Horngren's Cost Accounting: A Managerial Emphasis (16th Edition)
16th Edition
ISBN: 9780134475585
Author: Srikant M. Datar, Madhav V. Rajan
Publisher: PEARSON
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Textbook Question
Chapter 18, Problem 18.30E
FIFO method, spoilage. Refer to the information in Exercise 18-29.
- 1. Do Exercise 18-29 using the FIFO method of
process costing .
Required
- 2. Should LogicCo’s managers choose the weighted-average method or the FIFO method? Explain briefly.
18-29 Weighted-average method, spoilage. LogicCo is a fast-growing manufacturer of computer chips. Direct materials are added at the start of the production process. Conversion costs are added evenly during the process. Some units of this product are spoiled as a result of defects not detectable before inspection of finished goods. Spoiled units are disposed of at zero net disposal value. LogicCo uses the weighted-average method of process costing.
Summary data for September 2017 are as follows:
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LogicCO is a fast-growing manufacturer of computer chips. Direct materials are added at the start of the production process. Conversion costs are added evenly during the process. Some units of this product are spoiled as a result of defects not detectable before inspection of finished goods. Spoiled units are disposed of at zero net disposal value. uses the FIFO method of process costing. Summary data and weighted-average data for are as follows: Requirements : 1.
For each cost category, compute equivalent units. Show physical units in the first column.
2.
Summarize total costs to account for; calculate cost per equivalent unit for each cost category; and assign costs to units completed and transferred out (including normal spoilage), to abnormal spoilage, and to units in ending work in process.
3.
Should 's managers choose the weighted-average method or the FIFO method? Explain.
Central Perk, LLC, a manufacturer of coffee beans, is considering switching its
operations to an Activity Based Costing system. The following manufacturing
overhead activities and cost drivers have been identified:
Activity.
Machine setup
Machine assembly
Product inspection
Product movement
General factory
Cost Driver
Number of machine setups
Machine hours logged
Inspection hours logged
Number of moves
Machine hours logged
Based on the above descriptions, which of the following correctly pairs the activity
with its appropriate cost level?
O A. Product Inspection... batch level cost
OB. Product Movement... facility level cost
O C. Machine Assembly... unit level cost
O D. General Factory... batch level cost
O E. Machine Setup... unit level cost
A new product Zico was recently introduced by Philadelphia Co., in order to complement its other products, Novo and Domo. The accountant used to allocate the indirect cost according to the units produced. With the recent addition of an expanded computer system, Sonata would like to investigate the possibility of implementing ABC. Before making a final decision, management has come to you for advice. You collected the following information regarding manufacturing overhead:
Table (1)
Mfg. Overhead
Mfg. Overhead Costs
Allocation bases
Set-up
$ 40,000
Number of set-ups
Ordering materials
$ 45,000
Number of material orders
Handling materials
$ 9,000
Number of times material was handled
Inspection
$ 21,000
Number of inspection hours
$115,000
Table (2)
Activity
Products
Zico
Novo
Domo
Total Number of set-ups
5
20
55
Total…
Chapter 18 Solutions
Horngren's Cost Accounting: A Managerial Emphasis (16th Edition)
Ch. 18 - Why is there an unmistakable trend in...Ch. 18 - Distinguish among spoilage, rework, and scrap.Ch. 18 - Normal spoilage is planned spoilage. Discuss.Ch. 18 - Costs of abnormal spoilage are losses. Explain.Ch. 18 - What has been regarded as normal spoilage in the...Ch. 18 - Units of abnormal spoilage are inferred rather...Ch. 18 - In accounting for spoiled units, we are dealing...Ch. 18 - Total input includes abnormal as well as normal...Ch. 18 - Prob. 18.9QCh. 18 - The unit cost of normal spoilage is the same as...
