CHAPTER 6
DISCUSSION QUESTIONS
Q6-1. The basic objective of process costing is to
determine the costs of the products manufactured by the company. Determining the cost of
the products manufactured is necessary in
order to properly cost ending inventories for
external reporting purposes (i.e., reporting to
creditors and owners of the company, the
SEC, and the IRS) and to evaluate the profitability of the manufacturing activity. In order
to cost products, the costs must be determined for materials, labor, and factory overhead used to process each unit of product
through each department.
Q6-2. The products manufactured within a department (or cost center) during the period can be
heterogeneous if job order costing is used,
but must be homogeneous if process costing
is used. In job order costing, products are
accounted for in batches. The cost of each
unit of product manufactured on a job is determined by dividing the total cost charged to the
job by the number of units produced on the
job. Since the manufacturing cost of each job
is accounted for separately, accurate and
useful product cost can be determined even
when the products manufactured on different
jobs are substantially different. By contrast, in
process costing, all manufacturing costs are
charged to the department, and the unit cost
is determined by dividing the cost charged to
the department by the number of units produced. As a consequence, the units of product manufactured within a department must
be essentially alike in order for the cost allocated to each unit to be meaningful (i.e., to
reasonably reflect the actual cost of the
resources used to manufacture the product).
Q6-3. (a) Process
(b) Process, unless significantly different
models are manufactured
(c) Process
(d) Job order
(e) Process
(f) Process
(g) Job order
(h) Process, unless different fabrics are used
for different models, in which case the
conversion costs may be accounted for
using process, but the materials using job
order
Q6-4. Three product flow formats are: sequential,
parallel, and selective.
Sequential means that the product flows or is
manufactured in an unchanging fixed set of
operations, going from one department to the
next.
Parallel means that certain operational
phases take place simultaneously in other
departments and the partially completed units
or parts are brought together in subsequent
departments.
Selective refers to the fact that a product does
not necessarily move through every department. Depending upon the character or shape
of the final product, different departments are
engaged in completing the desired product.
Q6-5. Materials Costs—In job order costing, materials requisitions are used and charges are
made to jobs; in process costing, charges for
materials issued to production are made to
departments, with infrequent use of materials
requisitions.
Labor Costs—Time tickets are used in job
order costing to accumulate labor costs for
each job; in process costing, labor costs are
charged to departments, and, therefore,
detailed time records are not necessary.
Factory Overhead—Job order costing
requires the use of predetermined rates for
charging overhead to jobs; in process costing,
actual overhead may be used. (However, predetermined rates are often used in order to
smooth overhead that is not incurred at the
same rate as production activity.)
Summarizing Costs—A job order cost sheet is
used to accumulate the costs of an order in job
order costing; a cost of production report is
used in process costing. In job order costing,
costs are summarized on completion of the
job; in process costing, costs charged to the
6-1
6-2
department and costs accounted for are summarized in the cost of production report each
month (or sometimes each week).
Q6-6. Predetermined overhead rates can and
should be used if the pattern of overhead cost
incurrence does not follow the pattern of production activity. Some items of overhead are
fixed and not responsive to changes in production activity. If production volume varies each
month, then predetermined overhead rates
should be used. Some items of overhead are
incurred only at certain times during the year,
but benefit production throughout the year
(e.g., payroll taxes, insurance, property taxes,
vacation pay, etc.). These items can be
recorded as prepaid expenses and amortized
uniformly to each month if actual overhead is
charged to production. Alternatively, estimates
of such costs can be included in the predetermined overhead rate, and the actual cost
charged to overhead when incurred. The use
of predetermined rates is often simpler than
the allocation of actual costs because a single
predetermined rate requires only one overhead charge to each department each month.
In contrast, the capitalization and amortization of each item of actual overhead would
require numerous charges each month.
Q6-7. A cost of production report is an effective
monthly (or weekly) summary of the cost of
materials, labor, and overhead consumed by
each department or cost center, along with a
record of the quantity of products manufactured.
It provides information necessary to cost
Chapter 6
products, prepare journal entries to record the
transfer of costs between departments, and
control costs.
Q6-8. The sections commonly found in a cost of production report are: (a) a quantity schedule
indicating the source and disposition of the
units of product, (b) a cost charged to the
department section, indicating the cost in total
and per unit for the cost transferred in from
the preceding department, as well as materials, labor and overhead charged to the
department, and (c) a cost accounted for section indicating the amount of cost assigned to
the units transferred out of the department, as
well as the cost of ending inventory.
Q6-9. Separate departmental cost of production
reports are used to accumulate costs more
accurately and to provide more detailed data
for cost control purposes than a plant-wide
cost of production report could provide. In
some cases (e.g., a manufacturing plant that
has a selective production flow for its products), a plant-wide cost of production report
cannot be used.
Q6-10. An equivalent unit of production is the amount
of a resource (e.g., materials, labor, or overhead) that would be required to complete one
unit of the product with respect to the cost element being considered. The total number of
equivalent units, with respect to a particular
element of cost, represents the number of
units of the product that could have been
completed with the resources used during the
period.
Chapter 6
6-3
EXERCISES
E6-1
(1)
Equivalent units transferred out .................
Equivalent units in ending inventory:
Cost from preceding department
(100% × 5,000) ................................
Materials (100% × 5,000) ....................
Labor (80% × 5,000) ..............................
Factory overhead (60% × 5,000) .........
Total equivalent units...................................
(2)
Cost in beginning inventory........................
Cost added during current period ..............
Total cost to be accounted for ....................
Divided by total equivalent units ................
Cost per equivalent unit ..............................
Cost from
Preceding
Department
20,000
Materials
Labor
Factory
Overhead
20,000
20,000
20,000
5,000
5,000
4,000
25,000
Cost from
Preceding
Department
0
$40,000
$40,000
25,000
$ 1.60
25,000
24,000
Materials
Labor
0
$15,000
$15,000
25,000
$
.60
E6-2
Work in Process—Department X .............................................
Work in Process—Department Y .............................................
Materials ........................................................................
0
$ 9,600
$ 9,600
24,000
$
.40
3,000
23,000
Factory
Overhead
0
$16,330
$16,330
23,000
$
.71
50,000
40,000
90,000
Work in Process—Department X .............................................
Work in Process—Department Y .............................................
Payroll ............................................................................
80,000
70,000
Work in Process—Department X .............................................
Work in Process—Department Y .............................................
Factory Overhead ........................................................
180,000
70,000
Work in Process—Department Y .............................................
Work in Process—Department X ................................
300,000
Finished Goods Inventory........................................................
Work in Process—Department Y.................................
448,000
150,000
250,000
300,000
448,000
6-4
E6-3
Chapter 6
Tyndol Fabricators Inc.
Cutting and Forming Department
Cost of Production Report
For November
Quantity Schedule
Beginning inventory................................
Started in process this period ...............
Transferred to Assembling Department
Ending Inventory .....................................
Materials
Labor
75%
40%
Overhead
25%
Quantity
800
3,200
4,000
3,400
600
4,000
Cost Charged to Department
Beginning inventory:
Materials .....................................................................................
Labor ..........................................................................................
Factory overhead.......................................................................
Total cost in beginning inventory....................................
Total
Cost
$ 17,923
2,352
3,800
$ 24,075
Equivalent
Units*
Unit
Cost**
Cost added during current period:
Materials .....................................................................................
Labor...........................................................................................
Factory overhead.......................................................................
Total cost added during current period............................
Total cost charged to department ..................................................
$ 68,625
14,756
29,996
$113,377
$137,452
3,850
3,640
3,550
$22.48
4.70
9.52
Cost Accounted for as Follows
Transferred to Assembling Department
Work in Process, ending inventory:
Materials ............................................
Labor ..................................................
Factory overhead ..............................
Total cost accounted for ........................
Units
3,400
600
600
600
$36.70
%
Complete Unit Cost
100%
$36.70
75%
40%
25%
$22.48
4.70
9.52
Total Cost
$124,780
$10,116
1,128
1,428
12,672
$137,452
*Total number of equivalent units required in the cost accounted for section determined as follows:
Equivalent units transferred out ............
Equivalent units in ending inventory ....
Total equivalent units..............................
Materials
3,400
450
3,850
Labor
3,400
240
3,640
Overhead
3,400
150
3,550
** Total cost (i.e., the cost in beginning inventory plus the cost added during the current period)
divided by the total number of equivalent units required in the cost accounted for section
Chapter 6
E6-4
6-5
Tokyo Manufacturing Company
Molding Department
Cost of Production Report
For August
Quantity Schedule
Beginning inventory................................
