ACC 406 : product costing.doc

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blacksardine128

19 Apr 2012

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A noted earlier, all product costs are charged to inventory. To facilitate this process, manufacturers break inventory into three categories: rm inventory, wip inventory, and fg inventory. There are two categories of direct cost (dl & dm) and then there is overhead, which is a catch-all term for everything except dl and dm. Rm inventory when purchased and transferred to wip inventory when it is used. Indirect product costs are charged to an overhead account. Then just one number is transferred from oh to wip. In a company that produces a variety of products in specific batches, the total costs that are charged this way are made up of a series of jobs. They do thousands of jobs each of them has some dm (paper mainly), some dl (the operator), and a lot of oh (store rent, electricity, supplies etc and etc. ) Each job is numbered the number you see on your invoice.

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[The following information applies to the questions displayed below.]

Sierra Company manufactures woven blankets and accounts for product costs using process costing. Data below are for one of its processing departments. The following information is available regarding its May inventories

	Beginning Inventory		Ending Inventory
Raw materials inventory	$	65,000	$	77,000
Work in process inventory		441,500		555,000
Finished goods inventory		632,000		517,000

The following additional information describes the company's production activities for May.


Raw materials purchases (on credit)	$	250,000
Factory wages cost (paid in cash)		1,562,000
Other overhead cost (Other Accounts credited)		38,000
Materials used
Direct	$	158,000
Indirect		80,000
Labor used
Direct	$	800,000
Indirect		762,000
Overhead rate as a percent of direct labor		110	%
Sales (on credit)	$	3,500,000

The predetermined overhead rate was computed at the beginning of the year as 110% of direct labor cost.

1. Compute the cost of products transferred from production to finished goods and cost of goods sold.

Raw Materials (RM)	Work in Process (WIP)






Factory Wages Payable	Finished Goods (FG)





Factory Overhead	Income Statement (Partial)


		$0


	Cost of goods transferred
	Cost of goods sold

ceriseplatypus220

Kansas Supplies is a manufacturer of plastic parts that uses the weighted-average process costing method to account for costs of production. It produces parts in three separate departments: Molding, Assembling, and Packaging. The following information was obtained for the Assembling Department for the month of April.

Work in process on April 1 had 75,000 units made up of the following:

	Amount		Degree of Completion
Prior department costs transferred in from the Molding Department	$	192,000		100	%
Costs added by the Assembling Department
Direct materials	$	120,000		100	%
Direct labor		43,200		60	%
Manufacturing overhead		27,600		50	%
	$	190,800
Work in process, April 1	$	382,800

During April, 375,000 units were transferred in from the Molding Department at a cost of $960,000. The Assembling Department added the following costs:


Direct materials	$	576,000
Direct labor		216,000
Manufacturing overhead		113,400
Total costs added	$	905,400

Assembling finished 300,000 units and transferred them to the Packaging Department.

At April 30, 150,000 units were still in work-in-process inventory. The degree of completion of work-in-process inventory at April 30 was as follows:


Direct materials	90	%
Direct labor	70
Manufacturing overhead	35

Required:

a. Prepare a production cost report using the weighted-average method. (Round "Cost per equivalent unit" to 2 decimal places.)

KANSAS SUPPLIES
Assembling Department
Production Cost ReportâWeighted-Average
Flow of Production Units
	Physical units
Units to be accounted for:
Beginning WIP inventory
Units started this period
Total units to be accounted for

	DETAILS
	Total Costs	Prior Department Costs	Materials	Labor	Manufacturing Overhead
Costs to be accounted for:
Costs in beginning WIP inventory
Current period costs
Total costs to be accounted for

Cost per equivalent unit:
Prior department costs
Materials
Labor
Manufacturing overhead

Costs accounted for:
Costs assigned to units transferred out:
Prior department costs
Materials
Labor
Manufacturing overhead
Total costs of units transferred out
Costs assigned to ending WIP inventory:
Prior department costs
Materials
Labor
Manufacturing overhead
Total ending WIP inventory
Total costs accounted for

yellowseal74

At January 1, the Work in process Inventory account for StarCompany showed a balance of $20,680. During January, directmaterials costing $58,300 were requested for production, $24,200 ofthe $96,400 total factory payroll was used to pay indirect labor,and indirect materials costing $30,500 were purchased and used.Star applies overhead at a rate of 125% of direct labor costs.Also, costs of $193,600 were transferred to the Finished GoodsInventory account during January. The January 31 balance in theWork in Process Inventory account would be

a. $27,150.
b. $47,830.
c. $22,280.
d. $1,600.

blueferret299

ACC 406 : product costing.doc

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