Student Sol11 4eprocess

STUDENT SOLUTIONS MANUAL
CHAPTER 11: PROCESS COSTING

EXERCISES
11-28 Equivalent Units; Weighted-Average Method (20 min)
Quantity Schedule
Input
Work-in-process inventory, 1/1
Units started
Total units to account for
Output
Units completed
Work in process inventory, 12/31
Total units accounted for
30,000
150,000
180,000
165,000
15,000
180,000
Equivalent Units -- Weighted-Average Method

Materials
Units completed
165,000
Work-in-process inventory,12/31 15,000 x 70% = 10,500
Total equivalent units
175,500
Conversion:
Units completed
165,000
Work-in-process inventory,12/31 15,000 x 60% =
9,000
174,000
Blocher,Stout,Cokins,Chen:Cost Management,4e 11-1
The McGraw-Hill Companies, Inc., 2008
11-30 Equivalent Units; FIFO Method (25 min)

Beginning WIP
Units started or Trans-in
Total to account for
Units Finished or Trans-out
Ending WIP
Total accounted for
Units
Materials Conversion
200
100%
9%
900
1,100
800
300
1,100
EQUIVALENT UNITS: Weighted Average

Materials
Conversion
EQUIVALENT UNITS: FIFO
Materials
Conversion
100%
12%
1,100
836
900
818
Weighted Average:
Materials = 800 + 1.0 x 300 = 1,100
Conversion = 800 + .12 x 300 = 836
FIFO
Materials = 800 + 1.0 x 300 1.0 x 200 = 900

Conversion = 800 + .12 x 300 - .09 x 200 = 818
11-32 Equivalent Units; FIFO Unit Cost (25 min)

1.
Weighted Average:
Materials: $2.25
Conversion: $4.378
FIFO:
Materials: $2.40
Conversion: $4.412
2. The differences between the cost per equivalent unit (FIFO vs weightedaverage) for materials and conversion are due to differences in the per unit
amounts in beginning WIP and current costs.
These differences are
averaged together in the weighted-average method, while in the FIFO
method, the cost per equivalent unit is based on current costs only.
11-34 FIFO Method (25 min)

1. Equivalent units
Returns completed during March
1,200*
Returns in process, 3/31: 200 x 90% = 180
- Returns in process, 3/1: 100 x 30% = (30)
FIFO equivalent units
1,350
* 100 + 1,300 - 200 = 1,200
2. Cost per equivalent unit
$148,500 / 1,350 = $110
3. Cost of completed returns
From beginning inventory, 3/1:
$ 330
Added to finish the beginning
inventory: $110 x 100 x (1 - 30%) =
7,700
Total first batch
$ 8,030
Second batch--started and finished:
$110 x (1,200 - 100) =
121,000
Total cost of completed returns
$129,030
4. Cost of returns in process on March 31
$110 x (200 x 90%) = $19,800
11-36 Backflush Costing (10 min)

1.
First, at the time materials are purchased.
Materials Inventory
Accounts Payable, Cash
$190,000
$190,000
Second, conversion cost are incurred.

Conversion Cost Account
Wages payable, other accounts
$350,000
$350,000
Third, accounting for completed product at the end of the month.

Finished goods
$590,000
Materials inventory (for actual usage)
$210,000
Conversion Cost (applied)
380,000
The overapplied conversion cost of $30,000 (=$380,000 - $350,000) is
closed to the cost of goods sold account at the end of the year.
2. Backflush costing is used when the level of WIP inventory is very small.
This can be the case for firms that use just-in-time manufacturing (JIT), so
that purchases are carefully coordinated with scheduled production on a
daily basis. Backflush costing is a practical and convenient costing method
for cases like this.
PROBLEMS
11-38: Weighted Average Method
Beginning WIP
Units started
Whole
Units
6,000
15,000
21,000
Units Finished
Ending WIP
Total accounted for
18,000
3,000
21,000
(20 min)
100%
50%
100%