Started in process this period ...............
Transferred to Finishing Department ....
Ending inventory .....................................
Materials
75%
Labor
25%
Overhead
25%
Quantity
1,000
9,000
10,000
9,200
800
10,000
Cost Charged to Department
Beginning inventory:
Materials .....................................................................................
Labor...........................................................................................
Factory overhead.......................................................................
Total cost in beginning inventory....................................
Total
Cost
$ 4,120
522
961
$ 5,603
Equivalent
Units*
Unit
Cost**
Cost added during current period:
Materials .....................................................................................
Labor...........................................................................................
Factory overhead.......................................................................
$39,980
12,638
18,779
9,800
9,400
9,400
$4.50
1.40
2.10
Total cost added during current period............................
Total cost charged to department ..................................................
$71,397
$77,000
$8.00
%
Complete Unit Cost
100%
$8.00
Total Cost
$73,600
Cost Accounted for as Follows
Transferred to Finishing Department ....
Work in Process, ending inventory:
Materials ..............................................
Labor ....................................................
Factory overhead ................................
Total cost accounted for ........................
Units
9,200
800
800
800
75%
25%
25%
$4.50
1.40
2.10
$2,700
280
420
3,400
$77,000
*Total number of equivalent units required in the cost accounted for section determined as follows:
Equivalent units transferred out .......
Equivalent units in ending inventory
Total equivalent units ........................
Materials
9,200
600
9,800
Labor
9,200
200
9,400
Overhead
9,200
200
9,400
** Total cost (i.e., the cost in beginning inventory plus the cost added during the current period)
divided by the total number of equivalent units required in the cost accounted for section
6-6
E6-5
Chapter 6
Stanislov Corporation
Forming Department
Cost of Production Report
For September
Quantity Schedule
Beginning inventory................................
Received from Cutting Department.......
Transferred to Painting Department ......
Ending inventory .....................................
Materials
60%
Labor
30%
Overhead
30%
Quantity
1,400
4,600
6,000
5,000
1,000
6,000
Cost Charged to Department
Beginning inventory:
Cost from preceding department.............................................
Materials ....................................................................................
Labor...........................................................................................
Factory overhead.......................................................................
Total cost in beginning inventory......................................
Total
Cost
$ 21,120
5,880
2,614
5,228
$ 34,842
Equivalent
Units*
Unit
Cost**
Cost added during current period:
Cost from preceding department.............................................
Materials .....................................................................................
Labor...........................................................................................
Factory overhead ......................................................................
Total cost added during current period............................
Total cost charged to department .................................................
$ 68,280
20,440
17,526
35,052
$141,298
$176,140
6,000
5,600
5,300
5,300
$14.90
4.70
3.80
7.60
Cost Accounted for as Follows
Transferred to Painting Department ......
Work in Process, ending inventory:
Cost from preceding department ....
Materials ............................................
Labor ..................................................
Factory overhead ..............................
Total cost accounted for.........................
Units
5,000
%
Complete
100%
Unit Cost
$31.00
1,000
1,000
1,000
1,000
100%
60%
30%
30%
$14.90
4.70
3.80
7.60
$31.00
Total Cost
$155,000
$14,900
2,820
1,140
2,280
21,140
$176,140
*Total number of equivalent units required in the cost accounted for section determined as follows:
Equivalent units transferred out ............
Equivalent units in ending inventory ....
Total equivalent units..............................
Prior Dept.
Cost
Materials
5,000
5,000
1,000
600
6,000
5,600
Labor
5,000
300
5,300
Overhead
5,000
300
5,300
** Total cost (i.e., the cost in beginning inventory plus the cost added during the current period)
divided by the total number of equivalent units required in the cost accounted for section
Chapter 6
E6-6
6-7
Sonneli Corporation
Assembly Department
Cost of Production Report
For February
Quantity Schedule
Beginning inventory................................
Received from Cutting Department.......
Transferred to Finished Goods ..............
Ending inventory ....................................
Materials
80%
Labor
60%
Cost Charged to Department
Beginning inventory:
Overhead
60%
Total
Cost
Cost from preceding department.............................................
Materials .....................................................................................
Labor ..........................................................................................
Factory overhead.......................................................................
Total cost in beginning inventory......................................
$11,800
4,000
1,200
2,400
$19,400
Cost added during current period:
Cost from preceding department.............................................
Materials .....................................................................................
Labor ..........................................................................................
Factory overhead ......................................................................
Total cost added during current period ..........................
Total cost charged to department ..................................................
$63,200
21,200
17,660
35,320
$137,380
$156,780
Cost Accounted for as Follows
Transferred to Finished Goods ..............
Work in Process, ending inventory:
Cost from preceding department ....
Materials ............................................
Labor ..................................................
Factory overhead ..............................
Total cost accounted for.........................
Units
2,000
500
500
500
500
Quantity
400
2,100
2,500
2,000
500
2,500
Equivalent
Units*
Unit
Cost**
2,500
2,400
2,300
2,300
$30.00
10.50
8.20
16.40
$65.10
%
Complete Unit Cost
100%
$65.10
100%
80%
60%
60%
$30.00
10.50
8.20
16.40
Total Cost
$130,200
$15,000
4,200
2,460
4,920
26,580
$156,780
*Total number of equivalent units required in the cost accounted for section determined as follows:
Equivalent units transferred out ............
Equivalent units in ending inventory ....
Total equivalent units..............................
Prior Dept.
Cost
Materials
2,000
2,000
500
400
2,500
2,400
Labor
2,000
300
2,300
Overhead
2,000
300
2,300
** Total cost (i.e., the cost in beginning inventory plus the cost added during the current period)
divided by the total number of equivalent units required in the cost accounted for section
6-8
E6-7
Chapter 6
Saleri Manufacturing Corporation
Forming Department
Cost of Production Report
For June
Quantity Schedule
Beginning inventory................................
Received from Cutting Department.......
Transferred to Finishing Department ....
Ending inventory .....................................
Material A
100%
Material B
0%
Labor
30%
Overhead
30%
Quantity
600
3,900
4,500
4,100
400
4,500
Cost Charged to Department
Beginning inventory:
Cost from preceding department.............................................
Material A ...................................................................................
Material B ...................................................................................
Labor...........................................................................................
Factory overhead.......................................................................
Total cost in beginning inventory ....................................
Total
Cost
$ 4,422
2,805
0
1,250
1,875
10,352
Equivalent
Units*
Unit
Cost**
Cost added during current period:
Cost from preceding department.............................................
Material A ...................................................................................
Material B ...................................................................................
Labor...........................................................................................
Factory overhead ......................................................................
Total cost added during current period............................
Total cost charged to department ..................................................
$ 29,328
19,695
10,250
15,630
23,445
$ 98,348
$108,700
4,500
4,500
4,100
4,220
4,220
$ 7.50
5.00
2.50
4.00
6.00
Cost Accounted for as Follows
Transferred to Finishing Department ....
Work in Process, ending inventory:
Cost from preceding department ....
Material A ..........................................
Material B ..........................................
Labor ..................................................
Factory overhead .............................
Total cost accounted for ........................
Units
4,100
400
400
400
400
400
$25.00
%
Complete Unit Cost
100%
$25.00
100%
100%
0%
30%
30%
$7.50
5.00
2.50
4.00
6.00
Total Cost
$102,500
$3,000
2,000
0
480
720
6,200
$108,700
*Total number of equivalent units required in the cost accounted for section determined as follows:
Equivalent units transferred out ............
Equivalent units in ending inventory ....
Total equivalent units..............................
Prior Dept.
Cost
Material A
4,100
4,100
400
400
4,500
4,500
Material B
4,100
0
4,100
Labor
4,100
120
4,220
Overhead
4,100
120
4,220
** Total cost (i.e., the cost in beginning inventory plus the cost added during the current period)
divided by the total number of equivalent units required in the cost accounted for section
Chapter 6
E6-8
6-9
Canoli Cola Company
Carbonation Department
Cost of Production Report
For October
Quantity Schedule
Beginning inventory ................................................
Received from Syrup Department ..........................
Added to process in Carbonation Department .....
Transferred to Bottling Department .......................
Ending inventory ......................................................
Materials
100%
Cost Charged to Department
Beginning inventory:
Cost from preceding department ...........................................
