Chapter 16: Q26QS (page 747)
Hotwax completed products costing $275,000 and transferred them to finished goods. Prepare its journal entry to record the transfer of units from production to finished goods inventory.
Finished goods inventory is debited with $275,000.
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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: Companies such as Apple commonly prepare a process cost summary. What purposes does a process cost summary serve?
Braun Company produces its product through a single processing department. Direct materials are added at the beginning of the process. Conversion costs are added to the product evenly throughout the process. The company uses monthly reporting periods for its weighted-average process costing. The Work in Process Inventory account had a balance of \(21,300 on November 1, which consisted of \)6,800 of direct materials and \(14,500 of conversion costs.
During the month, the company incurred the following costs:
Direct materials | \) 116,400 |
Conversion | 1,067,000 |
During November, the company started 104,500 units and transferred 100,000 units to finished goods. At the end of the month, the work in process inventory consisted of 12,000 units that were 100% complete with respect to direct materials and 25% complete with respect to conversion.
Required
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 weighted-average method.
Victory Company uses weighted-average process costing to account for its production costs. Conversion cost is added evenly throughout the process. Direct materials are added at the beginning of the process. During November, the company transferred 700,000 units of product to finished goods. At the end of November, the work-in-process inventory consists of 180,000 units that are 30% complete with respect to conversion. Beginning inventory had \(420,000 of direct materials and \)139,000 of conversion cost. The direct material cost added in November is \(2,220,000, and the conversion cost added is \)3,254,000. Beginning work in process consisted of 60,000 units that were 100% complete with respect to direct materials and 80% complete with respect to conversion. Of the units completed, 60,000 were from beginning work in process and 640,000 units were started and completed during the period.
Required
1. Determine the equivalent units of production with respect to (a) direct materials and (b) conversion.
2. Compute both the direct material cost and the conversion cost per equivalent unit.
3. Compute the direct material cost and the conversion cost assigned to (a) units completed and transferred out and (b) ending work in process inventory.
Analysis Component
4. The company sells and ships all units to customers as soon as they are completed. Assume that an error is made in determining the percentage of completion for units in ending inventory. Instead of being 30% complete with respect to labor, they are actually 60% complete. Write a one-page memo to the plant manager describing how this error affects its November financial statements.
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