FINANCIAL ACCOUNTING (LOOSELEAF)
FINANCIAL ACCOUNTING (LOOSELEAF)
18th Edition
ISBN: 9781260706239
Author: williams
Publisher: MCG
bartleby

Concept explainers

bartleby

Videos

Question
Book Icon
Chapter 18, Problem 7BP

a. 1

To determine

Prepare a schedule showing units started and completed in the Molding Department during June.

a. 1

Expert Solution
Check Mark

Explanation of Solution

Process Costing:

It is a method of cost accounting used by an enterprise with processes categorised by continuous production. The cost for manufacturing those products are assigned to the manufacturing department before the averaged over units are being produced.

Prepare a schedule showing units started and completed in the Molding Department during June.

ParticularsUnits
Flow of physical units: Molding Department 
Units in beginning inventory, June 13,000
Units started in June50,000
Units in process during June53,000
Units in ending inventory, June 30(1,000)
Units transferred to Finishing Department in June52,000
Units in beginning inventory, June 1(3,000)
Units started and completed in June49,000

(Table 1)

Therefore, the units started and completed in the Molding Department during June is 49,000.

a. 2

To determine

Compute the equivalent units of direct materials and conversion for the Molding Department in June.

a. 2

Expert Solution
Check Mark

Explanation of Solution

Compute the equivalent units of direct materials and conversion for the Molding Department in June.

ParticularsInput Resources
 Direct MaterialsConversion
To finish units in process on June 1:  
Direct materials (3,000 units require 30% to complete)900 
Conversion (3,000 units require 60% to complete) 1,800
To start and complete 49,000 units in June49,00049,000
To start units in process on June 30:  
Direct materials (1,000 units 80% complete)800 
Conversion (1,000 units 20% complete) 200
Equivalent units of resources in June50,70051,000

 (Table 2)

Therefore, the equivalent units of direct materials and conversion for the Molding Department in June are 50,700 and 51,000 respectively.

a. 3

To determine

Calculate the cost per equivalent unit of input resource for the Molding Department during June.

a. 3

Expert Solution
Check Mark

Explanation of Solution

Calculate the cost per equivalent unit of input resource for the Molding Department during June.

ParticularsDirect Materials in $Conversion Cost in $
Cost per equivalent unit in June :  
Costs incurred by Molding Department in June (A)912,600612,000
Equivalent units in June (B)50,70051,000
Cost per equivalent unit in June (A÷B)1812

(Table 3)

Therefore, the cost per equivalent unit of input resource for the Molding Department during June is $18 per unit and $12 per unit respectively.

a. 4

To determine

Prepare journal entry to record the transfer of units from the Molding Department to the Finishing Department during June.

a. 4

Expert Solution
Check Mark

Explanation of Solution

Prepare journal entry to record the transfer of units from the Molding Department to the Finishing Department during June.

DateAccounts title and explanation

Debit

($)

Credit

($)

 

Work in process: Finishing Department  (4)

1,560,000 
      Work in process: Molding Department 1,560,000
 (To record the transfer of 52,000 units to the Finishing department in June)  

(Table 4)

  • Work in process: Finishing department is an asset and there is an increase in the value of an asset. Hence, debit the work in process: finishing department by $1,560,000.
  • Work in process: Molding department is an asset and there is a decrease in the value of an asset. Hence, credit the work in process: molding department by $1,560,000.

Working Notes:

Calculate the cost of beginning inventory:

Cost of beginning inventory = ( Direct materials cost carried forward from molding department during May 31)×(Conversion cost carried forward from molding department during May 31)=$37,800+$14,400=$52,200

(1)

Calculate the cost of direct materials during the month June:

Cost of direct materials during the month June} = (Units finished in process +Units started and completed)×(Cost per equivalent unit of Direct materials in June )=(900+49,000)×$18=49,900×$18=$898,200

(2)

Calculate the cost of conversion during the month June:

Cost of conversion during the month June} = (Units finished in process +Units started and completed)×(Cost per equivalent unit of conversion in June)=(1,800+49,000)×$12=50,800×$12=$609,600

(3)

Calculate the total cost of units transferred:

ParticularsAmount in $
Cost of beginning inventory, June 1 (1)52,200
June direct materials cost (2)898,200
June conversion cost (3)609,600
Total cost of units transferred1,560,000

(Table 5)

(4)

a.5

To determine

Compute the costs assigned to ending inventory in the Molding Department on June 30.

a.5

Expert Solution
Check Mark

Explanation of Solution

Compute the costs assigned to ending inventory in the Molding Department on June 30.