Materials .....................................................................................
Labor ..........................................................................................
Factory overhead.......................................................................
Total cost in beginning inventory ....................................
Cost added during current period:
Cost from preceding department.............................................
Materials .....................................................................................
Labor...........................................................................................
Factory overhead.......................................................................
Total cost added during current period............................
Total cost charged to department ..................................................
Cost Accounted for as Follows
Transferred to Bottling Department ......
Work in Process, ending inventory:
Cost from preceding department ....
Materials ...........................................
Labor ..................................................
Factory overhead .............................
Total cost accounted for ........................
Units
7,800
1,200
1,200
1,200
1,200
Labor
25%
Overhead
25%
7,800
1,200
9,000
Total
Cost
$ 1,120
140
65
120
$ 1,445
Equivalent
Units*
Unit
Cost**
$ 9,680
1,210
1,960
3,120
$15,970
$17,415
9,000
9,000
8,100
8,100
$1.20
.15
.25
.40
$2.00
%
Complete Unit Cost
100%
$2.00
100%
100%
25%
25%
Quantity
1,000
2,000
6,000
9,000
$1.20
.15
.25
.40
Total Cost
$15,600
$1,440
180
75
120
1,815
$17,415
*Total number of equivalent units required in the cost accounted for section determined as follows:
Equivalent units transferred out ............
Equivalent units in ending inventory ....
Total equivalent units..............................
Prior Dept.
Cost
Materials
7,800
7,800
1,200
1,200
9,000
9,000
Labor
7,800
300
8,100
Overhead
7,800
300
8,100
** Total cost (i.e., the cost in beginning inventory plus the cost added during the current period)
divided by the total number of equivalent units required in the cost accounted for section
6-10
E6-9
Chapter 6
Menezes Chemical Company
Blending Department
Cost of Production Report
For March
Quantity Schedule
Beginning inventory .................................................
Received from Refining Department ......................
Added to process in Blending Department ...........
Transferred to Finishing Department .....................
Ending inventory ......................................................
Materials
100%
Cost Charged to Department
Beginning inventory:
Cost from preceding department.............................................
Materials .....................................................................................
Labor...........................................................................................
Factory overhead.......................................................................
Total cost in beginning inventory ....................................
Cost added during current period:
Cost from preceding department.............................................
Materials .....................................................................................
Labor ..........................................................................................
Factory overhead.......................................................................
Total cost added during current period............................
Total cost charged to department ..................................................
Cost Accounted for as Follows
Transferred to Finishing Department ....
Work in Process, ending inventory:
Cost from preceding department ....
Materials ............................................
Labor ..................................................
Factory overhead ..............................
Total cost accounted for.........................
Units
26,000
4,000
4,000
4,000
4,000
Labor
Overhead
80%
90%
26,000
4,000
30,000
Total
Cost
$4,750
2,415
180
787
$8,112
Equivalent
Units*
Unit
Cost**
$25,250
12,885
2,740
8,113
$48,988
$57,100
30,000
30,000
29,200
29,600
$1.00
.51
.10
.30
$1.91
%
Complete Unit Cost
100%
$1.91
100%
100%
80%
90%
Quantity
5,000
20,000
5,000
30,000
$1.00
.51
.10
.30
Total Cost
$49,660
$4,000
2,040
320
1,080
7,440
$57,100
*Total number of equivalent units required in the cost accounted for section determined as follows:
Equivalent units transferred out ............
Equivalent units in ending inventory ....
Total equivalent units..............................
Prior Dept.
Cost
Materials
26,000
26,000
4,000
4,000
30,000
30,000
Labor
26,000
3,200
29,200
Overhead
26,000
3,600
29,600
** Total cost (i.e., the cost in beginning inventory plus the cost added during the current period)
divided by the total number of equivalent units required in the cost accounted for section
Chapter 6
6-11
E6-10 APPENDIX
Shankar Manufacturing Company
Cutting Department
Cost of Production Report
For July
Quantity Schedule
Beginning inventory................................
Started in process this period ...............
Transferred to Assembly Department ...
Ending inventory .....................................
Materials
60%
100%
Labor
20%
60%
Cost Charged to Department
Beginning inventory:
Materials .....................................................................................
Labor...........................................................................................
Factory overhead ......................................................................
Total cost in beginning inventory......................................
Cost added during current period:
Materials .....................................................................................
Labor...........................................................................................
Factory overhead.......................................................................
Total cost added during current period............................
Total cost charged to department ..................................................
Cost Accounted for as Follows
Transferred to Assembly Department:
Beginning inventory ........................
Cost to complete:
Materials ...............................
Labor .....................................
Factory overhead .................
Started and completed this period .
Total cost transferred to Assembly
Department ................................
Work in Process, ending inventory:
Materials ............................................
Labor ..................................................
Factory overhead .............................
Total cost accounted for ........................
Units
Overhead
20%
50%
Total
Cost
$2,940
390
585
$3,915
$46,530
18,860
27,150
$92,540
$96,455
Quantity
100
900
1,000
850
150
1,000
Equivalent
Units*
Unit
Cost**
940
920
905
$49.50
20.50
30.00
$100.00
Current % Unit Cost
Total Cost
$3,915
100
100
100
750
40%
80%
80%
100%
$49.50
20.50
30.00
100.00
1,980
1,640
2,400
$ 9,935
75,000
$84,935
150
150
150
100%
60%
50%
$49.50
20.50
30.00
$7,425
1,845
2,250
11,520
$96,455
*Number of equivalent units of cost added during the current period determined as follows:
To complete beginning inventory ..........
Started and completed this period........
Ending inventory .....................................
Total equivalent units..............................
Materials
40
750
150
940
Labor
80
750
90
920
Overhead
80
750
75
905
** Cost added during the current period divided by the number of equivalent units of cost added during the current period
6-12
Chapter 6
E6-11 APPENDIX
Cantach Tool Company
Assembly Department
Cost of Production Report
For November
Quantity Schedule
Beginning inventory................................
Received from Cutting Department.......
Transferred to Finished Goods ..............
Ending inventory .....................................
Materials
50%
90%
Labor
40%
80%
Cost Charged to Department
Beginning inventory:
Cost from preceding department...........................................
Materials .....................................................................................
Labor...........................................................................................
Factory overhead.......................................................................
Total cost in beginning inventory....................................
Cost added during current period:
Cost from preceding department.............................................
Materials .....................................................................................
Labor...........................................................................................
Factory overhead.......................................................................
Total cost added during current period............................
Total cost charged to department ..................................................
Overhead
40%
80%
Quantity
1,200
2,800
4,000
3,000
1,000
4,000
Total
Cost
$ 17,280
5,550
2,400
3,600
$ 28,830
Equivalent
Units*
Unit
Cost**
$ 40,600
29,700
16,932
25,398
$112,630
$141,460
2,800
3,300
3,320
3,320
$14.50
9.00
5.10
7.65
$36.25
Chapter 6
6-13
E6-11 APPENDIX (Concluded)
Cost Accounted for as Follows
Transferred to Finished Goods:
Beginning inventory .........................
Cost to complete:
Materials ...............................
Labor .....................................
Factory overhead .................
Started and completed this period
Total cost transferred to Finished Goods
Work in Process, ending inventory:
Cost from preceding department ....
Materials ............................................
Labor .................................................
Factory overhead ..............................
Total cost accounted for ........................
Units
Current % Unit Cost
Total Cost
$28,830
1,200
1,200
1,200
1,800
50%
60%
60%
100%
$9.00
5.10
7.65
36.25
1,000
1,000
1,000
1,000
100%
90%
80%
80%
$14.50
9.00
5.10
7.65
5,400
3,672
5,508
$14,500
8,100
4,080
6,120
$ 43,410
65,250
$108,660
32,800
$141,460
*Number of equivalent units of cost added during the current period determined as follows:
To complete beginning inventory ..........
Started and completed this period........
Ending inventory .....................................
Total equivalent units..............................
Prior Dept.
Cost
Materials
0
600
1,800
1,800
1,000
900
2,800
3,300
Labor
720
1,800
800
3,320
Overhead
720
1,800
800
3,320
** Cost added during the current period divided by the number of equivalent units of cost added during the current period
6-14
Chapter 6
E6-12 APPENDIX
Southwell Chemical Corporation
Blending Department
Cost of Production Report
For May
Quantity Schedule
Beginning inventory................................
