Chapter 16: Q15DQ (page 744)
Question: Are there situations where Google can use process costing? Identify at least one and explain it.
The cost incurred by Google foreach search made by the customer.
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Laffer 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 | |
Direct material used | \(522,000 |
Direct labor used | \)130,000 |
Pre-determined overhead rate (based on direct labor) | 175% |
Goods transferred from bagging to finished goods | (\(595,000) |
The company’s revenue for the month totaled \)950,000 from credit sales, and its cost of goods sold for the month is $540,000. Prepare summary journal entries dated October 31 to record its October production activities for
(1) direct materials usage,
(2) direct labor incurred
(3) overhead allocation,
(4) goods transfer from production to finished goods, and
(5) credit sales.
Question: During May, 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 May and 150,000 were started and completed in May. May’s beginning inventory units were 60% complete with respect to materials and 40% complete with respect to conversion. At the end of May, 51,250 additional units were in process in the production department and were 60% complete with respect to materials and 20% complete with respect to conversion. The production department had \(505,035 of direct materials and \)396,568 of conversion cost charged to it during May. Its beginning inventory included \(74,075 of direct materials cost and \)28,493 of conversion cost.
Question: Switch Co. manufactures a single product in one department. Direct labor and overhead are added evenly throughout the process. Direct materials are added as needed. The company uses monthly reporting periods for its weighted-average process costing. During January, Switch completed and transferred 220,000 units of product to finished goods inventory. Its 10,000 units of beginning work in process consisted of \(7,500 of direct materials and \)49,850 of conversion. In process at month-end are 40,000 units (50% complete with respect to direct materials and 30% complete with respect to conversion). During the month, the company used direct materials of \(112,500 in production and incurred conversion costs of \)616,000.
Required
Analysis Component
Question: Refer to the information in QS 16-10. Assign costs to the assembly department’s output—specifically, the units transferred out to the painting department and the units that remain in process in the assembly department at month-end. Use the FIFO method.
Refer to the information in Exercise 16-8 to compute the number of equivalent units with respect to both materials used and conversion costs in the production department for April using the FIFO method.
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