Ch. 18 - In job costing, the costs of normal spoilage that...Ch. 18 - The costs of rework are always charged to the...Ch. 18 - Abnormal rework costs should be charged to a loss...Ch. 18 - When is a company justified in inventorying scrap?Ch. 18 - How do managers use information about scrap?Ch. 18 - Prob. 18.16MCQCh. 18 - Which of the following is a TRUE statement...Ch. 18 - Healthy Dinners Co. produces frozen dinners for...Ch. 18 - Fresh Products, Inc. incurred the following costs...Ch. 18 - Normal and abnormal spoilage in units. The...Ch. 18 - Weighted-average method, spoilage, equivalent...Ch. 18 - Weighted-average method, assigning costs...Ch. 18 - FIFO method, spoilage, equivalent units. Refer to...Ch. 18 - FIFO method, assigning costs (continuation of...Ch. 18 - Weighted-average method, spoilage. LaCroix Company...Ch. 18 - FIFO method, spoilage. 1. Do Exercise 18-25 using...Ch. 18 - Spoilage, journal entries. Plastique produces...Ch. 18 - Recognition of loss from spoilage. Spheres Toys...Ch. 18 - Weighted-average method, spoilage. LogicCo is a...Ch. 18 - FIFO method, spoilage. Refer to the information in...Ch. 18 - Standard-costing method, spoilage. Refer to the...Ch. 18 - Spoilage and job costing. (L. Bamber) Barrett...Ch. 18 - Reworked units, costs of rework. Heyer Appliances...Ch. 18 - Scrap, job costing. The Russell Company has an...Ch. 18 - Weighted-average method, spoilage. World Class...Ch. 18 - FIFO method, spoilage. Refer to the information in...Ch. 18 - Weighted-average method, shipping department...Ch. 18 - FIFO method, shipping department (continuation of...Ch. 18 - Physical units, inspection at various levels of...Ch. 18 - Spoilage in job costing. Jellyfish Machine Shop is...Ch. 18 - Rework in job costing, journal entry (continuation...Ch. 18 - Scrap at time of sale or at time of production,...Ch. 18 - Physical units, inspection at various stages of...Ch. 18 - Weighted-average method, inspection at 80%...Ch. 18 - Job costing, classifying spoilage, ethics....
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- A new product Zico was recently introduced by Philadelphia Co., in order to complement its other products, Novo and Domo. The accountant used to allocate the indirect cost according to the units produced. With the recent addition of an expanded computer system, Sonata would like to investigate the possibility of implementing ABC. Before making a final decision, management has come to you for advice. You collected the following information regarding manufacturing overhead: Table (1) Mfg. Overhead Mfg. Overhead Allocation bases Costs $ 40,000 $ 45,000 $ 9,000 $ 21,000 Number of set-ups Set-up Ordering materials Handling materials Inspection Number of material orders Number of times material was handled Number of inspection hours $115,000 Table (2) Products Activity Zico Novo Domo Total Number of set-ups 5 20 55 Total Number of material orders 1 2 7 Total Number of times material was handled 1 17 Total Number of inspection hours Number of units produced 3 10 6,000 3,000 1,000 Required: 1.…arrow_forwardFor situations 1 trough 6, provide the following information:a. An estimate of the non-value-added cost caused by each activityb. The root caused of the activity cost (such as plant layout, process design, and product design)c. The appropriate cost reduction measure: activity elimination, activity reduction, activity sharing,or activity selection 1. It takes 1 hour and six pounds of material to produce a product using a traditional manufacturing process. A process reengineering study provided a new manufacturing process design (using existing technology) that would take 30 minutes and four pounds of material. The cost per labor hour is $12, and the cost per pound of material is $102. With its original design, a product requires 10 hours of setup time. Redesigning the product could replace the setup time to an absolute minimum of 30 minutes. The cost per hour of setup time is $250. 3. A product currently requires eight moves. By redesigning the manufacturing layout, the number of moves…arrow_forwardWojtek Nakowski has prepared the following list of statements about process cost accounting. Identify each statement as true or false. 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. Process cost systems are used to apply costs to similar products that are mass-produced in a continuous fashion. A process cost system is used when each finished unit is indistinguishable from another. Companies that produce soft drinks, motion pictures, and computer chips would all use process cost accounting. In a process cost system, costs are tracked by individual jobs. Job-order costing and process costing track different manufacturing cost components. Both job-order costing and process costing account for direct materials, direct labour, and manufacturing overhead. Costs flow through the accounts in the same basic way for both job-order costing and process costing. In a process cost system, only one work in process inventory account is used. In a process cost system, costs are summarized in a job cost sheet. In a…arrow_forward
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