Received from Refining Department .....
Added to process in Blending Department
Transferred to Finished Goods .............
Ending inventory .....................................
Materials
100%
100%
Cost Charged to Department
Beginning inventory:
Cost from preceding department.............................................
Materials .....................................................................................
Labor...........................................................................................
Factory overhead.......................................................................
Total cost in beginning inventory......................................
Cost added during current period:
Cost from preceding department.............................................
Materials .....................................................................................
Labor...........................................................................................
Factory overhead.......................................................................
Total cost added during current period............................
Total cost charged to department ..................................................
Labor
20%
60%
Overhead
40%
80%
Quantity
2,000
5,000
5,000
12,000
10,500
1,500
12,000
Total
Cost
$2,460
500
150
600
$3,710
Equivalent
Units*
Unit
Cost**
$12,500
2,500
3,300
7,630
$25,930
$29,640
10,000
10,000
11,000
10,900
$1.25
.25
.30
.70
$2.50
Chapter 6
6-15
E6-12 APPENDIX (Concluded)
Cost Accounted for as Follows
Transferred to Finished Goods:
Beginning inventory .........................
Cost to complete:
Materials ...............................
Labor ....................................
Factory overhead .................
Started and completed this period
Total cost transferred to Finished
Goods ..........................................
Work in Process, ending inventory:
Cost from preceding department ....
Materials ............................................
Labor ..................................................
Factory overhead ..............................
Total cost accounted for ........................
Units
Current % Unit Cost
Total Cost
$3,710
2,000
2,000
2,000
8,500
0%
80%
60%
100%
$ .25
.30
.70
2.50
0
480
840
$ 5,030
21,250
$26,280
1,500
1,500
1,500
1,500
100%
100%
60%
80%
$1.25
.25
.30
.70
$1,875
375
270
840
3,360
$29,640
*Number of equivalent units of cost added during the current period determined as follows:
To complete beginning inventory ..........
Started and completed this period........
Ending inventory .....................................
Total equivalent units..............................
Prior Dept.
Cost
Materials
0
0
8,500
8,500
1,500
1,500
10,000
10,000
Labor
1,600
8,500
900
11,000
Overhead
1,200
8,500
1,200
10,900
** Cost added during the current period divided by the number of equivalent units of cost added during the current period
6-16
Chapter 6
PROBLEMS
P6-1
(1)
Meninquez Cabinet Company
Cutting Department
Cost of Production Report
For August
Quantity Schedule
Beginning inventory................................
Started in process this period ..............
Transferred to Assembly Department ...
Ending inventory .....................................
Materials
90%.
Labor
60%
Cost Charged to Department
Beginning inventory:
Materials .....................................................................................
Labor...........................................................................................
Factory overhead.......................................................................
Total cost in beginning inventor........................................
Cost added during current period:
Materials .....................................................................................
Labor...........................................................................................
Factory overhead.......................................................................
Total cost added during current period............................
Total cost charged to department ..................................................
Cost Accounted for as Follows
Transferred to Assembly Department ...
Work in Process, ending inventory:
Materials ............................................
Labor ..................................................
Factory overhead ..............................
Total cost accounted for.........................
Units
650
150
150
150
Overhead
60%
Total
Cost
$ 5,365
530
795
$6,690
$26,035
8,350
12,525
$46,910
$53,600
Quantity
200
600
800
650
150
800
Equivalent
Units*
785
740
740
$40.00
12.00
18.00
$ 40.00
12.00
18.00
$ 70.00
%
Complete Unit Cost
100%
$70.00
90%
60%
60%
Unit
Cost**
Total Cost
$45,500
$5,400
1,080
1,620
8,100
$53,600
*Total number of equivalent units required in the cost accounted for section determined as follows:
Equivalent units transferred out .....
Equivalent units in ending inventory
Total equivalent units .......................
Materials
650
135
785
Labor
650
90
740
Overhead
650
90
740
** Total cost (i.e., the cost in beginning inventory plus the cost added during the current period)
divided by the total number of equivalent units required in the cost accounted for section
Chapter 6
6-17
P6-1 (Continued)
Meninquez Cabinet Company
Assembly Department
Cost of Production Report
For August
Quantity Schedule
Beginning inventory................................
Received from Cutting Department.......
Transferred to Finished Goods ..............
Ending inventory .....................................
Materials
Labor
Overhead
40%
20%
20%
Cost Charged to Department
Beginning inventory:
Cost from preceding department ...........................................
Materials ....................................................................................
Labor...........................................................................................
Factory overhead.......................................................................
Total cost in beginning inventory ....................................
Cost added during current period:
Cost from preceding department.............................................
Materials ....................................................................................
Labor...........................................................................................
Factory overhead.......................................................................
Total cost added during current period .........................
Total cost charged to department ..................................................
Total
Cost
$ 17,410
3,451
3,611
3,611
$ 28,083
$ 45,500
14,273
20,989
20,989
$101,751
$129,834
Quantity
250
650
900
800
100
900
Equivalent
Units*
900
840
820
820
Unit
Cost**
$ 69.90
21.10
30.00
30.00
$151.00
6-18
Chapter 6
P6-1 (Concluded)
Cost Accounted for as Follows
Transferred to Finished Goods ..............
Work in Process, ending inventory:
Cost from preceding department ....
Materials ............................................
Labor ..................................................
Factory overhead ..............................
Total cost accounted for ........................
Units
800
100
100
100
100
%
Complete Unit Cost
100%
$151.00
100%
40%
20%
20%
$69.90
21.10
30.00
30.00
Total Cost
$120,800
$6,990
844
600
600
9,034
$129,834
*Total number of equivalent units required in the cost accounted for section determined as follows:
Equivalent units transferred out .....
Equivalent units in ending inventory
Total equivalent units .......................
Prior Dept.
Cost
Materials
800
800
100
40
900
840
Labor
800
20
820
Overhead
800
20
820
** Total cost (i.e., the cost in beginning inventory plus the cost added during the current period)
divided by the total number of equivalent units required in the cost accounted for section
(2)
Work in Process—Cutting Department ......................
Work in Process—Assembly Department ..................
Materials ..............................................................
26,035
14,273
Work in Process—Cutting Department ......................
Work in Process—Assembly Department ..................
Payroll ..................................................................
8,350
20,989
Work in Process—Cutting Department ......................
Work in Process—Assembly Department ..................
Applied Factory Overhead..................................
12,525
20,989
Work in Process—Assembly Department ..................
Work in Process—Cutting Department .............
45,500
Finished Goods Inventory ...........................................
Work in Process—Assembly Department ........
120,800
40,308
29,339
33,514
45,500
120,800
Chapter 6
P6-2
(1)
6-19
Rimirez Tool Corporation
Casting Department
Cost of Production Report
For December
Quantity Schedule
Materials
Labor
Overhead
Beginning inventory................................
Started in process this period ..............
Transferred to Finishing Department ....
Ending inventory .....................................
1,000
8,000
9,000
100%
80%
Cost Charged to Department
Beginning inventory:
Materials .....................................................................................
Labor...........................................................................................
Factory overhead.......................................................................
Total cost in beginning inventory......................................
Cost added during current period:
Materials .....................................................................................
Labor...........................................................................................
Factory overhead.......................................................................
Total cost added during current period............................
Total cost charged to department ..................................................
Cost Accounted for as Follows
Transferred to Finishing Department ....
Work in Process, ending inventory:
Materials ............................................
Labor ..................................................
Factory overhead ..............................
Total cost accounted for ........................
Quantity
Units
7,500
1,500
1,500
1,500
80%
7,500
1,500
9,000
Total
Cost
$915
60
90
$ 1,085
Equivalent
Units*
Unit
Cost**
$17,085
4,290
6,435
$27,810
$28,875
9,000
8,700
8,700
$2.00
.50
.75
$3.25
%
Complete Unit Cost
100%
$3.25
100%
80%
80%
$2.00
.50
.75
Total Cost
$24,375
$3,000
600
900
4,500
$28,875
*Total number of equivalent units required in the cost accounted for section determined as follows:
Equivalent units transferred out .............................
Equivalent units in ending inventory......................
Total equivalent units ...............................................
Materials
7,500
1,500
9,000
Labor
7,500
1,200
8,700
Overhead
7,500
1,200
8,700
** Total cost (i.e., the cost in beginning inventory plus the cost added during the current period)
divided by the total number of equivalent units required in the cost accounted for section
6-20
Chapter 6
P6-2 (Continued)
Rimirez Tool Corporation
Finishing Department
Cost of Production Report
For December
Quantity Schedule
Labor
Overhead
Beginning inventory
Received from Casting Department .........................
