Concept explainers
Dublin Brewing Co. uses the
Production Costs
Work in process, beginning of period:
Costs incurred during month:
Production Data:
13,000 units finished and transferred to stockroom
Work in process, end of period, 2,000 units one-half completed
Required:
Prepare a cost of production summary for October.
Prepare a cost of production summary for October.
Explanation of Solution
Unit Cost of Production: The cost production derived in terms of corresponding units of production is called unit cost of production.
Prepare a cost of production summary for October.
Cost Elements | Amount ($) | Total cost ($) |
Cost of work in process, beginning of month: | ||
Materials | 2,600 | |
Labor | 2,300 | |
Factory overhead | 1,000 | 5,900 |
Cost of production for month: | ||
Materials | 10,000 | |
Labor | 7,500 | |
Factory overhead | 6,000 | 23,500 |
Total costs to be accounted for | 29,400 |
Table (1)
Compute the total equivalent production.
Cost Elements | Unit output |
Finished and transferred to finished goods during month | 13,000 |
Equivalent units of work in process, end of month | 10,000 |
Total equivalent production | 14,000 |
Table (2)
Compute the unit cost.
Cost Elements | Unit cost ($) |
Cost of work in process, beginning of month: | |
Materials (1) | 0.90 |
Labor (2) | 0.70 |
Factory overhead (3) | 0.50 |
Total | 2.10 |
Table (3)
Working Note:
(1) Calculate the unit cost (materials).
(2) Calculate the unit cost (labor).
(3) Calculate the unit cost (factory overhead).
Compute production costs.
Cost Elements | Amount ($) | Amount ($) |
Costs of goods finished and transferred to finished goods during month (4) | 27,300 | |
Materials (5) | 900 | |
Labor (6) | 700 | |
Factory overhead (7) | 500 | 2,100 |
Total production costs accounted for | 29,400 |
Table (4)
Working Note:
(4) Calculate the costs of goods finished and transferred to finished goods during month.
(5) Calculate the inventory costs (material).
(6) Calculate the inventory costs (labor).
(7) Calculate the inventory costs (factory overhead).
Want to see more full solutions like this?
Chapter 5 Solutions
Principles of Cost Accounting
- Kokomo Kayak Inc. uses the process cost system. The following data, taken from the organizations books, reflect the results of manufacturing operations during the month of March: Production Costs Work in process, beginning of period: Costs incurred during month: Production Data: 18,000 units finished and transferred to stockroom. Work in process, end of period, 3,000 units, two-thirds completed. Required: Prepare a cost of production summary for March.arrow_forwardDuring March, the following costs were charged to the manufacturing department: $22,500 for materials; $45,625 for labor; and $50,000 for manufacturing overhead. The records show that 40,000 units were completed and transferred, while 10,000 remained in ending inventory. There were 45,000 equivalent units of material and 42,500 units of conversion costs. Using the weighted-average method, prepare the companys process cost summary for the month.arrow_forwardAero Aluminum Inc. uses a process cost system. The records for May show the following information: Required: Prepare a cost of production summary for each department. (Hint: When preparing the Converting production summary, refer to the Rolling production summary for the costs transferred in during the month.)arrow_forward
- Premier Products Inc. has three departments and uses the process cost system of accounting. A portion of the departmental cost work sheet prepared by the cost accountant at the end of July is reproduced below. Required: Prepare a cost of production summary for each department. (Round unit costs to three decimal places and totals to the nearest whole dollar.)arrow_forwardPrepare a cost of production report for the Cutting Department of Dalton Carpet Company for January. Assuming that direct materials are placed in process during production, use the weighted average method with the following data:arrow_forwardSpokane Production Co. obtained the following information from its records for July: Required: 1. Prepare, in summary form, the journal entries that would have been made during the month to record issuing materials to production, the distribution of labor, and overhead costs; the completion of the jobs; and the sale of the jobs. 2. Prepare schedules computing the following for July: a. The gross profit or loss for each job completed and sold, and for the business as a whole. b. For each job, the gross profit or loss per unit. (Round to the nearest cent.)arrow_forward
