HILTON SELECT SOLUTIONS CHAPTER 4
EXERCISE 4-18 (15 MINUTES)
1.
5,500 equivalent units (refer to (a) in the following table)
2.
4,140 equivalent units (refer to (b) in the following table)
CALCULATION OF EQUIVALENT UNITS: ANDROMEDA GLASS COMPANY
Weighted-Average Method
Percentage
of
Equivalent Units
Completion with
Physical
Respect to
Direct
Units
Conversion
Material
Conversion
Work in process, August 1 .....
2,000
60%
Units started during August ...
3,500
Total units to account for .......
5,500
Units completed and transferred
out during August............
Work in process, August 31 ...
Total units accounted for .......
Total equivalent units .............
EXERCISE 4-19 (30 MINUTES)
3,800
1,700
5,500
100%
20%
3,800
1,700
_____
(1) 5,500
3,800
340
____
(2) 4,140
All three of these companies manufacture large amounts of relatively homogeneous
products (i.e., lumber and paper). Therefore, process costing is an appropriate productcosting system.
EXERCISE 4-20 (15 MINUTES)
CALCULATION OF COST PER EQUIVALENT UNIT: DULUTH GLASS COMPANY
Weighted-Average Method
Direct
Material
Conversion
Total
Work in process, February 1 .................
$ 43,200
$ 40,300
$ 83,500
Costs incurred during February ............
135,000
190,000
325,000
Total costs to account for .....................
$178,200
$230,300
$408,500
Equivalent units .....................................
16,500
47,000
Costs per equivalent unit ......................
$10.80*
$4.90†
$15.70
*$10.80 = $178,200 ÷ 16,500
†$4.90
= $230,300 ÷ 47,000
EXERCISE 4-21 (15 MINUTES)
CALCULATION OF COST PER EQUIVALENT UNIT: MONTANA LUMBER COMPANY
Weighted-Average Method
Direct
Material
Conversion
Total
Work in process, June 1 ...........................
$ 74,900
$167,000
$ 241,900
Costs incurred during June......................
380,700
625,000
1,005,700
Total costs to account for ........................
$455,600
$792,000
$1,247,600
Equivalent units ........................................
6,700
1,600
Costs per equivalent unit .........................
$68*
$495†
$563
*$68 = $455,600 ÷ 6,700
†$495 = $792,000 ÷ 1,600
EXERCISE 4-22 (25 MINUTES)
TUSCALOOSA PAPERBOARD COMPANY
Weighted-Average Method
Direct
Material
Conversion
Work in process, March 1 ........................
$ 10,900
$ 28,950
Costs incurred during March ..................
112,700
160,200
Total costs to account for .......................
$123,600
$189,150
Equivalent units .......................................
103,000
97,000
Costs per equivalent unit ........................
$1.20
$1.95
Total
$ 39,850
272,900
$312,750
$3.15
1. Cost of goods completed and
transferred out during March:
 number of units  total cost per 

 
 ......................
 transferred out   equivalent unit
2.
89,000$3.15
$280,350
Cost remaining in March 31 work
in process:
Direct material (14,000*$1.20) .
Conversion (8,000*$1.95) ........
Total ..............................................
Total costs accounted for ................
$ 16,800
15,600
32,400
$312,750
*Equivalent units in March 31 work in process:
Total equivalent units (weighted average) ......................
Units completed and transferred out ...............................
Equivalent units in ending work in process ....................
Direct
Material
103,000
(89,000)
14,000
Conversion
97,000
(89,000)
8,000
EXERCISE 4-23 (25 MINUTES)
RALEIGH TEXTILES COMPANY
Weighted-Average Method
Direct
Material
Conversion
Work in process, November 1 ..................
$ 85,750
$ 16,900
Costs incurred during November ............
158,000
267,300
Total costs to account for ........................
$243,750
$284,200
Equivalent units ........................................
62,500
49,000
Costs per equivalent unit .........................
$3.90
$5.80
1.
$9.70
Cost of goods completed and
transferred out during November:
 number of units  total cost per 

