MGAC03H3 Chapter 17: Chapter 17 Notes

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lavenderdonkey6

18 Oct 2011

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The cost allocation base is equivalent units, and all cost allocation rates are calculated on a cost per equivalent unit. Each cost pool is assigned on the basis on the equivalent units either completed or remaining in ending wip inventory. Journal entries in a process-costing system are similar to journal entries in a job-costing system. The first-in, first-out (fifo) method computes unit costs based on costs incurred during the period and equivalent units of work done in the current period. The costs of goods manufactured, those physical units completed in a prior conversion process, are transferred out of the prior department at the end of a specified time period. These become the beginning balance of transferred-in costs for the next department in the conversion process. Some companies choose to separate and track their cost of goods manufactured rather than departments.

Related Questions

	Physical	Direct Materials	Conversion Costs
	Units	(% complete)	(% complete)
Beginning work in process	240,000	-	-
Ending work in process	190,000	70%	90%
Units started during the month	990,000

Requirements

Complete the first two steps in the process costingâprocedure:

1. Summarize the flow of physical units.

2. Compute output in terms of equivalentunits.

Complete the first two steps in the process costingprocedure.

Alice's Apple Pies

Flow of Physical Units and Computation of Equivalent Units

Flow of

Equivalent Units

Physical

Direct

Conversion

Units

Materials

Costs

Units to account for:

Units accounted for:

Total Equivalent Units

salmonwildebeest917

I{C}{C}{C}. In a processcosting environment, production flow may include from __________ toa _________ or more departments, processes, or work cells.

II{C}{C}{C}. A process costingsystem maintains a _________________ Work in Process Inventoryaccount for each department, process, or work cell.

III{C}{C}{C}. Each Work in ProcessInventory account contains costs of any direct _____________,direct ____________, and ________________ for that department,process, or work cell, as well as any costs that have beentransferred in from the ______________ department, process, or workcell.

IV{C}{C}{C}. At the ___________ of everyaccounting period, a ____________ report assigns the costs thathave accumulated during the period to the units that havetransferred out of the department and to the units that are still apart of the work in process.

V{C}{C}{C}. A process cost report may beprepared using the __________ costing method or the _______________costing method.

VI{C}{C}{C}. _______________ production(equivalent units) is a measure of the number of equivalent wholeunits worked on during a period.

A. Explain why the calculation ofequivalent units is necessary.

B. Equivalent production applies a______________of-completion factor to partially completed units tocalculate the equivalent number of ___________ units produced in anaccounting period for each type of production input.

C. The number of equivalent unitsproduced is the sum of the following:

1. Total units ______________ and____________ during the period

2. An amount representing the workdone on _______________ completed products in both the beginningand ending work in process inventories.

ivoryimpala527

This is for E18-17 in Horngren's Cost Accounting ISBN: 978-0-13-342885-8

Weighted Average method, spoilage, equivalent units. Consider the following data for November 2014 from Gray Manufacturing Company, which makes silk pennants and uses a process-costing system. All direct materials are added at the begining of the process, and convernsion costs are added evenly during the process. Spoilage is detected upon inspection at the completion of the process. Spoiled units are disposed of at zero net disposal value. Gray Manufacturing uses weighted-average method of process costing.

	Physical Units	Direct Materials	Conversion costs
work in process Nov. 1(a)	1000	1423	1110
started in Nov. 2014	?
Good units completed and transferred out during Nov. 2014	9000
Normal Spoilage	100
Abnormal spoilage	50
Work In Process, Nov. 30(b)	2000
Total Costs added During Nov. 2014		12180	27750

(a) degree of completion: direct materials, 100%; conversion costs, 50%

(b) degree of completion; direct materials, 100%; conversion costs, 30%

Compute equivalent units for direct materials and conversion costs. Show physical units in the first column of your schedule.

Flow of Production	Physical Units
Work in Process, Beginning
Started During Current Period
To account for
Completed and Transferred Out During current period
Normal Spoilage
Abnormal Spoilage
Work in process ending
Accounted for
equivalent units of work done to date

The following questions are extension of E18-17

E18-18 Weighted-average method, assigning costs

For the data in exercise 18-17, summarize the total costs to account for; calculate the cost per equivalent unit for direct materials and conversion costs; and assign costs to units completed and transferred out(including normal spoilage), to abnormal spoilage and to units in ending work in process inventory

E18-19 FIFO method, spoilage, equivalent units. Refer to the information in E18-17. Suppose Gray Manufacturing Company uses the FIFO method of process costing instead of the weighted average method. Compute equivalent units for direct materials and conversion costs. Show physical units in the first column of your schedule.

E18-20 FIFO method, assigning costs

For the data in E18-17, use the FIFO method to summarize the totals costs to account for; calculate the cost per equivalent unit for direct materials and conversion costs; and assign costs to units completed and transferred out(including normal spoilage) to abnormal spoilage, and to units in ending work in process.

skyplatypus828

MGAC03H3 Chapter 17: Chapter 17 Notes

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