- Holmes Products, Inc., produces plastic cases used for video cameras. The product passes through three departments. For April, the following equivalent units schedule was prepared for the first department: Costs assigned to beginning work in process: direct materials, 90,000; conversion costs, 33,750. Manufacturing costs incurred during April: direct materials, 75,000; conversion costs, 220,000. Holmes uses the weighted average method. Required: 1. Compute the unit cost for April. 2. Determine the cost of ending work in process and the cost of goods transferred out.arrow_forwardThe standard cost summary for the most popular product of Phenom Products Co. is shown as follows, together with production and cost data for the period. One gallon each of liquid lead and varnish are added at the start of processing. The balance of the materials is added when the process is two-thirds complete. Labor and overhead are added evenly throughout the process. There were no units in process at the beginning of the month. Required: Calculate equivalent production for materials, labor, and overhead. (Be sure to refer to the standard cost summary to help determine the percentage of materials in ending work in process.) Calculate materials and labor variances and indicate whether they are favorable or unfavorable, using the diagram format shown in Figure 8-4. Determine the cost of materials and labor in the work in process account at the end of the month.arrow_forwardThe cost accountant for River Rock Beverage Co. estimated that total factory overhead cost for the Blending Department for the coming fiscal year beginning February 1 would be 3,150,000, and total direct labor costs would be 1,800,000. During February, the actual direct labor cost totalled 160,000, and factory overhead cost incurred totaled 283,900. a. What is the predetermined factory overhead rate based on direct labor cost? b. Journalize the entry to apply factory overhead to production for February. c. What is the February 28 balance of the account Factory OverheadBlending Department? d. Does the balance in part (c) represent over- or underapplied factory overhead?arrow_forward
- Using the same data found in Exercise 6.22, assume the company uses the FIFO method. Required: Prepare a schedule of equivalent units, and compute the unit cost for the month of December. Fordman Company has a product that passes through two processes: Grinding and Polishing. During December, the Grinding Department transferred 20,000 units to the Polishing Department. The cost of the units transferred into the second department was 40,000. Direct materials are added uniformly in the second process. Units are measured the same way in both departments. The second department (Polishing) had the following physical flow schedule for December: Costs in beginning work in process for the Polishing Department were direct materials, 5,000; conversion costs, 6,000; and transferred in, 8,000. Costs added during the month: direct materials, 32,000; conversion costs, 50,000; and transferred in, 40,000.arrow_forwardTanaka Manufacturing Co. uses the process cost system. The following information for the month of December was obtained from the company’s books and from the production reports submitted by the department heads: Required: Prepare cost of production summaries for the Mixing, Blending, and Bottling (Hint: You must calculate the adjusted unit cost from Blending.) departments. Prepare a departmental cost work sheet. Draft the journal entries required to record the month’s operations. Prepare a statement of cost of goods manufactured for December. (Hint: Goods finished but not transferred to finished goods are considered part of work in process inventory.)arrow_forwardAbbey Products Company is studying the results of applying factory overhead to production. The following data have been used: estimated factory overhead, 60,000; estimated materials costs, 50,000; estimated direct labor costs, 60,000; estimated direct labor hours, 10,000; estimated machine hours, 20,000; work in process at the beginning of the month, none. The actual factory overhead incurred for November was 80,000, and the production statistics on November 30 are as follows: Required: 1. Compute the predetermined rate, based on the following: a. Direct labor cost b. Direct labor hours c. Machine hours 2. Using each of the methods, compute the estimated total cost of each job at the end of the month. 3. Determine the under-or overapplied factory overhead, in total, at the end of the month under each of the methods. 4. Which method would you recommend? Why?arrow_forward
- Principles of Cost AccountingAccountingISBN:9781305087408Author:Edward J. Vanderbeck, Maria R. MitchellPublisher:Cengage LearningManagerial AccountingAccountingISBN:9781337912020Author:Carl Warren, Ph.d. Cma William B. TaylerPublisher:South-Western College PubPrinciples of Accounting Volume 2AccountingISBN:9781947172609Author:OpenStaxPublisher:OpenStax College
- Cornerstones of Cost Management (Cornerstones Ser...AccountingISBN:9781305970663Author:Don R. Hansen, Maryanne M. MowenPublisher:Cengage LearningFinancial And Managerial AccountingAccountingISBN:9781337902663Author:WARREN, Carl S.Publisher:Cengage Learning,Excel Applications for Accounting PrinciplesAccountingISBN:9781111581565Author:Gaylord N. SmithPublisher:Cengage Learning