AYB225 Lecture Notes - Lecture 8: Corn Chip, Finished Good, Weighted Arithmetic Mean

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lemonporpoise458

5 Jul 2013

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Weighted average process costing, with no spoilage. When goods reach the end of assembly they will be transferred out of assembly and transferred in to finishing. When goods reach the end of finishing, they will move to the fg storeroom/warehouse. In this unit we do not consider accounting for spoiled units, therefore we will not consider the situation where goods are reworked. This means that in all the problems we cover, once goods have passed a point in the process they do not pass that point again. As products move through the processes, dm, dl and oh costs are incurred. Because the costs should be viewed as being attached to the product, wherever the product is sitting in the manufacturing process, the costs are sitting at that point as well. As goods move into the next process, costs attached or already incurred on those goods move into the next process.

Related Questions

part one

Which of the following would not be a characteristic in aProcess Costing System?

Select one:

A. Each department has its own WIP account

B. A product cost report accumulates costs in eachdepartment

C. DM, DL, and FOH are transferred directly to the finished goodaccount

D. Products physically move through each department

part 2

Dropping an unprofitable customer will always result inimmediate improvements in company profits.

True or False

part 3

In process costing, all product costs are accumulated in asingle Work in Process account until the goods have passed throughall production departments; the costs are then transferred toFinished Goods.

True of False

Part 4

Increasing the number of cost pools in an Activity-Based Costingsystem will almost always result in cost savings.

true or false

apricotsquirrel151

Pls do not handwrite the answer, this is for easy reading

Speedy Scoot manufacturers various lies of e-scooters due to itsrising popularity. Speedy scoot offers 3 models of e-scooters:Windy, Fast and Quiet. Because of the high volume of each line, thecompany employs a process costing system using the FIFO method todetermine unit costs.

A typical e-scooter consists of 4 components: electrical &electric system, the motion system, the structure and powertrain.The structure and the motion system are manufactured in theMoulding department. They are then consolidated into a singlee-scooter unit in the moulding department and transferred to theassembly department where they are assembling is completed. In theassembly department, the appropriate electrical & electricsystem and powertrain are added to complete each model ofe-scooter. Each of the 3 models of e-scooter is produced in a jointprocess up to the split-off point which is the Assembly process.After being assembled, the different models of e-scooters are sentto the packing department.

Annual cost and production figures for the Assembly departmentare as follows:-

Assembly Department Cost Data

	Transferred In from moulding Department	Assembly Materials	Assembly Conversion Cost	Total Cost of e-scooter through Assembly
Beginning WIP costs	$82,200	$6,660	$11,930	$100,790
Current period costs	$1,237,800	$96,840	$236,590	$1,571,230
Total costs	$1,320000	$103,500	$248,520	$1,672,020

Assembly Department Production Data

Percentage of completion

	No of units	Assembly Materials	Assembly conversion
Beginning Work in Progress	300	100%	80%
Transferred In from Moulding Department	4,500	-	-
Transferred Out to packing Department	4,000	100%	100%
End Work in Progress	400	50%	20%

Defective e-scooter are identified at the inspection point whenthe assembly conversion process is 70% complete. 50% of assemblymaterials are added at the beginning of the process and theremainder of the assembly materials are added at the 60% mark ofthe assembly conversion process. Hence, all assembly materials areadded by the time the e-scooter is inspected. The normal rejectionsfor defective e-scooter are 5% of the e-scooter reaching theinspection point. Any defective e-scooters above 5% quota are to betreated as abnormal. All defective e-scooter are destroyed afterremoved from the production process.

The production mix of the different models at the split-offpoint is determined to be 50%, 30% and 20% for Windy, Fast andQuiet respectively. In the Packing Department, separate packingcosts are incurred on each line of e-scooter. Due to the complexityof the parts for Windy, the packing cost is at $20 per unit ascompared to only $10 per unit for the other 2 models. The currentselling prices of Windy, Fast and quiet are at $700, $500 and $150respectively.

The production workers in the Moulding department are rewardedwith a fixed bonus if production volume can be efficient. This ismeasured based on achieving a fixed volume of production within thespecified period.