Units Completed
Materials (Ending WIP)
Conversion (Ending WIP)
Total
EQUIVALENT UNITS: FIFO
Materials (Beginning WIP)
Conversion (Beginning WIP)
Total
50%
18,000
3,000
21,000
18,000
1,500
19,500
6,000
15,000
3,000
16,500
COST ADDED
Beginning WIP
Current Costs
TOTAL
Materials
Conversion
Total
$ 88,000 $ 126,000 $ 214,000
220,000
356,000
576,000
$ 308,000 $ 482,000 $ 790,000
WTAVG
FIFO
Cost per EU
Cost per EU
14.667 $
14.667
COST ASSIGNED - WEIGHTED AVERAGE

Finished Goods
18,000 units
Good production
TOTAL
Ending WIP
Materials
Conversion
TOTAL
TOTAL
39.385
36.242
708,923
3,000 units
44,000
37,077
$
COST ASSIGNED -FIFO

Finished Goods
18,000 units
Prior period costs in Beginning WIP
Current per. cost to complete Beg WIP
Cost of units started and finished
TOTAL
Ending WIP
Materials
Conversion
TOTAL
TOTAL
24.718 $
21.576
81,077
790,000
214,000
64,727
434,909
$
713,636
76,364
790,000
3,000 units
44,000
32,364
11-39 FIFO Method (20 min) -- see solution above

11-40 Weighted-Average Method (30-40 min)

1. Quantity Schedule (not required)
Input
Units started
27,000
60,000
87,000
Output
Units completed
70,000
17,000
87,000
Equivalent Units:
Material X
Units completed
70,000
Work-in-process inventory, 8/31 17,000 x 100% = 17,000
87,000
Material Y
Units completed
Work-in-process inventory, 8/31 17,000 x 0% =
70,000
0
70,000
Conversion
Units completed
Work-in-process inventory, 8/31 17,000 x 40% =
70,000
6,800
76,800
2. Costs per equivalent unit:

Costs
Material X Material Y Conversion
Total
WIP, 8/1
$ 64,800 $ 89,100 $119,880 $273,780
Costs added 152,700
138,400
302,520
593,620
Total
$217,500 $227,500 $422,400 $867,400
EU
87,000
70,000
76,800
Unit cost
$2.50
$3.25
$5.50
$11.25
Problem 11-40: (continued)

3. Cost of units transferred out:

($2.50 + $3.25 + $5.50) x 70,000 = $787,500
4. Cost of ending work-in-process inventory:
Material X $2.50 x 17,000 =
$ 42,500
Material Y
0
Conversion $5.50 x 6,800 =
37,400
$ 79,900
11-42 Weighted-Average Method (30 min)

1. Equivalent units:
Direct Materials: 175,000 + (30,000 x 80%) = 199,000
Conversion: 175,000 + (30,000 x 40%) = 187,000
2. Cost per equivalent unit:
Direct Materials:
(57,000 renminbi + 736,000 renminbi) / 199,000 = 3.9849 renminbi
Conversion:
(45,000 renminbi + 1,094,950 renminbi) / 187,000 = 6.096 renminbi
Total unit costs: 3.9849 + 6.096 = 10.0809 renminbi
3. Cost of goods completed and transferred out:
10.0809 x 175,000 = 1,764,157.50 renminbi
4. Cost of work-in-process, 10/31:
Direct Materials:
3.9849 x 30,000 x 80% = 95,637.60 renminbi
Conversion:
6.096 x 30,000 x 40% = 73,152.00 renminbi
Total: 95,637.60 + 73,152.00 = 168,789.60 renminbi
5. Exchange rate depends on a particular date, which an instructor
selected.
The exchange rate as of July 6, 2006 was $1 US = 7.9908
11-44 Reconditioning Service; Weighted-Average (20 min)
Problem 11-44 (continued)

2. The information in the cost report shows two relevant items of
information regarding planning for the coming months work. First,
note there has been an increase in WIP during November, a month in
which there were fewer units in process (900 units) . Decembers
work will require 900 + 200 = 1,100 units in process, somewhat larger
than Novembers requirement. Bauer should be concerned about its
capacity and ability to meet the December orders on a timely basis.
Second, the cost report shows that the cost per equivalent unit for
conversion, at $365, is somewhat higher than the average for prior
months. This might reflect higher labor costs and could be a result of
the decrease in volume (November completed 700 units relative to an
average of 800-850 completed units per month).
11-46 (continued)
11-48 Weighted-Average Method; Transferred-In Costs (40-50 min)

