Chapter 18: Q.18-15RQ (page 1006)
Question: How is the cost per equivalent unit of production calculated?
Answer:
The cost per equivalent unit of production is calculated by dividing the total cost with the Equivalent unit of production.
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Preparing a production cost report, second department, withbeginning WIP and transferred in costs; journal entries; FIFO method Work Problem P18-40B using the FIFO method. The Mixing Department beginningwork in process of 400 units is 80% complete as to both direct materials and conversion costs. Round equivalent unit costs to four decimal places. Round all other costs to the nearest dollar.
Describe the three groups of units that must be accounted for when using the FIFO method.
Question: What are conversion costs? Why do some companies using process costing systems use conversion costs?
The Blending Department for CenTex Paints started October with 1,000 gallons in process and started in production 9,500gallons. During the month, 7,000 gallons were completed and transferred to the next department. Ending work-in-process was3,500 gallons (100% complete with respect to direct materials and 30% complete for conversion costs). The department uses the
weighted-average method. The Blending Department incurred the following costs:
Beginning WIP-Direct materials cost | \(500 |
Beginning WIP-Conversion cost | 1,210 |
Direct material added during the month | 5,800 |
Conversion cost added during the month | 5,230 |
Total | \)12,740 |
7. Prepare a production cost report for the Blending Department for the month of October.
Question: Evergreen Orange manufactures orange juice. Last month’s total manufacturing costs for the Tampa operation included:
Direct materials | $450,000 |
Direct labor | 32,000 |
Manufacturing overhead | 125,000 |
What was the conversion cost for Evergreen Orange’s Tampa operation last month?
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