costs $
$
$

Cost to be accounted for
Work in process, July 1 $

Started into production

Total costs $

Cost Reconciliation Schedule
Costs accounted for
Transferred out $

Work in process, July 31
Materials $

Conversion costs

Total costs $

P3-5A

Chen Company manufactures basketballs. Materials are added at the beginning of the production process and conversion costs are incurred uniformly. Production and cost data for the month of July 2008 are as follows.
Production Data-Basketballs Units Percent
Complete
Work in process units, July 1 500 60%
Units started into production 1,000
Work in process units, July 31 600 30%

Cost Data - Basketballs
Work in process, July 1
Materials $750
Conversion costs 600 $1,350
Direct materials 2,400
Direct labor 1,580
Manufacturing overhead 1,060

Calculate the following.
1. The equivalent units of production for materials and conversion.
Materials

Conversion costs

2. The unit costs of production for materials and conversion costs.
Unit cost-Materials $

Unit cost-Conversion costs $

3. The assignment of costs to units transferred out and in process at the end of the period.
Costs accounted for
Transferred out $

Work in process, July 31
Materials $

Conversion costs

Total costs $

Prepare a production cost report for the month of July for the basketballs.
CHEN COMPANY
Basketball Department
Production Cost Report
For the Month Ended July 31, 2008
Equivalent Units
Quantities Physical Units Materials Conversion Costs
Units to be accounted for
Work in process, July 1

Started into production

Total units

Units accounted for
Transferred out

Work in process, July 31

Total units

Costs Materials Conversion Costs Total
Unit costs
Costs in July $
$
$

Equivalent units

Unit costs $
$

Cost to be accounted for
Work in process, July 1 $

Started into production

Total costs $

Cost Reconciliation Schedule
Costs accounted for
Transferred out $

Work in process, July 31
Materials $

Conversion costs

Total costs $

Attachments

Solution Summary

The solution answers questions... E 3-4 Douglas Manufacturing E3-7 Ortiz Furniture E 3-9 Podsednik Company E3-14 Container Shipping, Inc. P 3-2A Ortega Industries Inc. P 3-5a Chen Company.

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