Chapter 18: Q9RQ (page 1005)
Question: What is a production cost report?
Answer:
Production cost report is the report that shows in detail total cost, including the raw material and operating costs, of manufacturing the products.
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Question: The Mixing Department of Complete Foods had 62,000 units to account for in October. Of the 62,000 units, 38,000 units were completed and transferred to the next department, and 24,000 units were 20% complete. All of the materials are added at the beginning of the process. Conversion costs are added evenly throughout the mixing process and the company uses the weighted-average method.
Compute the total equivalent units of production for direct materials and
conversion costs for October.
Question: The Finishing Department of Lee and Lewis, Inc., the last department in the manufacturing process, incurred production costs of \(220,000 during the month of June.If the June 1 balance in Work-in-Process Inventory—Finishing is \)0 and the June 30balance is $70,000, what amount was transferred to Finished Goods Inventory?
PepsiCo, Inc. is a global food and beverage company that manufactures brands such as Frito-Lay, Gatorade, Pepsi-Cola, Quaker, and Tropicana. One of the products PepsiCo, Inc. manufactures is Mountain Dew. The first process in manufacturing Mountain Dew consists of clarifying the water to remove impurities such as organic materials and bacteria. The clarification process involves mixing the water with aluminum sulfate (an indirect material) to remove the impurities.
Assume PepsiCo uses the weightedaverage method of process costing.
Requirements
1. During the month of June, the Clarification Department incurred the following costs in processing 100,000 liters:
Wages of workers operating the clarification equipment | $20,000 |
Manufacturing overhead allocated to clarification | 24,000 |
Water | 160,000 |
PepsiCo had no beginning Work-In-Process Inventory in the Clarification Department in June. Compute the June conversion costs in the Clarification Department.
2. Assume that water is added at the beginning of the clarification process and conversion costs are added evenly throughout the process. The Clarification Department completed and transferred out 60,000 liters during June. The 40,000 liters remaining in Clarification’s ending Work-in-Process Inventory were 100% complete for direct materials and 60% complete for conversion costs. Compute the equivalent units of production for direct materials and conversion costs for the Clarification Department.
3. Compute the cost per equivalent unit for direct materials and conversion costs for the Clarification Department.
Question: What types of companies use process costing systems?
Complete the missing amounts and labels in the T-accounts.
Work-in-process inventory – Cutting
Balance, May 1 | 0 | Transferred out to | (A) |
Direct materials | 57,000 | ||
Direct labor | 5,000 | ||
Manufacturing overhead | 39,000 | ||
Balance, May 31 | 16,000 |
Work-in-process inventory – Finishing
Balance, May 1 | 11,000 | Transferred out to | 80,000 |
Transferred in from | (B) | ||
Direct materials | 21,000 | ||
Direct labor | (C ) | ||
Manufacturing overhead | 18,000 | ||
Balance, May 31 | 68,000 |
Work-in-process inventory – Packaging
Balance, May 1 | 4,000 | Transferred out to | (D) |
Transferred in from | (E ) | ||
Direct material | 1,000 | ||
Direct labor | 9,000 | ||
Manufacturing overhead | 14,000 | ||
Balance, May 31 | 8,000 |
Finished goods inventory
Balance, May 1 | 0 | Transferred out to | (F) |
Transferred in from | (G) | ||
Balance, May 31 | 2,000 |
Cost of goods sold
Balance, May 1 | 0 | ||
Transferred in from | (H) | ||
Balance, May 31 | (I) |
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