Transferred to Finished Goods ................................
Ending inventory ........................................................
Quantity
1,500
7,500
9,000
40%
Cost Charged to Department
Beginning inventory:
Cost from preceding department.............................................
Labor...........................................................................................
Factory overhead ......................................................................
Total cost in beginning inventory......................................
Cost added during current period:
Cost from preceding department.............................................
Labor...........................................................................................
Factory overhead.......................................................................
Total cost added during current period............................
Total cost charged to department ..................................................
50%
7,000
2,000
9,000
Total
Cost
$ 4,785
201
555
$ 5,541
Equivalent
Units*
Unit
Cost**
$24,375
2,919
3,125
$30,419
$35,960
9,000
7,800
8,000
$3.24
.40
.46
$4.10
Chapter 6
6-21
P6-2 (Concluded)
Cost Accounted for as Follows
Transferred to Finished Goods ..............
Work in Process, ending inventory:
Cost from preceding department ....
Labor ..................................................
Factory overhead ..............................
Total cost accounted for.........................
Units
7,000
2,000
2,000
2,000
%
Complete Unit Cost
100%
$4.10
100%
40%
50%
$3.24
.40
.46
Total Cost
$28,700
$6,480
320
460
7,260
$35,960
*Total number of equivalent units required in the cost accounted for section determined as follows:
Equivalent units transferred out.........................
Equivalent units in ending inventory .................
Total equivalent units .........................................
Prior Dept.
Cost
7,000
2,000
9,000
Labor
7,000
800
7,800
Overhead
7,000
1,000
8,000
** Total cost (i.e., the cost in beginning inventory plus the cost added during the current period)
divided by the total number of equivalent units required in the cost accounted for section
(2)
Work in Process—Casting Department......................
Materials ..............................................................
17,085
Work in Process—Casting Department......................
Work in Process—Finishing Department...................
Payroll ..................................................................
4,290
2,919
Work in Process—Casting Department......................
Work in Process—Finishing Department...................
Applied Factory Overhead..................................
6,435
3,125
Work in Process—Finishing Department...................
Work in Process—Casting Department ............
24,375
Finished Goods Inventory ...........................................
Work in Process—Finishing Department..........
28,700
17,085
7,209
9,560
24,375
28,700
6-22
P6-3
(1)
Chapter 6
Jetter Engine Corporation
Casting Department
Cost of Production Report
For February
Quantity Schedule
Beginning inventory................................
Started in process this period ...............
Transferred to Assembly Department ...
Ending inventory .....................................
Materials
100%
Labor
80%
Cost Charged to Department
Beginning inventory:
Materials .....................................................................................
Labor...........................................................................................
Factory overhead ......................................................................
Total cost in beginning inventory......................................
Cost added during current period:
Materials .....................................................................................
Labor...........................................................................................
Factory overhead.......................................................................
Total cost added during current period............................
Total cost charged to department ..................................................
Cost Accounted for as Follows
Transferred to Assembly Department ...
Work in Process, ending inventory:
Materials ...........................................
Labor ..................................................
Factory overhead ..............................
Total cost accounted for.........................
Units
2,700
800
800
800
Overhead
90%
Quantity
500
3,000
3,500
2,700
800
3,500
Total
Cost
$ 10,925
338
2,839
$ 14,102
Equivalent
Units*
$146,575
16,362
48,461
$211,398
$225,500
3,500
3,340
3,420
%
Complete Unit Cost
100%
$65.00
100%
80%
90%
$45.00
5.00
15.00
Unit
Cost**
$
45.00
5.00
15.00
$
65.00
Total Cost
$175,500
$36,000
3,200
10,800
50,000
$225,500
*Total number of equivalent units required in the cost accounted for section determined as follows:
Equivalent units transferred out ...............................
Equivalent units in ending inventory........................
Total equivalent units ................................................
Materials
2,700
800
3,500
Labor
2,700
640
3,340
Overhead
2,700
720
3,420
** Total cost (i.e., the cost in beginning inventory plus the cost added during the current period)
divided by the total number of equivalent units required in the cost accounted for section
Chapter 6
6-23
P6-3 (Continued)
Jetter Engine Corporation
Assembly Department
Cost of Production Report
For February
Quantity Schedule
Beginning inventory................................
Received from Casting Department .....
Transferred to Finishing Department ....
Ending inventory .....................................
Materials
70%
Labor
30%
Cost Charged to Department
Beginning inventory:
Cost from preceding department ...........................................
Materials .....................................................................................
Labor ..........................................................................................
Factory overhead ......................................................................
Total cost in beginning inventory....................................
Cost added during current period:
Cost from preceding department.............................................
Materials .....................................................................................
Labor...........................................................................................
Factory overhead.......................................................................
Total cost added during current period............................
Total cost charged to department .................................................
Cost Accounted for as Follows
Transferred to Finishing Department ....
Work in Process, ending inventory
Cost from preceding department ....
Materials ............................................
Labor ..................................................
Factory overhead ..............................
Total cost accounted for.........................
Units
2,900
800
800
800
800
Overhead
30%
Quantity
1,000
2,700
3,700
2,900
800
3,700
Total
Cost
$ 63,150
40,258
12,426
12,426
$128,260
Equivalent
Units*
Unit
Cost**
$175,500
116,480
44,408
44,408
$380,796
$509,056
3,700
3,460
3,140
3,140
$64.50
45.30
18.10
18.10
$146.00
%
Complete Unit Cost
100%
$146.00
100%
70%
30%
30%
$
64.50
45.30
18.10
18.10
Total Cost
$423,400
$51,600
25,368
4,344
4,344
85,656
$509,056
*Total number of equivalent units required in the cost accounted for section determined as follows:
Equivalent units transferred out ............
Equivalent units in ending inventory ....
Total equivalent units..............................
Prior Dept.
Cost
Materials
2,900
2,900
800
560
3,700
3,460
Labor
2,900
240
3,140
Overhead
2,900
240
3,140
** Total cost (i.e., the cost in beginning inventory plus the cost added during the current period)
divided by the total number of equivalent units required in the cost accounted for section
6-24
Chapter 6
P6-3 (Continued)
Jetter Engine Corporation
Finishing Department
Cost of Production Report
For February
Quantity Schedule
Beginning inventory ...................................................
Received from Assembly Department ......................
Transferred to Finished Goods ................................
Ending inventory.........................................................
Labor
50%
Cost Charged to Department
Beginning inventory:
Cost from preceding department.............................................
Labor...........................................................................................
Factory overhead.......................................................................
Total cost in beginning inventory ...................................
Cost added during current period:
Cost from preceding department.............................................
Labor...........................................................................................
Factory overhead.......................................................................
Total cost added during current period............................
Total cost charged to department .................................................
Cost Accounted for as Follows
Transferred to Finished Goods ..............
Work in Process, ending inventory:
Cost from preceding department ....
Labor ..................................................
Factory overhead ..............................
Total cost accounted for.........................
Units
2,800
400
400
400
Overhead
50%
Quantity
300
2,900
3,200
2,800
400
3,200
Total
Cost
$ 42,840
2,760
4,140
$ 49,740
Equivalent
Units*
$423,400
12,240
18,360
$454,000
$503,740
3,200
3,000
3,000
$ 145.70
5.00
7.50
$ 145.70
5.00
7.50
$ 158.20
%
Complete Unit Cost
100%
$ 158.20
100%
50%
50%
Unit
Cost**
Total Cost
$442,960
$58,280
1,000
1,500
60,780
$503,740
*Total number of equivalent units required in the cost accounted for section determined as follows:
Equivalent units transferred out ...............................
Equivalent units in ending inventory........................
Total equivalent units .................................................
Prior Dept.
Cost
2,800
400
3,200
Labor
2,800
200
3,000
Overhead
2,800
200
3,000
** Total cost (i.e., the cost in beginning inventory plus the cost added during the current period)
divided by the total number of equivalent units required in the cost accounted for section
Chapter 6
6-25
P6-3 (Concluded)
(2)
Work in Process—Casting Department......................
Work in Process—Assembly Department ..................
Materials ...............................................................
146,575
116,480
Work in Process—Casting Department......................
Work in Process—Assembly Department ..................