 
 .....................
 transferred out   equivalent unit
2.
Total
$ 102,650
425,300
$527,950
47,000$9.70
$455,900
Cost remaining in November 30
work in process:
Direct material (15,500*$3.90).
Conversion (2,000*$5.80) ........
Total ..............................................
Total costs accounted for ................
$60,450
11,600
72,050
$527,950
*Equivalent units in November 30 work in process:
Total equivalent units (weighted average) ........................
Units completed and transferred out .................................
Equivalent units in ending work in process ......................
3.
Direct
Material
62,500
(47,000)
15,500
Conversion
49,000
(47,000)
2,000
The electronic version of the Solutions Manual “BUILD A SPREADSHEET
SOLUTIONS” is available on your Instructors CD and on the Hilton, 8e website:
www.mhhe.com/hilton8e.
Exercise 4-24 (45 minutes)
1. Diagram of production process:
Work-in-Process Inventory:
Preparation Department
Batch P25 Batch S33
Accumulated
by
department
Conversion costs:
Direct-labor
Manufacturing
overhead
Work-in-Process Inventory:
Finishing Department
Batch P25
Accumulated
by
batch
Batch S33
Directmaterial
costs
Work-in-Process Inventory:
Packaging Department
Batch P25
Finished-Goods Inventory
EXERCISE 4-24 (CONTINUED)
2. The product cost for each basketball is computed as follows:
Professional
Direct material: ....................................................................
Batch P25 ($42,000 ÷ 2,000) ..........................................
Batch S33 ($45,000 ÷ 4,000) ..........................................
Conversion: Preparation Department ..............................
Conversion: Finishing Department ..................................
*Conversion: Packaging Department ................................
Total product cost ..............................................................
$21.00
-07.50
6.00
.50
$35.00
Scholastic
-0$11.25
7.50
6.00
-0$24.75
*The two production departments each worked on a total of 6,000 balls, but the
Packaging Department handled only the 2,000 professional balls.
3.
Journal entries:
Work-in-Process Inventory: Preparation Department ..........
Raw-Material Inventory..................................................
39,500*
39,500
*$39,500 = $42,000 of direct material
for batch P25 – $2,500 of packaging material
Work-in-Process Inventory: Preparation Department ..........
Raw-Material Inventory ..................................................
45,000*
45,000
*Direct-material cost for batch S33.
Work-in-Process Inventory: Preparation Department ..........
Applied Conversion Costs ............................................
45,000*
45,000
*$45,000 = 6,000 units$7.50 per unit
Work-in-Process Inventory: Finishing Department ..............
Work-in-Process Inventory: Preparation Department
*$129,500 = $39,500 + $45,000 + $45,000
129,500*
129,500
EXERCISE 4-24 (CONTINUED)
Work-in-Process Inventory: Finishing Department ..............
Applied Conversion Costs ............................................
36,000*
36,000
*$36,000 = 6,000 units$6.00 per unit
Work-in-Process Inventory: Packaging Department ............
Finished-Goods Inventory ......................................................
Work-in-Process Inventory: Finishing Department .....
66,500*
99,000†
165,500
*$66,500 = $39,500 + (2,000$7.50) + (2,000$6.00).
These are the costs accumulated for batch P25 only.
†$99,000
= $45,000 + (4,000$7.50) + (4,000$6.00).
These are the costs accumulated for batch S33 only.
Work-in-Process Inventory: Packaging Department ............
Raw-Material Inventory ..................................................
Applied Conversion Costs ............................................
3,500
2,500*
1,000†
*Cost of packaging material for batch P25.
†$1,000
= 2,000 units$.50 per unit
Finished-Goods Inventory ......................................................
Work-in-Process Inventory: Packaging Department ...
*$70,000 = $66,500 + $3,500
70,000*
70,000
SOLUTIONS TO PROBLEMS
PROBLEM 4-25 (45 MINUTES)
1.
2.
Physical flow of units:
Work in process, June 1 ...........................................................................
Units started during June.........................................................................
Total units to account for .........................................................................
Physical
Units
40,000
190,000
230,000
Units completed and transferred out during June .................................
Work in process, June 30 .........................................................................
Total units accounted for .........................................................................
180,000
50,000
230,000
Equivalent units:
Work in process, June 1 ..........
Units started during June........
Total units to account for ........
Units completed and transferred
out during June ...................
Work in process, June 30 ........
Total units accounted for ........
Total equivalent units ..............
3.
Percentage
of
Completion
with
Physical Respect to
Units
Conversion
40,000
38%
190,000
230,000
180,000
50,000
230,000
100%
55%
Equivalent Units
Direct
Material Conversion
180,000
50,000
180,000
27,500
230,000
207,500
Costs per equivalent unit:
Work in process, June 1 ...............
Costs incurred during June ..........
Total costs to account for .............
Equivalent units .............................
Costs per equivalent unit..............
Direct
Material
$110,500
430,000
$540,500
230,000
$2.35
Conversion
$ 22,375
320,000
$342,375
207,500
$1.65
Total
$132,875
750,000
$882,875
$4.00
PROBLEM 4-25 (CONTINUED)
4.
Cost of goods completed and transferred out during June:
 number of units  total cost per 