1.
Whole
Equivalent Units
Units
4,000
100%
80%
15,000
19,000
16,000
Beginning WIP
TOTAL IN Process
Normal spoilage
Abnormal spoilage
Ending WIP
TOTAL OUT Process
3,000
19,000

Transferred In
19,000
Materials
18,700
Conversion
17,800
Cost Added:
Trans-in
Beginning WIP
Current Costs
Total
Cost per EU
90%
= finished units + spoiled units + % completion x Ending WIP

= finished units + spoiled units + % completion x Ending WIP
-----This Dept----Materials Conversion
57,800
141,700
199,500
$
60%
23,400
93,475
116,875
10.500 $
6.250 $
COST ASSIGNMENT - WEIGHTED AVERAGE

Finished Goods
16,000 units
Good production (@ $24.25)
Total
Ending WIP
3,000 units
Trans-in (3,000 x $10.50)
Materials (3,000 x .9 x $6.25)
Conversion (3,000 x . 6 x $7.50)
Total
Total Cost to Account For
23,360
110,140
133,500
Total
104,560
345,315
449,875
7.500 $ 24.250
388,000
31,500
16,875
13,500
61,875
449,875
2. On March 17, 2006, the exchange rate was $1 US = 970 South Korean
Won (KRW). The dollar had fallen from a rate of $1 US = 1,200 KRW three
years earlier.

1. Quantity Schedule (not required)
Input
Units started
15,000
80,000
95,000
Output
Units completed
70,000
25,000
95,000
Equivalent Units -- FIFO Method:

Material A
Units completed
70,000
Total
95,000
Less: EU in WIP inventory, 6/1 15,000 x 100% = (15,000)
80,000
Material B
Units completed
70,000
Total
95,000
Less: EU in WIP inventory, 6/1 15,000 x 0% =
(
0)
95,000
Conversion:
Units completed
70,000
Total
86,250
Less: EU in WIP inventory, 6/1 15,000 x 40% = ( 6,000)
80,250
.
Problem 11-50 (Continued)
2. Costs per equivalent unit:
Costs
Material A Material B Conversion
Costs incurred in June
$260,000 $403,750 $461,437.50
Divided by EU
80,000
95,000
80,250
Unit cost
$3.25
$4.25
$5.75
3. Cost of units transferred out:
Work-in-process inventory, June 1
$ 85,437.50
Cost to finish beginning WIP:
Material B 15,000 x $4.25 =
$63,750
Conversion 15,000 x 60% x $5.75 = 51,750 115,500.00
Total
$200,937.50
Cost of units started and completed:
($3.25 + $4.25 + $5.75) x (70,000 - 15,000) = 728,750.00
Cost of units transferred out
$929,687.50
4. Cost of ending work-in-process inventory:
Material A $3.25 x 25,000 =
Material B $4.25 x 25,000 =
Conversion $5.75 x 16,250 =
$ 81,250.00
106,250.00
93,437.50
$280,937.50
11-52 FIFO Method; Two Departments (60-70 min)

Production Report - Molding Department (FIFO Method)
Physical Percent
Equivalent Units
Units Complete
DM
Conv
WIP, January 1
0
Units started during Jan.50,000
Total units to acct. for 50,000
Units completed & transferred
out during Jan.
50,000
WIP, January 31
0
Total units acct. for
50,000
100%
Weighted average equivalent units

