Managerial Accounting 1B
Financial and Managerial Accounting
Chapter 16
1.Exercise 16-6 Recording cost flows in a process cost system L.O. P1, P2, P3, P4
| Lowes Lumber produces bagged bark for use in landscaping. Production involves packaging bark chips in plastic bags in a bagging department. The following information describes production operations for October. |
| Bagging Department |
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| Direct materials used | $ | 230,000 | |
| Direct labor used | $ | 38,000 | |
| Predetermined overhead rate (based on direct labor) | 120 | % | |
| Goods transferred from bagging to finished goods | $ | (203,500 | ) |
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| The company’s revenue for the month totaled $450,000 from credit sales, and its cost of goods sold for the month is $250,000. |
| (1) | Prepare journal entry dated October 31 to record its October production activities for direct material usage. (Omit the “$” sign in your response.) |
| (2) | Prepare journal entry dated October 31 to record its October production activities for direct labor usage.(Omit the “$” sign in your response.) |
| (3) | Prepare journal entry dated October 31 to record its October production activities for overhead allocation.(Omit the “$” sign in your response.) |
| (4) | Prepare journal entry dated October 31 to record its October production activities for goods transfer from production to finished goods. (Omit the “$” sign in your response.) |
| (5) | Prepare journal entries dated October 31 to record its October activities for sales. (Omit the “$” sign in your response.) |
2.
Exercise 16-8 Computing equivalent units of production-weighted average L.O. C2
| During April, the production department of a process manufacturing system completed a number of units of a product and transferred them to finished goods. Of these transferred units, 37,500 were in process in the production department at the beginning of April and 150,000 were started and completed in April. April’s beginning inventory units were 60% complete with respect to materials and 40% complete with respect to labor. At the end of April, 51,250 additional units were in process in the production department and were 80% complete with respect to materials and 30% complete with respect to labor. |
| 1. | Compute the number of units transferred to finished goods. |
| Number of units |
| 2. | Compute the number of equivalent units with respect to both materials used and labor used in the production department for April using the weighted-average method. |
| Direct Materials |
Direct Labor | |
| Number of equivalent units | ||
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3.Exercise 16-9 Costs assigned to output and inventories-weighted average L.O. C2, P4
| During April, the production department of a process manufacturing system completed a number of units of a product and transferred them to finished goods. Of these transferred units, 37,500 were in process in the production department at the beginning of April and 150,000 were started and completed in April. April’s beginning inventory units were 60% complete with respect to materials and 40% complete with respect to labor. At the end of April, 51,250 additional units were in process in the production department and were 80% complete with respect to materials and 30% complete with respect to labor. |
| The production department had $531,480 of direct materials and $407,689 of direct labor cost charged to it during April. Also, its beginning inventory included $74,075 of direct materials cost and $28,493 of direct labor. |
| 1. | Using the weighted-average method, compute the direct materials cost and the direct labor cost per equivalent unit for the department. (Round your answers to 2 decimal places. Omit the “$” sign in your response.) |
| Direct Materials | Direct Labor | |
| Cost per equivalent unit | ||
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| 2. | Using the weighted-average method, assign April’s costs to the department’s output—specifically, its units transferred to finished goods and its ending goods in process inventory. (Round your intermediate calculations and final answer to 2 decimal places. Omit the “$” sign in your response.) |
| Total cost |
4.Exercise 16-10 Computing equivalent units of production-FIFO L.O. C4
| During April, the production department of a process manufacturing system completed a number of units of a product and transferred them to finished goods. Of these transferred units, 37,500 were in process in the production department at the beginning of April and 150,000 were started and completed in April. April’s beginning inventory units were 60% complete with respect to materials and 40% complete with respect to labor. At the end of April, 51,250 additional units were in process in the production department and were 80% complete with respect to materials and 30% complete with respect to labor. |
| Compute the number of equivalent units with respect to both materials used and labor used in the production department for April using the FIFO method. |
| Direct Materials |
Direct Labor | |
| Number of equivalent units | ||
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5.Exercise 16-11A Costs assigned to output-FIFO L.O. C4, P4
| During April, the production department of a process manufacturing system completed a number of units of a product and transferred them to finished goods. Of these transferred units, 37,500 were in process in the production department at the beginning of April and 150,000 were started and completed in April. April’s beginning inventory units were 60% complete with respect to materials and 40% complete with respect to labor. At the end of April, 51,250 additional units were in process in the production department and were 80% complete with respect to materials and 30% complete with respect to labor. |
| The production department had $531,480 of direct materials and $407,689 of direct labor cost charged to it during April. Also, its beginning inventory included $74,075 of direct materials cost and $28,493 of direct labor. |
| 1. | Using the FIFO method, compute the direct materials cost and the direct labor cost per equivalent unit for the department. (Round your answers to 2 decimal places. Omit the “$” sign in your response.) |
| Direct Materials | Direct Labor | |
| Cost per equivalent unit | $ | $ |
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| 2. | Using the FIFO method, assign April’s costs to the department’s output—specifically, its units transferred to finished goods and its ending goods in process inventory. (Round your intermediate calculations and final answer to 2 decimal places. Omit the “$” sign in your response.) |
| Total cost |
Problem 16-1A Production cost flow and measurement; journal entries L.O. P1, P2, P3, P4
[The following information applies to the questions displayed below.]