 
 ........................
 transferred out   equivalent unit 
180,000$4.00
$720,000
50,000$2.35
$117,500
27,500$1.65
45,375
Cost remaining in June 30 work-in-process inventory:
Direct material:
 number of
  cost per


 

 equivalent    equivalent  ..........................
 units of
  unit of


 

 direct material  direct material
Conversion:
 number of   cost per 

 

 equivalent    equivalent  ......................................
 units of   unit of


 

 conversion  conversion
Total cost of June 30 work in process ........................................................
$162,875
Check: Cost of goods completed and transferred out ..............................
Cost of June 30 work-in-process inventory ...................................
Total costs accounted for ...............................................................
$720,000
162,875
$882,875
PROBLEM 4-30 (35 MINUTES)
1.
Direct material cost was $1,390,000:
JR1163 ................................
JY1065 ................................
DC0766 ...............................
Total ..............................
$ 225,000
710,000
455,000
$1,390,000
Texarkana Corporation’s total direct-labor payroll amounted to $134,274 for 6,394
hours of work ($134,274 ÷ $21 per hour). Thus, conversion cost was $575,460:
Direct labor……………………………….…….. $134,274
Overhead applied (6,394 hours x $69)……..
441,186
Total………………………………………….. $575,460
2.
Goods completed during April cost $2,002,000 (26,000 units x $77) as the
following calculations show:
Physical
Units
Percentage
Of
Completion
Equivalent Units
With
Respect to Direct
Conversion Material Conversion
Work in process, April 1……………….
Units started during April……………..
Total units to account for……………..
3,000
27,000
30,000
80%
Units completed and transferred
out during April……………………..
Work in process, April 30……………..
Total units accounted for……………...
Total equivalent units…………………..
26,000
4,000
30,000
100%
45%
26,000
4,000
26,000
1,800
30,000
27,800
PROBLEM 4-30 (CONTINUED)
Work in process, April 1……………………
Costs incurred during April……………….
Total costs to account for………………….
Equivalent units……………………………...
Cost per equivalent unit……………………
Direct
Material
Conversion
Total
$ 230,000
1,390,000
$1,620,000
30,000
$54a
$ 63,940
575,460
$639,400
27,800
$23b
$ 293,940
1,965,460
$2,259,400
$77c
a$1,620,000
÷ 30,000 = $54
÷ 27,800 = $23
c$54 + $23 = $77
b$639,400
3.
The cost of the ending work-in-process inventory is $257,400:
Direct material (4,000 x $54)…….. $216,000
Conversion cost (1,800 x $23)…..
41,400
Total……………………………. $257,400
4.
5.
(a)
No material would be added during May. All material is introduced at the
start of the manufacturing process, and these units were begun in April.
(b)
Since the work-in-process inventory is 45% complete at the end of April,
55% of the conversion would be done in May.
Given that the ending work-in-process inventory is at the 45% stage of
completion, these units would not have reached the 75% point in April where
TH55 is added. Therefore, there would be zero equivalent units with respect to
part TH55 in the ending work-in-process inventory.
PROBLEM 4-31 (50 MINUTES)
The missing amounts are shown below. A completed production report follows.
Work in process, October 1 (in units) ..................................................................
Units completed and transferred out during October ........................................
Total equivalent units: conversion ......................................................................
10,000
75,000
78,500
Work in process, October 1: conversion .............................................................
Costs incurred during October: direct material ..................................................
Cost per equivalent unit: conversion ..................................................................
Cost of goods completed and transferred out during October .........................
Cost remaining in ending work-in-process inventory: direct material .............
$ 30,225
600,000
11.85
1,556,250
44,500
PRODUCTION REPORT: FANTASIA FLOUR MILLING COMPANY
Weighted-Average Method
Percentage
of
Completion
with
Equivalent Units
Physical
Respect to
Direct
Units
Conversion
Material
Conversion
Work in process, October 1 ..........
10,000
15%
Units started during October........
70,000
Total units to account for .............
80,000
Units completed and transferred
out during October .............
Work in process, October 31 ........
Total units accounted for .............
Total equivalent units ...................
75,000
5,000
80,000
100%
70%
75,000
5,000
_____
80,000
75,000
3,500
_____
78,500
PROBLEM 4-31 (CONTINUED)
Work in process, October 1 ..........
Costs incurred during October ....
Total costs to account for ............
Equivalent units ............................
Costs per equivalent unit .............
*$8.90 = $712,000 ÷ 80,000
†$11.85 = $930,225 ÷ 78,500
**$20.75 = $8.90 + $11.85
Direct
Material
$112,000
600,000
$712,000
80,000
$8.90*
Conversion
$ 30,225
900,000
$930,225
78,500
$11.85†
Total
$ 142,225
1,500,000
$1,642,225
$20.75**
PROBLEM 4-31 (CONTINUED)
Cost of goods completed and transferred out during October:
 number of units  total cost per 