Less: equivalent units in Jan.1 WIP
Costs:
DM
WIP, January 1
$
0
Costs incurred during Jan. 300,000
Total costs to acct. for
$300,000
Divided by equivalent units
Costs per equivalent unit
50,000
$6.00
50,000
50,000
50,000
0
50,000
50,000
0
50,000
0
50,000
$50,000
Total
$
0
350,000
$350,000
50,000
$1.00
$7.00
Conv
Cost of goods completed and transferred out of the molding department

during January:
Cost of January 1 WIP inventory $ 0
Cost incurred to produce units that were both started and completed during
January:
( # of units ) x ( total cost per equivalent unit ) = 50,000 x $7.00 = $350,000
Total cost of goods completed and transferred out: $350,000
Cost remaining in January 31 WIP Inventory in the molding department: $ 0
Problem 11-52 (Continued 1)

Production Report - Finishing Department (FIFO Method)
Physical Percent
Equivalent Units
Units
Complete
DM
Conv
WIP, January 1
5,000
25%
Units transferred in
during Jan.
50,000
Total units to acct. for 55,000
Units completed and
transferred out
during January
WIP, January 31
Total units acct. for
53,000
2,000
55,000
100%
25%
Weighted-average equivalent units

Less: equivalent units in Jan.1 WIP
Costs:
WIP, January 1
Costs incurred during Jan.
Total costs to acct. for
Divided by equivalent units
Costs per equivalent unit
Trans.In
$350,000
50,000
$7.00
53,000
2,000
53,000
500
55,000
53,500
(5,000)
( 1,250)
50,000
52,250
Conv
Total
$15,000
$40,000 390,000
$405,000
52,250
$0.7656
$7.7656
Cost of goods completed and transferred out of the finishing department

during January:
Cost of Jan. 1 WIP Inv., which is transferred out first: $15,000
Cost incurred to finish the Jan.1 WIP Inv.:
(# of units) x (% of conversion remaining) x (cost per equivalent unit of
conversion) = 5,000 x 0.75 x $0.7656 = $2,871
Problem 11-52 (Continued 2)

Cost incurred to produce units that were both started and completed during
Jan.:
(# of units) x (total cost per equivalent unit)
= (53,000 - 5,000) x $7.7656 = $372,748.80
Total cost of goods completed and transferred out:
= $15,000 + $2,871 + $372,748.80 = $390,619.80
Cost remaining in Jan.31 WIP inventory in the finishing department:
Transferred-in costs:
(# of equivalent units of transferred-in cost) x (transferred-in cost per
equivalent unit) = 2,000 x $7.00 = $14,000
Conversion:
(# of equivalent units of conversion.) x (Conversion cost per equivalent
unit)
= 500 x $0.7656 = $382.80
Total cost of Jan.31 WIP inventory: $14,382.80
Check: Cost of goods completed & transferred out
Cost of Jan.31 WIP Inv.
Total costs accounted for
$390,619.80
14,382.80
$405,002.60*
* $2.60 difference due to rounding
11-54 Appendix: Spoilage (30 Min)

1. The revised cost production report for November 2004 as follows.
Romano Foods- Mixing Department
Revised Production Cost Report
Month ended November 30, 2007
Input
Units
120,000
Good
10%
Good
Total
Output Normal Abnormal
Unit
Costs
Units Spoilage Spoilage
Cost
$45,360
107,000 10,700 2,300
$0.4158
Budgeted unit cost

Actual cost per good unit
Favorable variance
Cost Reconciliation
Cost of 107,000 good units at $.4158
Abnormal spoilage (2,300 X $.378)
Total production costs
$.4350
.4158
$.0192
$44,490.60
869.40
$45,360.00
Supporting Calculations
a. 10% of good output = units of normal spoilage
.10 X 107,000 units = 10,700 units of normal spoilage
b. Total spoilage
13,000
Less normal spoilage10,700
Abnormal spoilage
2,300
c. Total cost of November production
Divide by total input (units)
Unit cost of production
$45,360
120,000
$ .378
Problem 11-54 (Continued)

Good units completed
$40,446.00
(107,000 X $.378)
Normal spoilage
(10,700 X $.378)
Total cost of good units
Units cost of good units
($44,490.60/107,000)
d. Abnormal spoilage (units)
Multiplied by unit cost of production
Total cost of abnormal spoilage
4,044.60
$44,490.60
$ .4158
2,300
.378
$869.40
2. The journal entry, required to transfer November costs of the Mixing