Work in Process—Finishing Department...................
Payroll ..................................................................
16,362
44,408
12,240
Work in Process—Casting Department......................
Work in Process—Assembly Department ..................
Work in Process—Finishing Department...................
Applied Factory Overhead..................................
48,461
44,408
18,360
Work in Process—Assembly Department ..................
Work in Process—Casting Department.............
175,500
Work in Process—Finishing Department...................
Work in Process—Assembly Department .........
423,400
Finished Goods inventory ...........................................
Work in Process—Finishing Department..........
442,960
263,055
73,010
111,229
175,500
423,400
442,960
6-26
P6-4
(1)
Chapter 6
Peneli Cologne Company
Blending Department
Cost of Production Report
For June
Quantity Schedule
Beginning inventory................................
Started in process this period ...............
Transferred to Finishing Department ....
Ending inventory .....................................
Materials
60%
Labor
20%
Cost Charged to Department
Beginning inventory:
Materials .....................................................................................
Labor...........................................................................................
Factory overhead.......................................................................
Total cost in beginning inventory......................................
Cost added during current period:
Materials .....................................................................................
Labor...........................................................................................
Factory overhead.......................................................................
Total cost added during current period ...........................
Total cost charged to department .................................................
Cost Accounted for as Follows
Transferred to Finishing Department ....
Work in Process, ending inventory:
Materials ............................................
Labor ..................................................
Factory overhead ..............................
Total cost accounted for.........................
Units
6,400
600
600
600
Overhead
25%
Quantity
1,000
6,000
7,000
6,400
600
7,000
Total
Cost
$ 19,620
944
2,375
$ 22,939
Equivalent
Units*
Unit
Cost**
$129,100
6,880
29,065
$165,045
$187,984
6,760
6,520
6,550
$22.00
1.20
4.80
$28.00
%
Complete Unit Cost
100%
$28.00
60%
20%
25%
$22.00
1.20
4.80
Total Cost
$179,200
$7,920
144
720
8,784
$187,984
*Total number of equivalent units required in the cost accounted for section determined as follows:
Equivalent units transferred out.........................
Equivalent units in ending inventory .................
Total equivalent units...........................................
Materials
6,400
360
6,760
Labor
6,400
120
6,520
Overhead
6,400
150
6,550
** Total cost (i.e., the cost in beginning inventory plus the cost added during the current period)
divided by the total number of equivalent units required in the cost accounted for section
Chapter 6
6-27
P6-4 (Continued)
Peneli Cologne Company
Finishing Department
Cost of Production Report
For June
Quantity Schedule
Beginning inventory ...................................................
Received from Blending Department ......................
Added to process in Finishing Department.............
Transferred to Finished Goods .................................
Ending inventory .......................................................
Materials
100%
Cost Charged to Department
Beginning inventory:
Cost from preceding department ...........................................
Materials .....................................................................................
Labor...........................................................................................
Factory overhead.......................................................................
Total cost in beginning inventory......................................
Cost added during current period:
Cost from preceding department.............................................
Materials .....................................................................................
Labor...........................................................................................
Factory overhead.......................................................................
Total cost added during current period............................
Total cost charged to department ..................................................
Labor
70%
Overhead
70%
Quantity
1,400
6,400
19,200
27,000
26,000
1,000
27,000
Total
Cost
$ 8,450
1,395
106
659
$ 10,610
Equivalent
Units*
Unit
Cost**
$179,200
28,305
19,919
60,751
$288,175
$298,785
27,000
27,000
26,700
26,700
$ 6.95
1.10
.75
2.30
$11.10
6-28
Chapter 6
P6-4 (Concluded)
Cost Accounted for as Follows
Transferred to Finished Goods ..............
Work in Process, ending inventory:
Cost from preceding department ....
Materials ............................................
Labor ..................................................
Factory overhead ..............................
Total cost accounted for ........................
Units
26,000
1,000
1,000
1,000
1,000
%
Complete Unit Cost
100%
$11.10
100%
100%
70%
70%
$ 6.95
1.10
.75
2.30
Total Cost
$288,600
$6,950
1,100
525
1,610
10,185
$298,785
*Total number of equivalent units required in the cost accounted for section determined as follows:
Equivalent units transferred out ............
Equivalent units in ending inventory ....
Total equivalent units..............................
Prior Dept.
Cost
Materials
26,000
26,000
1,000
1,000
27,000
27,000
Labor
26,000
700
26,700
Overhead
26,000
700
26,700
** Total cost (i.e., the cost in beginning inventory plus the cost added during the current period)
divided by the total number of equivalent units required in the cost accounted for section
(2)
Work in Process—Blending Department ...................
Work in Process—Finishing Department...................
Materials ..............................................................
129,100
28,305
Work in Process—Blending Department ...................
Work in Process—Finishing Department...................
Payroll ...................................................................
6,880
19,919
Work in Process—Blending Department ...................
Work in Process—Finishing Department...................
Applied Factory Overhead .................................
29,065
60,751
Work in Process—Finishing Department...................
Work in Process—Blending Department ..........
179,200
Finished Goods inventory ...........................................
Work in Process—Finishing Department..........
288,600
157,405
26,799
89,816
179,200
288,600
Chapter 6
6-29
P6-5
(1)
Hi-tech Chemical Corporation
Refining Department
Cost of Production Report
For March
Quantity Schedule
Beginning inventory ..................................................
Started in process this period...................................
Transferred to Blending Department ........................
Ending inventory.........................................................
Materials
Labor
100%
75%
Cost Charged to Department
Beginning inventory:
Materials .....................................................................................
Labor...........................................................................................
Factory overhead.......................................................................
Total cost in beginning inventory ....................................
Cost added during current period:
Materials ....................................................................................
Labor ..........................................................................................
Factory overhead.......................................................................
Total cost added during current period............................
Total cost charged to department .................................................
Cost Accounted for as Follows
Transferred to Blending Department.....
Work in Process, ending inventory:
Materials ............................................
Labor .................................................
Factory overhead ..............................
Total cost accounted for.........................
Units
7,000
1,000
1,000
1,000
Overhead
Total
Cost
$728
30
60
$818
Equivalent
Units*
$7,272
1,520
2,940
$11,732
$12,550
8,000
7,750
7,500
$1.00
.20
.40
7,000
1,000
8,000
50%
%
Complete Unit Cost
100%
$1.60
100%
75%
50%
Quantity
800
7,200
8,000
Unit
Cost**
$
1.00
.20
.40
$
1.60
Total Cost
11,200
$1,000
150
200
1,350
$12,550
*Total number of equivalent units required in the cost accounted for section determined as follows:
Equivalent units transferred out ............
Equivalent units in ending inventory ....
Total equivalent units..............................
Materials
7,000
1,000
8,000
Labor
7,000
750
7,750
Overhead
7,000
500
7,500
** Total cost (i.e., the cost in beginning inventory plus the cost added during the current period)
divided by the total number of equivalent units required in the cost accounted for section
6-30
Chapter 6
P6-5 (Continued)
Hi-tech Chemical Corporation
Blending Department
Cost of Production Report
For March
Quantity Schedule
Beginning inventory................................
Received from Refining Department ....
Added to process in Blending Department
Transferred to Finished Goods .............
Ending inventory .....................................
Materials
80%
Cost Charged to Department
Beginning inventory:
Cost from preceding department.............................................
Materials .....................................................................................
Labor...........................................................................................
Factory overhead ......................................................................
Total cost in beginning inventory......................................
Cost added during current period:
Cost from preceding department.............................................
Materials ....................................................................................
Labor...........................................................................................
Factory overhead.......................................................................
Total cost added during current period ...........................
Total cost charged to department ..................................................
Labor
40%
Overhead
40%
Quantity
1,400
7,000
1,800
10,200
9,200
1,000
10,200
Total
Cost
$ 1,754
620
68
160
$ 2,602
Equivalent
Units*
Unit
Cost**
$11,200
4,380
3,100
5,600
$24,280
$26,882
10,200
10,000
9,600
9,600
$1.27
.50
.33
.60
$2.70
Chapter 6
6-31
P6-5 (Concluded)
Cost Accounted for as Follows
Transferred to Finished Goods ..............
Work in Process, ending inventory:
Cost from preceding department ....
Materials ............................................
Labor .................................................
Factory overhead ..............................
Total cost accounted for.........................