ParticularsAmount in $
Work in Process: Molding Department, June 30: 
Direct materials cost  (5)14,400
Conversion cost  (6)2,400
Ending inventory in process, June 3016,800

(Table 6)

Working Notes:

Calculate the cost of direct materials during the month end of June 30:

Cost of direct materials during the month June 30} = (Units started in process forthe month end June 30)×(Cost per equivalent unit of Direct materials in  June)=800×$18=$14,400

(5)

Calculate the cost of conversion during the month end of June 30:

Cost of conversion during the month June 30} = (Units started in process forthe month end June 30)×(Cost per equivalent unit of conversion in June)=200×$12=$2,400

(6)

b. 1

To determine

Prepare a schedule showing units started and completed in the Finishing Department during June.

b. 1

Expert Solution
Check Mark

Explanation of Solution

Prepare a schedule showing units started and completed in the finishing Department during June.

ParticularsUnits
Flow of physical units: Finishing Department 
Units in beginning inventory, June 15,000
Units started in June52,000
Units in process during June57,000
Units in ending inventory, June 30(2,000)
Units transferred to Finishing Department in June55,000
Units in beginning inventory, June 1(5,000)
Units started and completed in June50,000

(Table 7)

Therefore, the units started and completed in the Finishing Department during June is 50,000

b. 2

To determine

Compute the equivalent units of direct materials and conversion for the Finishing Department in June.

b. 2

Expert Solution
Check Mark

Explanation of Solution

FINANCIAL ACCOUNTING (LOOSELEAF), Chapter 18, Problem 7BP

(Figure 4)

b. 3

To determine

Calculate the cost per equivalent unit of input resource for the Finishing Department during June.

b. 3

Expert Solution
Check Mark

Explanation of Solution

Calculate the cost per equivalent unit of input resource for the Finishing Department during June.

ParticularsInput Resources
 Molding materials  in $Direct Materials  in $Conversion in $
Cost per equivalent unit in June   
Costs charged to Finishing Department in June (A)1,560,000222,000430,400
Equivalent units in June (B)52,00055,50053,800
Cost per equivalent unit in June (A÷B)3048

(Table 8)

Note:

Total cost of Molding Department $1,560,000 is transferred to the Finishing Department in June.

b.4

To determine

Prepare journal entry to record the transfer of units from the Finishing Department to Finished goods inventory during June.

b.4

Expert Solution
Check Mark

Explanation of Solution

Prepare journal entry to record the transfer of units from the Finishing Department to Finished goods inventory during June.

DateAccounts title and explanation

Debit

($)

Credit

($)

 Finished goods inventory2,310,000 
 

     Work in process: Finishing Department  (9)

 2,310,000
 (To record the transfer of 55,000 units to the Finishing goods in June)  

(Table 9)

  • Finished goods inventory is an asset and there is an increase in the value of an asset. Hence, debit the finished goods inventory by $2,310,000.
  • Work in process: Molding department is an asset and there is a decrease in the value of an asset. Hence, credit the work in process: molding department by $2,310,000.

Working Notes:

Calculate the cost of beginning inventory:

Cost of beginning inventory =[ ( Molding department cost carried forward during May 31)+( Direct materials cost carried forward from finishing department during May 31)+(Conversion cost carried forward from finishing department during May 31)]=$150,000+$4,000+$24,000=$178,000

(5)

Calculate the cost of molding department during the month June:

Cost of molding department during the month June } = (Units started and completed)×(Cost per equivalent unit of molding department in June)=50,000×$30=$1,500,000

(6)

Calculate the cost of direct materials during the month June for finishing department:

Cost of direct materials during the month June } = (Units finished in process +Units started and completed)×(Cost per equivalent unit of Direct materials in June)=(4,000+50,000)×$4=54,000×$4=$216,000

(7)

Calculate the cost of conversion during the month June for finishing department:

Cost of conversion during the month June} = (Units finished in process +Units started and completed)×(Cost per equivalent unit of conversion in June )=(2,000+50,000)×$8=52,000×$8=$416,000

(8)

Calculate the total cost of units transferred:

ParticularsAmount in $
Cost of beginning inventory, June 1 (5)178,000
June molding materials (6)1,500,000
June direct materials cost (7)216,000
June conversion cost (8)416,000
Total cost of units transferred2,310,000

(Table 10)

(9)

a.5

To determine

Compute the costs assigned to ending inventory in the Finishing Department on June 30.

a.5

Expert Solution
Check Mark

Explanation of Solution

Compute the costs assigned to ending inventory in the Finishing Department on June 30.

ParticularsAmount in $
Work in Process: Finishing department, June 30: 
Molding materials (10)60,000
Direct materials cost  (11)6,000
Conversion cost  (12)14,400
Ending inventory in process, June 3080,400

(Table 11)

Working Notes:

Calculate the cost of molding materials during the month end of June 30 for finishing department:

Cost of Molding material during the month June  30} = (Units started in process forthe month end June 30)×(Cost per equivalent unit of Molding Department in June)=2,000×$30=$60,000

(10)

Calculate the cost of direct materials during the month end of June 30 for finishing department:

Cost of direct materials during the month June 30} = (Units started in process forthe month end June 30)×(Cost per equivalent unit of Direct materials in June)=1,500×$4=$6,000

(11)

Calculate the cost of conversion during the month end of June 30 for finishing department:

Cost of conversion during the month June 30} = (Units started in process forthe month end June 30)×(Cost per equivalent unit of conversion in June )=1,800×$8=$14,400

(12)

Want to see more full solutions like this?

Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Chapter 18 Solutions

FINANCIAL ACCOUNTING (LOOSELEAF)

Ch. 18 - 6. Taylor & Malone is a law firm. Would the...Ch. 18 - 7. Briefly explain the operation of process...Ch. 18 - 8. Some companies that use process costing simply...Ch. 18 - 9. Discuss how managers use information they...Ch. 18 - 10. Explain the term equivalent units. In a...Ch. 18 - 11. Identify various product characteristics that...Ch. 18 - 12. In a process costing system, what condition...Ch. 18 - 13. Why is the combination of direct labor and...Ch. 18 - 14. Why might the unit cost of those items started...Ch. 18 - 15. In a process costing system that uses a FIFO...Ch. 18 - BRIEF EXERCISE 18.1 Selecting Cost Accounting...Ch. 18 - BRIEF EXERCISE 18.2 Matching Cost Systems and...Ch. 18 - Prob. 3BECh. 18 - BRIEF EXERCISE 18.4 Journal Entries in Process...Ch. 18 - BRIEF EXERCISE 18.5 Computing Equivalent Units of...Ch. 18 - Prob. 6BECh. 18 - BRIEF EXERCISE 18.7 Solving for Missing...Ch. 18 - BRIEF EXERCISE 18.8 Determining Departmental...Ch. 18 - BRIEF EXERCISE 18.9 Interpreting a Production Cost...Ch. 18 - Prob. 10BECh. 18 - EXERCISE 18.1 Accounting Terminology Listed are...Ch. 18 - EXERCISE 18.2 Calculating Equivalent Units Moon...Ch. 18 - EXERCISE 18.3 Process Costing Shamrock Industries...Ch. 18 - EXERCISE 18.4 Production Cost Report Use the...Ch. 18 - EXERCISE 18.5 Computing Costs per Equivalent...Ch. 18 - EXERCISE 18.6 Process Costing with No Beginning...Ch. 18 - EXERCISE 18.7 Process Costing with No Beginning...Ch. 18 - EXERCISE 18.8 Process Costing with Beginning...Ch. 18 - EXERCISE 18.9 Process Costing with Beginning...Ch. 18 - Prob. 10ECh. 18 - EXERCISE 18.11 Process Costing through Two...Ch. 18 - Prob. 12ECh. 18 - EXERCISE 18.13 Assessing the Need for Process...Ch. 18 - EXERCISE 18.14 Interpreting Information from a...Ch. 18 - EXERCISE 18.15 Finding Missing Information for a...Ch. 18 - PROBLEM 18.1A Calculating Equivalent Units Brite...Ch. 18 - PROBLEM 18.2A Computing and Using Unit Costs One...Ch. 18 - Refer to the information from Problem...Ch. 18 - PROBLEM 18.4A Process Costing with No Beginning or...Ch. 18 - PROBLEM 18.5A Calculate Cost per Equivalent...Ch. 18 - PROBLEM 18.5A Calculate Cost per Equivalent...Ch. 18 - Prob. 7APCh. 18 - Prob. 8APCh. 18 - PROBLEM 18.1B Calculating Equivalent Units Street...Ch. 18 - PROBLEM 18.2B Computing and Using Unit Costs One...Ch. 18 - PROBLEM 18.3B Production Cost Report Refer to the...Ch. 18 - PROBLEM 18.4B Process Costing with No Beginning or...Ch. 18 - PROBLEM 18.5B Calculate Cost per Equivalent...Ch. 18 - PROBLEM 18.6B Production Cost Report Refer to the...Ch. 18 - Prob. 7BPCh. 18 - Prob. 8BPCh. 18 - Prob. 1CTCCh. 18 - CASE 18.2 Interpreting and Using Process Costing...
Knowledge Booster
Background pattern image
Accounting
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.
Recommended textbooks for you
Text book image
FINANCIAL ACCOUNTING
Accounting
ISBN:9781259964947
Author:Libby
Publisher:MCG
Text book image
Accounting
Accounting
ISBN:9781337272094
Author:WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:Cengage Learning,
Text book image
Accounting Information Systems
Accounting
ISBN:9781337619202
Author:Hall, James A.
Publisher:Cengage Learning,
Text book image
Horngren's Cost Accounting: A Managerial Emphasis...
Accounting
ISBN:9780134475585
Author:Srikant M. Datar, Madhav V. Rajan
Publisher:PEARSON
Text book image
Intermediate Accounting
Accounting
ISBN:9781259722660
Author:J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:McGraw-Hill Education
Text book image
Financial and Managerial Accounting
Accounting
ISBN:9781259726705
Author:John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:McGraw-Hill Education
Cost Accounting - Definition, Purpose, Types, How it Works?; Author: WallStreetMojo;https://www.youtube.com/watch?v=AwrwUf8vYEY;License: Standard YouTube License, CC-BY