Department to the Assembly Department, charges the cost of good
production to the Assembly Department, charges a loss account for
abnormal spoilage, and credits the Mixing Department with the total
cost of production.
Debit
Credit
Work in process Assembly
$ 44,490.60
Loss from Abnormal spoilage
869.40
Work in process Mixing
$45,360.00
3.
Corolla's report is less favorable than the revised report because he

ignored the normal spoilage in calculating the unit cost. In addition, he
miscalculated normal spoilage as ten percent of total input rather than
ten percent of good output and , thus, miscalculated abnormal
spoilage. Corolla divided the November production costs ($45,360) by
the good units produced plus the incorrect amount of abnormal
spoilage (107,000 + 1,000 = 108,000) to get the $.42 per unit. By
ignoring the equivalent units of the normal spoilage, he used a higher
base for calculating the unit cost. Normal spoilage should always be
incorporated into the equivalent unit calculation to get an accurate
representation of the unit cost.
11-56 Appendix: Spoilage; Weighted-Average Method;

Transferred-in Costs (40 Min)
1. Physical quantity schedule
Beginning WIP
Bikes transferred in
Bikes to account for
3,000
45,000
48,000
Bikes transferred out 40,000

Ending WIP
4,000
Bikes lost
4,000
Bikes accounted for
48,000
a. Normal amount of defective or spoiled bikes

Bikes passing through assembly
48,000
Less:
Bikes not inspected during current year
Beginning work-in-process inventory
(inspected in prior year 80% complete) 3,000
Ending work-in-process inventory
(have not reached inspection point
20% complete)
4,000 7,000
Bikes that reached inspection point
41,000
Normal defective/spoiled rate
.05
Normal amount of defective/spoiled bikes
2,050
b. Abnormal amount of defective/spoiled bikes
Total bikes lost
Normal amount of defective/spoiled bikes
Abnormal amount of defective/spoiled bikes
4,000
2,050
1,950

2. Equivalent units of production
a.
Transferredin from
Molding
40,000
Units transferred out

Equivalent units in
ending work-in-process
4,000 x 100%
c.
Assembly
Conversion
40,000
4,000
4,000 x 50%
4,000 x 20%
Equivalent units lost
4,000 x 100%
4,000 x 70%
b.
Assembly
Material
40,000
2,000
4,000
4,000
48,000
46,000
800
2,800
43,600
3. Cost per equivalent unit for fully assembled dirt bike
Total
Prior
Current
Cost per
Period Period
Total Equivalent Equivalent
Cost
Cost
Cost
Units
Unit
Transferred in $82,200 $1,237,800 $1,320,000 48,000 $27.50
Materials
6,660
96,840
103,500 46,000
2.25
Conversion
11,930
236,590
248,520 43,600
5.70
$35.45
4. The total production cost:
a. Normal defective/spoiled bikes
Transferred-in
2,050 x $27.50 = $56,375.00
Material
2,050 x 2.25 =
4,612.50
Conversion
2,050 x .7 x 5.70 = 8,179.50
$69,167.00
Beginning WIP
Units
5,000
20,000 STUDENT SOLUTIONS MANUAL
25,000

22,000
Normal spoilageb. Abnormal defective/spoiled
100
bikes
Abnormal spoilage Transferred-in 400
1,950 x $27.50 = $53,625.00
Ending WIP
2,500
Material
1,950 x 2.25 = 4,387.50
Total accounted for
25,000
Conversion
1,950 x .7x
5.70 = 7,780.50
$65,793.00
c. Good bikes completed in the

Assembly Department
40,000 bikes x $35.45 =
d. Ending work-in-process
Transferred-in
Conversion
Total costs accounted for
$ 1,418,000.00
4,000 x $27.50 = $110,000.00
2,000 x 2.25 =
4,500.00
800 x 5.70 =
4,560.00
$ 119,060.00
$1,672,020.00
5. a. The cost of the normal spoiled units of $69,167 would be

transferred to the Packing Department as a portion of the cost
of the 40,000 good units transferred out. Thus, this amount
would be a portion of the Packing Departments inventory
account and/or cost of goods sold amount depending upon the
proportion of the units in the work-in-process inventory, finished
goods inventory, and units sold during the year.
b. The abnormal losses of $65,793 would appear as a period
expense on the companys income statement.
c. The cost of the good units completed and transferred to the
Packing Department ($1,418,000) would be included in the Packing
Departments production costs. Thus, this amount would be a
portion of the Packing Departments inventory accounts and/or cost
of goods sold account depending upon the proportion of the units in
the work-in-process inventory, finished goods inventory, and units
sold during the year.