Units
9,200
1,000
1,000
1,000
1,000
%
Complete Unit Cost
100%
$2.70
100%
80%
40%
40%
$1.27
.50
.33
.60
Total Cost
$24,840
$1,270
400
132
240
2,042
$26,882
*Total number of equivalent units required in the cost accounted for section determined as follows:
Equivalent units transferred out .....
Equivalent units in ending inventory
Total equivalent units .......................
Prior Dept.
Cost
Materials
9,200
9,200
1,000
800
10,200
10,000
Labor
9,200
400
9,600
Overhead
9,200
400
9,600
** Total cost (i.e., the cost in beginning inventory plus the cost added during the current period)
divided by the total number of equivalent units required in the cost accounted for section
(2)
Work in Process—Refining Department ....................
Work in Process—Blending Department ...................
Materials ...............................................................
7,272
4,380
Work in Process—Refining Department ....................
Work in Process—Blending Department ...................
Payroll ...................................................................
1,520
3,100
Work in Process—Refining Department ....................
Work in Process—Blending Department ...................
Applied Factory Overhead .................................
2,940
5,600
Work in Process—Blending Department ...................
Work in Process—Refining Department ..........
11,200
Finished Goods Inventory ...........................................
Work in Process—Blending Department .........
24,840
11,652
4,620
8,540
11,200
24,840
6-32
Chapter 6
P6-6 APPENDIX
(1)
Upton Manufacturing Company
Cutting Department
Cost of Production Report
For October
Quantity Schedule
Beginning inventory................................
Started in process this period ...............
Transferred to Assembly Department ...
Ending inventory .....................................
Materials
90%
100%
Labor
40%
80%
Cost Charged to Department
Beginning inventory:
Materials .....................................................................................
Labor...........................................................................................
Factory overhead.......................................................................
Total cost in beginning inventory......................................
Cost added during current period:
Materials .....................................................................................
Labor...........................................................................................
Factory overhead ......................................................................
Total cost added during current period............................
Total cost charged to department ..................................................
Cost Accounted for as Follows
Transferred to Assembly Department:
Beginning inventory .........................
Cost to complete:
Materials ...............................
Labor .....................................
Factory overhead .................
Started and completed this period .
Total cost transferred to Assembly
Department .................................
Work in Process, ending inventory:
Materials ............................................
Labor ..................................................
Factory overhead ..............................
Total cost accounted for.........................
Units
Overhead
20%
100%
Quantity
1,000
9,000
10,000
8,500
1,500
10,000
Total
Cost
$8,010
1,750
790
$ 10,550
Equivalent
Units*
Unit
Cost**
$ 81,900
18,600
39,200
$139,700
$150,250
9,100
9,300
9,800
$ 9.00
2.00
4.00
$15.00
Current % Unit Cost
Total Cost
$10,550
1,000
1,000
1,000
7,500
10%
60%
80%
100%
$ 9.00
2.00
4.00
15.00
900
1,200
3,200
$ 15,850
112,500
$128,350
1,500
1,500
1,500
100%
80%
100%
$ 9.00
2.00
4.00
$13,500
2,400
6,000
21,900
$150,250
Chapter 6
6-33
P6-6 APPENDIX (Continued)
* Number of equivalent units of cost added during the current period determined as follows:
To complete beginning inventory ...
Started and completed this period
Ending inventory...............................
Total equivalent units .......................
Materials
100
7,500
1,500
9,100
Labor
600
7,500
1,200
9,300
Overhead
800
7,500
1,500
9,800
** Cost added during the current period divided by the number of equivalent units of cost added during the current period
6-34
Chapter 6
P6-6 APPENDIX (Continued)
Upton Manufacturing Company
Assembly Department
Cost of Production Report
For October
Quantity Schedule
Beginning inventory................................
Received from Cutting Department.......
Transferred to Finished Goods Inventory
Ending inventory .....................................
Materials
75%
60%
Labor
60%
40%
Cost Charged to Department
Beginning inventory:
Cost from preceding department.............................................
Materials .....................................................................................
Labor...........................................................................................
Factory overhead.......................................................................
Total cost in beginning inventory......................................
Cost added during current period:
Cost from preceding department.............................................
Materials .....................................................................................
Labor...........................................................................................
Factory overhead ......................................................................
Total cost added during current period............................
Total cost charged to department ..................................................
Cost Accounted for as Follows
Transferred to Finished Goods:
Beginning inventory ........................
Cost to complete:
Materials ...............................
Labor .....................................
Factory overhead .................
Started and completed this period .
Total cost transferred to Finished
Goods ..........................................
Work in Process, ending inventory:
Cost from preceding department ....
Materials ............................................
Labor ..................................................
Factory overhead ..............................
Total cost accounted for.........................
Units
Overhead
60%
40%
Quantity
2,000
8,500
10,500
9,500
1,000
10,500
Total
Cost
$ 4,000
400
800
1,600
$ 6,800
Equivalent
Units*
Unit
Cost**
$128,350
30,100
21,315
30,015
$209,780
$216,580
8,500
8,600
8,700
8,700
$15.10
3.50
2.45
3.45
$24.50
Current % Unit Cost
Total Cost
$ 6,800
2,000
2,000
2,000
7,500
25%
40%
40%
100%
$ 3.50
2.45
3.45
24.50
1,750
1,960
2,760
$ 13,270
183,750
$197,020
1,000
1,000
1,000
1,000
100%
60%
40%
40%
$15.10
3.50
2.45
3.45
$15,100
2,100
980
1,380
19,560
$216,580
Chapter 6
6-35
P6-6 APPENDIX (Concluded)
*Number of equivalent units of cost added during the current period determined as follows:
To complete beginning inventory ...
Started and completed this period
Ending inventory...............................
Total equivalent units ......................
Prior Dept.
Cost
Materials
0
500
7,500
7,500
1,000
600
8,500
8,600
Labor
800
7,500
400
8,700
Overhead
800
7,500
400
8,700
** Cost added during the current period divided by the number of equivalent units of cost added during the current period
(2)
Work in Process—Cutting Department ......................
Work in Process—Assembly Department ..................
Materials ..............................................................
81,900
30,100
Work in Process—Cutting Department ......................
Work in Process—Assembly Department ..................
Payroll ..................................................................
18,600
21,315
Work in Process—Cutting Department ......................
Work in Process—Assembly Department ..................
Applied Factory Overhead..................................
39,200
30,015
Work in Process—Assembly Department ..................
Work in Process—Cutting Department .............
128,350
Finished Goods Inventory ...........................................
Work in Process—Assembly Department ........
197,020
112,000
39,915
69,215
128,350
197,020
6-36
P6-7 APPENDIX
(1)
Chapter 6
Felicia Manufacturing Company
Fabricating Department
Cost of Production Report
For August
Quantity Schedule
Beginning inventory................................
Started in process this period ..............
Transferred to Finishing Department ....
Ending inventory .....................................
Materials
100%
100%
Labor
40%
80%
Cost Charged to Department
Beginning inventory:
Materials .....................................................................................
Labor...........................................................................................
Factory overhead.......................................................................
Total cost in beginning inventory......................................
Cost added during current period:
Materials ....................................................................................
Labor...........................................................................................
Factory overhead.......................................................................
Total cost added during current period............................
Total cost charged to department ..................................................
Overhead
80%
90%
Quantity
400
1,200
1,600
1,100
500
1,600
Total
Cost
$ 29,280
1,900
11,800
$ 42,980
Equivalent
Units*
$90,000
16,080
46,740
$152,820
$195,800
1,200
1,340
1,230
Unit
Cost**
$ 75.00
12.00
38.00
$125.00
Chapter 6
6-37
P6-7 APPENDIX (Continued)
Cost Accounted for as Follows
Transferred to Finishing Department:
Beginning inventory .........................
Cost to complete:
Materials ...............................
Labor .....................................
Factory overhead .................
Started and completed this period
Total cost transferred to Finishing
Department .................................
Work in Process, ending inventory:
Materials ............................................
Labor ..................................................
Factory overhead ..............................
Total cost accounted for ........................
Units
Current % Unit Cost
Total Cost
$42,980
400
400
400
700
0%
60%
20%
100%
$ 75.00
12.00
38.00
125.00
0
2,880
3,040
$ 48,900
87,500
$136,400
500
500
500
100%
80%
90%
$ 75.00
12.00
38.00
$37,500
4,800
17,100
59,400
$195,800
*Number of equivalent units of cost added during the current period determined as follows:
To complete beginning inventory .......................