Required:

a) Compute the normal and abnormal spoilage for SpeedyScoot.

b)Prepare a production cost report for speedy scoot that showsthe following:

bi) Equivalent units computed for production with regards toeach cost category
bii) Costs of normal spoilage and abnormal spoilage
biii) Costs of units transferred out to Packing Department
bv) Costs of end WIP

mauvegerbil620

All of the following statements regarding managementaccounting's role in assigning decision-making authority are trueexcept:

A. Since management accounting information is used for decisionmaking purposes, historical information is unnecessary.

B. Information from the management accounting system supportsdecision making.

C. The syllabus for a college course is a type of report thatoutlines students' decision-making responsibilities.

D. All members of an organization have some decision-makingability.

Which of the following costs would not be considered part of themanufacturing overhead of a furniture manufacturer?

A. The cost of compliance with federal factory safetyregulations.

B. Depreciation expense on factory equipment.

C. The cost of grease used to lubricate factory equipment.

D. The cost of wood used in furniture construction.

Which of the following costs would not be considered part of themanufacturing overhead of a chemical plant?

A. The costs of disposing of toxic waste materials.

B. Salaries of factory medical personnel.

C. Salaries of employees who operate distilling equipment usedin the production process.

D. The cost of complying with federal safety regulationsconcerning plant operations.

Duffy Brothers manufactures a single product using a processinvolving (1) mixing ingredients and (2) a subsequent packagingoperation. Duffy uses a process costing system to account for theflow of costs through its production process

Refer to the information above. In the production processdescribed, what is the Work in Process Inventory: PackagingDepartment debited for?

A. Costs transferred from the Work in Process Inventory: MixingDepartment only.

B. The cost of materials, direct labor, and overhead applicableto the packaging operation only.

C. Costs transferred from the Work in Process Inventory: MixingDepartment, as well as materials, direct labor, and overheadapplicable to the packaging operation.

D. Costs transferred to the Finished Goods Inventory.

Refer to the information above. In Duffy s operation, theFinished Goods Inventory account is debited for:

A. The cost of units transferred directly from the MixingDepartment.

B.The cost of units transferred directly from the PackagingDepartment.

C. The cost of units transferred directly from both the MixingDepartment and the Packaging Department.

D. The cost of the units sold.

Sue s Soup Products uses a process costing system with twoprocessing departments: the Mixing and Cooking Department and theCanning Department. Work in process inventories are reduced to zeroeach month. In March, the Mixing and Cooking Department incurredmanufacturing costs of $63,000 to mix 42,000 gallons of soup. TheCanning Department incurred manufacturing costs of $9,000. A totalof 170,000 cans of soup were transferred to the finished goodswarehouse during the month.

Refer to the information above. The journal entry to record thetransfer of soup out of the Mixing and Cooking Department duringMarch would include:

A. A debit to Work in Process Inventory, Mixing and CookingDepartment of $63,000.

B. A credit to Work in Process Inventory, Canning Department of$72,000.

C. A debit to Finished Goods Inventory of $72,000.

D. A credit to Work in Process Inventory, Mixing and CookingDepartment of $63,000.

Refer to the information above. The journal entry to record thetransfer of soup out of the Canning Department during March wouldinclude:

A. A credit to Work in Process Inventory, Canning Department of$9,000.

B. A credit to Work in Process Inventory, Canning Department of$63,000.

C. A debit to Finished Goods Inventory of $72,000.

D. A credit to Finished Goods Inventory, Mixing and CookingDepartment of $72,000.

Refer to the information above. The unit cost per gallon of souptransferred to the Canning Department during March was:

A. $1.50.

B. $1.62.

C. $1.71.

D. $1.83.

Refer to the information above. The unit cost per can of souptransferred to the finished goods warehouse during March was:

A. $0.05.

B. $0.42.

C. $0.37.

D. $1.71.

Evans Products uses a process costing system with two processingdepartments: the Mixing Department and the Finishing Department. InJune, unit costs incurred by the Mixing Department amounted to$4.00 per unit. Unit costs transferred to the finished goodswarehouse during the month amounted to $22. Work-in-processinventories are reduced to zero each month.

Refer to the information above. If 80% of all inventory was soldat $32 per unit and 3,500 units were sold, what is the cost of thefinished goods inventory at year-end?

A. $16,800.

B. $77,000.

C. $19,250.

D. $96,250

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AYB225 Lecture Notes - Lecture 8: Corn Chip, Finished Good, Weighted Arithmetic Mean

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