ACCT 202 Chapter Notes - Chapter 16: Finished Good, Operations Management, Financial Statement
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Dazzle, Inc. produces beads for jewelry making use. Thefollowing information summarizes production operations and salesactivities for June. The journal entry to record June sales is:
| Direct materials used | $87,000 |
| Direct labor used | 160,000 |
| Predetermined overhead rate(based on direct labor) | 155% |
| Goods transferred to finishedgoods | 432,000 |
| Cost of goods sold | 444,000 |
| Credit sales | 810,000 |
a.Debit Accounts Receivable $810,000; credit Cost of Goods Sold$810,000.
b.Debit Accounts Receivable $810,000; credit Sales $366,000;credit Finished Goods Inventory $444,000.
c.Debit Cost of Goods Sold $444,000; credit Sales $444,000.
d.Debit Finished Goods Inventory $444,000; debit Sales $810,000;credit Accounts Receivable $810,000; credit Cost of Goods Sold$444,000.
e.Debit Accounts Receivable $810,000; credit Sales $810,000;debit Cost of Goods Sold $444,000; credit Finished Goods Inventory$444,000.
2. A process cost summary is amanagerial accounting report that describes all but which of thefollowing:
a.The gross profit earned on the sale of products.
b.The equivalent units of production by the department.
c.How the costs were assigned to the output.
d.Physical transfers for a department.
e.The costs charged to a department.
3. During January, the productiondepartment of a process operations system completed and transferredto finished goods a total of 78,000 units. At the end of January,9,000 additional units were in process in the production departmentand were 65% complete with respect to labor. The beginninginventory included labor cost of $37,100 and the productiondepartment incurred direct labor cost of $294,300 during January.Compute the direct labor cost per equivalent unit for thedepartment using the weighted-average method.
a.$6.34.
b.$3.77.
c.$3.51.
d.$4.25.
e.$3.95.
4.Which of the following is thebest explanation for why it is necessary to calculate equivalentunits of production in a process costing environment?
a.In most manufacturing environments, it is not possible toconduct a physical count of units.
b.Companies often use a combination of a process costing and joborder costing systems.
c.In most process costing systems, direct materials are added atthe beginning of the process while conversion costs are addedevenly throughout the manufacturing process.
d.All of the work to make a unit 100% complete and ready to moveto the next stage of production or to finished goods inventory maynot have been completed in a single time period.
e.In most cases, there is no difference between physical unitsand equivalent units of production.
5.The following refers to unitsprocessed by a breakfast cereal maker in August. Compute the totalequivalent units of production with respect to conversion for Julyusing the weighted-average inventory method.
| Tons of Product | Percentof Conversion Added | |
| Beginning Work in Process | 230,000 | 60% |
| Goods started | 570,000 | 100% |
| Goods completed | 620,000 | 100% |
| Ending Work in Process | 180,000 | 70% |
a.758,000
b.800,000
c.620,000
d.746,000
e.884,000
6.During December, the productiondepartment of a process operations system completed and transferredto finished goods a total of 65,000 units of product. At the end ofMarch, 15,000 additional units were in process in the productiondepartment and were 80% complete with respect to materials. Thebeginning inventory included materials cost of $57,500 and theproduction department incurred direct materials cost of $183,000during December. Compute the direct materials cost per equivalentunit for the department using the weighted-averagemethod.
a.$3.70.
b.$2.38.
c.$2.82.
d.$3.12.
e.$4.79.
Problem 4
Prepare journal entries to reflect the following transactionsfor a textile company.After you complete the entries, determine theamount to include in raw materials, work in process, and finishedgoods.
May 7, 20X7 | Purchased fabric to be used in the manufacturing process. Thepurchase price was $7,000, on account. |
May 11, 20X7 | Transferred 70% of the raw materials purchases on May 7 intoproduction. |
May 11, 20X7 | Incurred direct labor cost of $4,200.Factory overhead is appliedat 30% of the direct labor cost. |
May 12, 20X7 | Transferred completed product with total assigned costs of$5,700 to finished goods. |
May 13, 20X7 | Sold and delivered half of the finished goods (from May 12) to acustomer for $9,000 cash. |
WORKSHEET #4
GENERAL JOURNAL | |||
Date | Accounts | Debit | Credit |
5-7-X7 | |||
To record purchase of raw materials. | |||
5-11-X7 | |||
To transfer raw materials to production, record direct laborcost on job, and apply overhead at the predetermined rate. | |||
5-12-X7 | |||
To transfer completed units to finished goodsinventory. | |||
5-13 X7 | |||
To record sale of finished product for $9,000. | |||
5-13-X7 | |||
To transfer finished goods to cost of goods sold. | |||