  
 ..............................
 transferred out   equivalent unit 
75,000$20.75
$1,556,250
5,000$8.90
$44,500
3,500$11.85
41,475
Total cost of October 31 work-in-process ........................................................
$85,975
Cost remaining in October 31 work-in-process inventory:
Direct material:
 number of
  cost per


 

 equivalent   equivalent 
 units of
   unit of
 .................................

 

direct
material
direct
material

 

Conversion:
 number of   cost per 

 

 equivalent   equivalent 
 units of
   unit of
 ...........................................

 

conversion
conversion

 

Check: Cost of goods completed and transferred out ......
Cost of October 31 work-in-process inventory ....
Total costs accounted for ......................................
$1,556,250
85,975
$1,642,225
PROBLEM 4-36 (35 MINUTES)
1.
Conversion cost per unit in department I:

direct labor  manufacturing overhead
units produced*

$76,000  $460,000
5,500  2,000  2,500
 $53.60 per uni t
*Note that all of the products sold after processing in departments I, II, or III were
produced orginally in department I.
2.
Conversion cost per unit in department II:

direct labor  manufacturing overhead
units produced*

$44,000  $136,000
2,000  2,500
 $40.00 per unit
*Note that all of the products sold after processing in departments II and III were
colored in department II.
3.
Cost of a clear glass sheet:
direct material per
= unit in department I

$900,000
 $53.60
10,000
 $143.60 per sheet
conversion cost per
+ unit in department I
PROBLEM 4-36 (CONTINUED)
4.
Cost of an unetched, colored glass sheet:
=
cost per clear
glass sheet
 $143.60 
direct material
conversion cost per
+ per unit in department II + unit in department II
$144,000
 $40.00
4,500
 $215.60 per sheet
5.
Cost of an etched, colored glass sheet:
cost per unetched
= colored glass sheet
 $215.60 
conversion cost per
+ unit in department III
$76,000  $147,500
2,500
 $305.00 per sheet