| Edison Company manufactures wool blankets and accounts for product costs using process costing. The following information is available regarding its May inventories. |
| Beginning Inventory |
Ending Inventory |
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| Raw materials inventory | $ | 28,000 | $ | 25,500 | ||
| Goods in process inventory | 220,750 | 252,000 | ||||
| Finished goods inventory | 319,000 | 277,000 | ||||
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| The following additional information describes the company’s production activities for May. |
| Raw materials purchases (on credit) | $ | 135,000 | |
| Factory payroll cost (paid in cash) | 791,500 | ||
| Other overhead cost (Other Accounts credited) | 43,000 | ||
| Materials used | |||
| Direct | $ | 93,500 | |
| Indirect | 31,000 | ||
| Labor used | |||
| Direct | $ | 352,000 | |
| Indirect | 439,500 | ||
| Overhead rate as a percent of direct labor | 110 | % | |
| Sales (on credit) | $ | 1,500,000 | |
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6.
Problem 16-1A Part 1
| Required: | |
| 1(a) | Compute the cost of products transferred from production to finished goods. (Omit the “$” sign in your response.) |
| Cost of products transferred |
| 1(b) | Compute the cost of goods sold. (Omit the “$” sign in your response.) |
| Cost of goods sold |
7.Problem 16-1A Part 2
| 2(a) | Prepare journal entry dated May 31 to record the raw materials purchases. (Omit the “$” sign in your response.) |
| 2(b) | Prepare journal entry dated May 31 to record the direct materials usage. (Omit the “$” sign in your response.) |
| 2(c) | Prepare journal entry dated May 31 to record the indirect materials usage. (Omit the “$” sign in your response.) |
| 2(d) | Prepare journal entry dated May 31 to record the payroll costs. (Omit the “$” sign in your response.) |
| 2(e) | Prepare journal entry dated May 31 to record the direct labor costs. (Omit the “$” sign in your response.) |
| 2(f) | Prepare journal entry dated May 31 to record the indirect labor costs. (Omit the “$” sign in your response.) |
| 2(g) | Prepare journal entry dated May 31 to record the other overhead costs. (Omit the “$” sign in your response.) |
| 2(h) | Prepare journal entry dated May 31 to record the overhead applied. (Omit the “$” sign in your response.) |
| 2(i) | Prepare journal entry dated May 31 to record the goods transferred from production to finished goods.(Omit the “$” sign in your response.) |
| 2(j) | Prepare journal entry dated May 31 to record the sale of finished goods. (Omit the “$” sign in your response.) |
Problem 16-2A Cost per equivalent unit; costs assigned to products L.O. C2, C3
[The following information applies to the questions displayed below.]
| Fairfax Company uses weighted-average process costing to account for its production costs. Direct labor is added evenly throughout the process. Direct materials are added at the beginning of the process. During September, the company transferred 735,000 units of product to finished goods. At the end of September, the goods in process inventory consists of 207,000 units that are 90% complete with respect to labor. Beginning inventory had $244,920 of direct materials and $69,098 of direct labor cost. The direct labor cost added in September is $1,312,852, and the direct materials cost added is $1,639,080. |
8.
Problem 16-2A Part 1
| Required: | |
| 1(a) | Determine the equivalent units of production with respect to direct labor. |
| Equivalent units |
| 1(b) | Determine the equivalent units of production with respect to direct materials. |
| Equivalent units |
9.
Problem 16-2A Part 2
| 2. | Compute both the direct labor cost and the direct materials cost per equivalent unit. (Round your answers to 2 decimal place. Omit the “$” sign in your response.) |
| Per equivalent unit |
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| Direct labor cost | |
| Direct materials cost | |
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10. Problem 16-2A Part 3
| 3(a) | Compute both direct labor cost and direct materials cost assigned to units completed and transferred out. (Round your per unit costs to 2 decimal places and final answers to the nearest dollar amount.) |
| Cost transferred out |
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| Direct materials | |
| Direct labor | |
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| 3(b) | Compute both direct labor cost and direct materials cost assigned to ending goods in process inventory. (Round your per unit costs to 2 decimal places and final answers to the nearest dollar amount.) |
| Costs of ending goods in process | |
| Direct materials | |
| Direct labor | |
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