Started and completed this period.....................
Ending inventory ..................................................
Total equivalent units...........................................
Materials
0
700
500
1,200
Labor
240
700
400
1,340
Overhead
80
700
450
1,230
** Cost added during the current period divided by the number of equivalent units of cost added during the current period
6-38
Chapter 6
P6-7 APPENDIX (Continued)
Felicia Manufacturing Company
Finishing Department
Cost of Production Report
For August
Quantity Schedule
Beginning inventory................................
Received from Fabricating Department
Transferred to Finished Goods Inventory
Ending inventory .....................................
Materials
40%
100%
Labor
20%
60%
Cost Charged to Department
Beginning inventory:
Cost from preceding department.............................................
Materials ....................................................................................
Labor...........................................................................................
Factory overhead ......................................................................
Total cost in beginning inventory ...................................
Cost added during current period:
Cost from preceding department.............................................
Materials .....................................................................................
Labor...........................................................................................
Factory overhead ......................................................................
Total cost added during current period............................
Total cost charged to department ..................................................
Cost Accounted for as Follows
Transferred to Finished Goods:
Beginning inventory .........................
Cost to complete:
Materials ...............................
Labor .....................................
Factory overhead ................
Started and completed this period .
Total cost transferred to Finished
Goods ..........................................
Work in Process, ending inventory:
Cost from preceding department ....
Materials ............................................
Labor ..................................................
Factory overhead .............................
Total cost accounted for ........................
Units
Overhead
20%
60%
Quantity
600
1,100
1,700
1,300
400
1,700
Total
Cost
$ 74,000
230
1,600
2,520
$ 78,350
Equivalent
Units*
$136,400
2,920
19,880
28,400
$187,600
$265,950
1,100
1,460
1,420
1,420
Unit
Cost**
$ 124.00
2.00
14.00
20.00
$ 160.00
Current % Unit Cost
Total Cost
$78,350
600
600
600
700
60%
80%
80%
100%
$
2.00
14.00
20.00
160.00
720
6,720
9,600
$ 95,390
112,000
$207,390
400
400
400
400
100%
100%
60%
60%
$124.00
2.00
14.00
20.00
$49,600
800
3,360
4,800
58,560
$265,950
Chapter 6
6-39
6-7 APPENDIX (Concluded)
*Number of equivalent units of cost added during the current period determined as follows:
To complete beginning inventory ...
Started and completed this period
Ending inventory...............................
Total equivalent units .......................
Prior Dept.
Cost
Materials
0
360
700
700
400
400
1,100
1,460
Labor
480
700
240
1,420
Overhead
480
700
240
1,420
** Cost added during the current period divided by the number of equivalent units of cost added during the current period
(2)
Work in Process—Fabricating Department ...............
Work in Process—Finishing Department...................
Materials ..............................................................
90,000
2,920
Work in Process—Fabricating Department ...............
Work in Process—Finishing Department...................
Payroll ..................................................................
16,080
19,880
Work in Process—Fabricating Department ...............
Work in Process—Finishing Department...................
Applied Factory Overhead..................................
46,740
28,400
Work in Process—Finishing Department...................
Work in Process—Fabricating Department ......
136,400
Finished Goods Inventory ...........................................
Work in Process-Finishing Department ............
207,390
92,920
35,960
75,140
136,400
207,390
6-40
P6-8 APPENDIX
(1)
Chapter 6
Tatanach Beverage Company
Mashing Department
Cost of Production Report
For September
Quantity Schedule
Beginning inventory................................
Started in process this period ...............
Transferred to Blending Department.....
Ending inventory .....................................
Materials
90%
60%
Labor
60%
40%
Overhead
30%
20%
Quantity
600
3,000
3,600
3,100
500
3,600
Cost Charged to Department
Beginning inventory:
Materials .....................................................................................
Labor...........................................................................................
Factory overhead.......................................................................
Total cost in beginning inventory......................................
Total
Cost
$ 1,088
172
172
$ 1,432
Equivalent
Units*
Unit
Cost**
Cost added during current period:
Materials .....................................................................................
Labor...........................................................................................
Factory overhead.......................................................................
Total cost added during current period............................
Total cost charged to department ..................................................
$ 6,006
1,470
3,020
$10,496
$11,928
2,860
2,940
3,020
$2.10
.50
1.00
$3.60
Chapter 6
6-41
P6-8 APPENDIX (Continued)
Cost Accounted for as Follows
Transferred to Blending Department:
Beginning inventory .........................
Cost to complete:
Materials ...............................
Labor .....................................
Factory overhead .................
Started and completed this period
Total cost transferred to Blending
Department .................................
Work in Process, ending inventory:
Materials ............................................
Labor ..................................................
Factory overhead ..............................
Total cost accounted for.........................
Units
Current % Unit Cost
Total Cost
$1,432
600
600
600
2,500
10%
40%
70%
100%
$2.10
.50
1.00
3.60
126
120
420
$ 2,098
9,000
$11,098
500
500
500
60%
40%
20%
$2.10
.50
1.00
$ 630
100
100
830
$11,928
*Number of equivalent units of cost added during the current period determined as follows:
To complete beginning inventory ...
Started and completed this period .
Ending inventory...............................
Total equivalent units .......................
Materials
60
2,500
300
2,860
Labor
240
2,500
200
2,940
Overhead
420
2,500
100
3,020
** Cost added during the current period divided by the number of equivalent units of cost added during the current period
6-42
Chapter 6
P6-8 APPENDIX (Continued)
Tatanach Beverage Company
Blending Department
Cost of Production Report
For September
Quantity Schedule
Beginning inventory ...................................................
Received from Mashing Department ........................
Added to process in Blending Department .............
Transferred to Finished Goods Inventory ...............
Ending inventory.........................................................
Materials
50%
100%
Cost Charged to Department
Beginning inventory:
Cost from preceding department.............................................
Materials .....................................................................................
Labor...........................................................................................
Factory overhead.......................................................................
Total cost in beginning inventory......................................
Cost added during current period:
Cost from preceding department.............................................
Materials .....................................................................................
Labor...........................................................................................
Factory overhead.......................................................................
Total cost added during current period............................
Total cost charged to department ..................................................
Cost Accounted for as Follows
Transferred to Finished Goods:
Beginning inventory .........................
Cost to complete:
Materials ...............................
Labor .....................................
Factory overhead .................
Started and completed this period
Total cost transferred to Finished
Goods ..........................................
Work in Process, ending inventory:
Cost from preceding department ....
Materials ............................................
Labor ..................................................
Factory overhead ..............................
Total cost accounted for ........................
Units
Labor
20%
60%
Overhead
20%
60%
Quantity
1,000
3,100
3,100
7,200
6,400
800
7,200
Total
Cost
$ 1,770
100
55
74
$ 1,999
Equivalent
Units*
Unit
Cost**
$11,098
1,407
2,004
2,672
$17,181
$19,180
6,200
6,700
6,680
6,680
$1.79
.21
.30
.40
$2.70
Current % Unit Cost
Total Cost
$1,999
1,000
1,000
1,000
5,400
50%
80%
80%
100%
$ .21
.30
.40
2.70
105
240
320
$ 2,664
14,580
$17,244
800
800
800
800
100%
100%
60%
60%
$1.79
.21
.30
.40
$1,432
168
144
192
1,936
$19,180
Chapter 6
6-43
P6-8 APPENDIX (Concluded)
*Number of equivalent units of cost added during the current period determined as follows:
To complete beginning inventory ...
Started and completed this period
Ending inventory...............................
Total equivalent units .......................
Prior Dept.
Cost
Materials
0
500
5,400
5,400
800
800
6,200
6,700
Labor
800
5,400
480
6,680
Overhead
800
5,400
480
6,680
** Cost added during the current period divided by the number of equivalent units of cost added during the current period
(2)
Work in Process—Mashing Department ....................
Work in Process—Blending Department ...................
Materials ..............................................................
6,006
1,407
Work in Process—Mashing Department ....................
Work in Process—Blending Department ...................
Payroll ..................................................................
1,470
2,004
Work in Process—Mashing Department ....................
Work in Process—Blending Department ...................
Applied Factory Overhead..................................
3,020
2,672
Work in Process—Blending Department ...................
Work in Process—Mashing Department ...........
11,098
Finished Goods Inventory ...........................................
Work in Process—Blending Department ..........
17,244
7,413
3,474
5,692
11,098
17,244