Chapter 18: Q23RQ (page 1006)
Describe the three groups of units that must be accounted for when using the FIFO method.
Under the FIFO method, the following three groups of units must be accounted for:
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What is the purpose of the Costs Accounted For section of the production cost report?
Brian’s Frozen Pizzas uses FIFO process costing. Selected production and cost data follow for April 2018.
Prepping department | |
Units to account for: | |
Beginning work-in-process, March 31 | 20,000 |
Started in April | 45,000 |
Total units to account for | 65,000 |
Units accounted for: | |
Completed and transferred out during April: | |
From beginning work-in-process inventory | 20,000 |
Started and completed during April | 30,000 |
Ending work-in-process, April 30 | 15,000 |
Total units accounted for | 65,000 |
Requirements
1. Calculate the following:
a. On March 31, the Prepping Department beginning Work-in-Process Inventory was 75% complete for materials and 55% complete for conversion costs. This means that for the beginning inventory % of the materials and % of the conversion costs were added during April.
b. On April 30, the Prepping Department ending Work-in-Process Inventory was 60% complete for materials and 85% complete for conversion costs. This means that for the ending inventory % of the materials and % of the conversion costs were added during April.
2. Use the information in the table and the information in Requirement 1 to compute the equivalent units of production for direct materials and conversion costs for the Prepping Department.
Refer to your answers from Exercise E18-21.
Requirements
1. Prepare the journal entries to record the assignment of direct materials and direct labor and the allocation of manufacturing overhead to the Blending Department. Also, prepare the journal entry to record the costs of the gallons completed and transferred out to the Packaging Department. Assume labor costs are accrued and not yet paid.
2. Post the journal entries to the Work-in-Process Inventory—Blending T-account.
What is the ending balance?
3. What is the average cost per gallon transferred out of the Blending Department
into the Packaging Department? Why would the company managers want to
know this cost?
Roan Paper Co. produces the paper used by wallpaper manufacturers. Roan’s four-stage process includes mixing, cooking, rolling, and cutting. On March 1, the Mixing Department had 300 rolls of paper in process. During March, the Mixing Department completed the mixing process for those 300 rolls and also started and completed the mixing process for an additional 4,200 rolls of paper. The department started but did not finish the mixing process for an additional 500 rolls, which were 20% complete with respect to both direct materials and conversion work at the end of March. Direct materials and conversion costs are
incurred evenly throughout the mixing process.
The Mixing Department compiledthe following data for March:
Direct materials | Direct labor | Manufacturing overhead allocated | Total costs | |
Beginning inventory, Mar. 1 | \(350 | \)245 | \(200 | \)795 |
Costs added during March | 4,940 | 3,000 | 3,225 | 11,165 |
Total costs | \(5,290 | \)3,245 | \(3,425 | \)11,960 |
Requirements
1. Prepare a production cost report for the Mixing Department for March. The company uses the weighted-average method.
2. Journalize all transactions affecting the company’s mixing process during March. Assume labor costs are accrued and not yet paid.
Question: Mayhem Electronics makes game consoles in three processes: assembly, programming, and packaging. Direct materials are added at the beginning of the assembly process. Conversion costs are incurred evenly throughout the process. The Assembly Department had no Work-in-Process Inventory on March 31. In mid-April, Mayhem Electronics started production on 99,000 game consoles. Of this number, 95,000 game consoles were assembled during April and transferred out to the Programming Department. The April 30 Work-in-Process Inventory in the Assembly Department was 45% of the way through the assembly process. Direct materials costing \(301,950 were placed in production in Assembly during April, direct labor of \)100,960 was assigned, and manufacturing overhead of $136,200 was allocated to that department.
Requirements
1. Prepare a production cost report for the Assembly Department for April. The
company uses the weighted-average method.
2. Prepare a T-account for Work-in-Process Inventory—Assembly to show its activity during April, including the April 30 balance.
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