ACG 4361
Handout #3B – Process, Throughput, and Operation Costing
Spring 2016
PROBLEM 1 – Weighted-Average Process Costing with No Transferred-In Costs
Harden Widgets uses a weighted-average process costing system. It has 4 processes through
which its widgets go through during production—Cutting, Shaping, Assembly, and Packaging.
It provides the following information concerning its Cutting department for its widgets during
March, 2015.
Units - Work in Process, February 28
% Complete for direct materials in beginning WIP
% Complete for conversion costs in beginning WIP
Actual cost of direct materials in beginning WIP
Actual conversion costs in beginning WIP
Units started during March
Work in Process, March 31 units in WIP
% Complete for direct materials in Ending WIP
% Complete for conversion costs in ending WIP
Direct material cost added during March
Conversion costs added during March
75,000
100%
65%
$103,000
$54,250
300,000
80,000
90%
55%
$423,000
$547,000
1. Prepare a production cost report in good form for the cutting department.
2. How many work in process t-accounts will Harden Widgets have in its general ledger?
Updated December 26, 2015
PROBLEM 2 Weighted Average Process Costing with Transferred-In Costs
Viking Sports is a manufacturer of sportswear and it uses the weighted average process
system. Viking produces its products in two departments. The information for the current
month for Department #2 is as follows:
Beginning WIP was half complete as to conversion costs. Direct materials for Department #2
are added at when the process is 25% complete. Factory overhead is applied at a rate equal to
40 percent of direct manufacturing labor. Ending WIP was 30 percent complete.
Prepare a production cost report in good form for Department 2.
Updated December 26, 2015
PROBLEM 3 FIFO Process Costing with No Transferred-In Costs
Prepare a production cost report using FIFO process costing in good form using the data in
problem 1.
PROBLEM 4 FIFO Process Costing with Transferred-In Costs
Prepare a production cost report using FIFO process costing in good form using the data in
problem 2.
Updated December 26, 2015
Problem 5 - Tasty Trains produces toy trains. The product passes through 2 processes—
assembly and finishing. In the finishing department, materials are added when the trains are
40% complete, and conversion costs are added evenly throughout the process. Production
information for July follows:
% Complete - conversion costs -ending WIP
% Complete - conversion costs -beginning WIP
Units started during July
Units in work in process, July 1
Units in Work in Process, July 31
40%
70%
41,000
5,200
7,000
Conversion costs in beginning WIP
Transferred-in cost in beginning WIP
Cost of direct materials in beginning WIP
Conversion costs added during July
Direct material cost added during July
Transferred-in costs added during July
$31,000
$16,820
$11,280
$21,500
$24,000
$34,000
Part A: Tasty Trains uses weighted average process costing. Determine the following amounts
for the finishing department for the month of July.
A. Number of physical units completed and transferred out
B. Equivalent units for conversion costs
C. Total cost to be accounted for
D. Total cost accounted for
E. Total conversion costs of the units completed
F. Total cost assigned to ending work in process
G. Unit cost of transferred in costs
H. Total cost transferred out to finished goods
I. Ending work in process inventory balance
Part B: Assume Tasty Trains uses FIFO process costing. Determine the amounts indiacted in
part A for the finishing department for the month of July.
Updated December 26, 2015
Problem 6 Markoff, Inc. makes a single product, digits. Information for 2014 appears below:
Production in units
98,000
Sales in units
99,500
Beginning inventory in units
7,000
Direct material cost per unit
$0.70
Direct labor cost per unit
$0.30
Variable production cost per unit
$0.10
Variable operating cost per unit
$0.60
Fixed production cost per year
$120,000
Fixed selling and admin cost per year
$41,000
Selling price per unit
$9.00
1. How much is ending inventory under throughput costing?
2. How much product cost is reported on the end of year 2014 income statement for
Markoff?
3. How much is throughput margin for 2014?
4. How much is contribution margin for 2014?
5. How much is gross margin for 2014?
Updated December 26, 2015
Problem 8 North Brew makes 3 flavors of coffee-Macadamia nut, French vanilla, and
Columbian. All flavors go through the same assembly line and utilize all processes, but they
differ as to the materials used. North Brew uses operation costing and allocates conversion
costs using one cost pool based on the number of machine hours used. The following
information is provided for June:
Macadamia
Nut
Cost per pounds of raw materials
Pounds of materials:
Pounds processed
Pounds sold
Beginning inventory in pounds
Machine hours used
Columbian
$2.20
$2.50
$2.10
3,600
3,400
120
900
2,800
2,900
300
650
5,600
5,500
250
450
Direct labor costs
Overhead costs:
Cleaning
Roasting
Flavoring
Packaging
French
Vanilla
Total
12,000
11,400
670
2,000
$13,000
$11,000
14,000
13,400
12,800
$51,200
A. What rate will be used to allocate any costs necessary under operation costing?
B. How much cost of goods sold will be reported on North Brew’s income statement for
French Vanilla coffee for the month of June?
C. How much finished goods inventory will North Brew report for its french vanilla coffee on its
balance sheet at June 30?
Updated December 26, 2015