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STUDENT SOLUTIONS MANUAL

CHAPTER 11: PROCESS COSTING

Equivalent Units -- Weighted-Average Method

Blocher,Stout,Cokins,Chen:Cost Management,4e 11-1

The McGraw-Hill Companies, Inc., 2008

STUDENT SOLUTIONS MANUAL

11-30 Equivalent Units; FIFO Method (25 min)

EQUIVALENT UNITS: Weighted Average

Materials = 800 + 1.0 x 300 1.0 x 200 = 900

Blocher,Stout,Cokins,Chen:Cost Management,4e 11-2

The McGraw-Hill Companies, Inc., 2008

STUDENT SOLUTIONS MANUAL

11-32 Equivalent Units; FIFO Unit Cost (25 min)

Blocher,Stout,Cokins,Chen:Cost Management,4e 11-3

The McGraw-Hill Companies, Inc., 2008

STUDENT SOLUTIONS MANUAL

11-34 FIFO Method (25 min)

Blocher,Stout,Cokins,Chen:Cost Management,4e 11-4

The McGraw-Hill Companies, Inc., 2008

STUDENT SOLUTIONS MANUAL

11-36 Backflush Costing (10 min)

Second, conversion cost are incurred.

Third, accounting for completed product at the end of the month.

Blocher,Stout,Cokins,Chen:Cost Management,4e 11-5

The McGraw-Hill Companies, Inc., 2008

STUDENT SOLUTIONS MANUAL

EQUIVALENT UNITS: Weighted Average

COST ASSIGNED - WEIGHTED AVERAGE

COST ASSIGNED -FIFO

11-39 FIFO Method (20 min) -- see solution above

The McGraw-Hill Companies, Inc., 2008

STUDENT SOLUTIONS MANUAL

11-40 Weighted-Average Method (30-40 min)

2. Costs per equivalent unit:

Problem 11-40: (continued)

The McGraw-Hill Companies, Inc., 2008

STUDENT SOLUTIONS MANUAL

3. Cost of units transferred out:

Blocher,Stout,Cokins,Chen:Cost Management,4e 11-8

The McGraw-Hill Companies, Inc., 2008

STUDENT SOLUTIONS MANUAL

11-42 Weighted-Average Method (30 min)

Blocher,Stout,Cokins,Chen:Cost Management,4e 11-9

The McGraw-Hill Companies, Inc., 2008

STUDENT SOLUTIONS MANUAL

11-44 Reconditioning Service; Weighted-Average (20 min)

Blocher,Stout,Cokins,Chen:Cost Management,4e 11-10

The McGraw-Hill Companies, Inc., 2008

STUDENT SOLUTIONS MANUAL

Problem 11-44 (continued)

Blocher,Stout,Cokins,Chen:Cost Management,4e 11-11

The McGraw-Hill Companies, Inc., 2008

STUDENT SOLUTIONS MANUAL

11-46 FIFO Method (25 min)

Blocher,Stout,Cokins,Chen:Cost Management,4e 11-12

The McGraw-Hill Companies, Inc., 2008

STUDENT SOLUTIONS MANUAL

Blocher,Stout,Cokins,Chen:Cost Management,4e 11-13

The McGraw-Hill Companies, Inc., 2008

STUDENT SOLUTIONS MANUAL

11-48 Weighted-Average Method; Transferred-In Costs (40-50 min)

EQUIVALENT UNITS: Weighted Average

= finished units + spoiled units + % completion x Ending WIP

-----This Dept----Materials Conversion