Chapter 16: Q6QS (page 744)
Refer to QS 16-4. Compute the total equivalent units of production with respect to conversion for March using the FIFO method.
Equivalent units for conversion:250,000
Over 22 million students worldwide already upgrade their learning with Vaia!
All the tools & learning materials you need for study success - in one app.
Get started for free
Refer to QS 16-8 and compute the total equivalent units of production with respect to conversion for July using the FIFO method.
Belda Co. makes organic juice in two departments: cutting and blending. Direct materials are added at the beginning of each process, and conversion costs are added evenly throughout each process. The company uses the FIFO method of process costing. During March, the cutting department completed and transferred 220,000 units to the blending department. Of the units completed, 10,000 were from beginning inventory and the remaining 210,000 were started and completed during the month. Beginning work in process was 75% complete with respect to direct materials and 60% complete with respect to conversion. The company has 40,000 units (50% complete with respect to direct materials and 30% complete with respect to conversion) in process at month-end. Information on the cutting department’s costs of beginning work in process inventory and costs added during the month follows.
Cost | Direct Materials | Conversion |
Of beginning work in process inventory | \( 16,800 | \) 97,720 |
Added during the month | 223,200 | 1,233,960 |
Required
Analysis Component
3. The company provides incentives to department managers by paying monthly bonuses based on their success in controlling costs per equivalent unit of production. Assume that the production department overestimates the percentage of completion for units in ending inventory with the result that its equivalent units of production for March are overstated. What impact does this error have on bonuses paid to the managers of the production department? What impact, if any, does this error have on these managers’ April bonuses?
Can services be delivered by means of process operations?
Support your answer with an example.
What is the main factor for a company in choosing betweenthe job order costing and process costing systems? Give two likely applications of each system.
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
3. The cost accounting process depends on several estimates.
a. Identify two major estimates that affect the cost per equivalent unit.
b. In what direction might you anticipate a bias from management for each estimate in part 3a (assume that management compensation is based on maintaining low inventory amounts)? Explain your answer
What do you think about this solution?
We value your feedback to improve our textbook solutions.
