Managerial Accounting
Managerial Accounting
7th Edition
ISBN: 9781260247886
Author: Wild
Publisher: MCG
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Chapter 3, Problem 2PSA

2.

To determine

To compute: Cost per equivalent unit of production.

2.

Expert Solution
Check Mark

Explanation of Solution

For direct material:

Given,
Total direct material cost is $2,640,000.
Total EUP (Direct Material) is 880,000 units.

Formula for calculating cost per equivalent unit of production,

    CostperEUP(DirectMaterial)= TotalDirectMaterialCost TotalEUP(DirectMaterial)

Substitute $2,640,000 for total direct material cost and 880,000 units for total EUP (direct material).

    CostperEUP(DirectMaterial)= $2,640,000 880,000 =$3

Hence, cost per EUP (direct material) is $3.

Working notes:

Calculation for total direct material cost,

    TotalDirectMaterialCost=( DirectMaterialIntheopeninginventory +Directmatrialusedduringthemonth ) =$420,000+$2,220,000 =$2,640,000

For conversion:

Given,
Total conversion cost is $3,393,000.
Total EUP (Conversion) is 754,000 units.

Formula for calculating cost per equivalent unit of production,

    CostperEUP(Conversion)= TotalDirectMaterialCost TotalEUP(Conversion)

Substitute $3,393,000 for total conversion cost and 754,000 units for total EUP (conversion).

    CostperEUP(Conversion)= $3,393,000 754,000 =$4.50

Hence, cost per EUP (conversion) is $4.50.

Working notes:

Calculation for total direct material cost,

    TotalConversionCost=( ConversionCostIntheopeninginventory +ConversionCostusedduringthemonth ) =$139,000+$3,254,000 =$3,393,000

3.

To determine

To compute: Cost assign to completed and work in process (ending).

3.

Expert Solution
Check Mark

Explanation of Solution

For completed goods:

Given,
Direct material cost for completed goods is $2,100,000.
Conversion cost for completed goods is $3,150,000.

Formula to calculate the cost of unit completed,

    CostofUnitsCompleted=( DirectMaterialCostforCompletedGoods +ConversionCostforCompletedGoods )

Substitute $2,100,000 for direct material cost for completed goods and $3,150,000 for conversion cost for completed goods.

    CostofUnitsCompleted=$2,100,000+$3,150,000 =$5,250,000

Hence, cost of unit completed is $5,250,000.

Working notes:

Calculation for direct material cost for completed goods,

    DirectMaterialCostforCompletedGoods=( CompletedGoods ×CostperEUP(DirectMaterial) ) =700,000×$3 =$2,100,000

Calculation for conversion cost for completed goods,

    ConversionCostforCompletedGoods=( CompletedGoods ×CostperEUP(Conversion) ) =700,000×$4.50 =$3,150,000

For work in process (end):

Given,
Direct material cost for work in process (end) is $540,000.
Conversion cost for work in process (end) is $243,000.

Formula for calculating the cost of work in process (end),

    Costofwork in process ( end )=( DirectMaterialCostforworkinprocess(end) +ConversionCostforworkinprocess(end) )

Substitute $540,000 for direct material cost for work in process (end) and $243,000 for conversion cost for work in process (end).

    Costofwork in process ( end )=$540,000+$243,000 =$783,000

Hence, cost of work in process (end) is $783,000.

Working notes:

Calculation for direct material cost for work in process (end),

    [ DirectMaterialCostfor work in process( end ) ]=[ EUP(DirectMaterial)forwork in process ( end ) ×CostperEUP(DirectMaterial) ] =180,000×$3 =$540,000

Calculation for conversion cost for work in process (end),

    [ ConversionCostfor CompletedGoods ]=[ EUP(Conversion)forwork in process ( end ) ×CostperEUP(Conversion) ] =54,000×$4.50 =$243,000

4.

To determine

To prepare: A memo.

4.

Expert Solution
Check Mark

Explanation of Solution

Memo:

From,
X

To,
Z

Date: March 6, 2018

Subject: Explaining concept of closing process.

Sir,

If the labor is actually 60% complete instead of 30% then it will increase the equivalent unit of production for conversion. It will also decrease the cost per unit of equivalent unit of production and increase the work in process ending inventory.

Since, the cost per equivalent unit of production is more than it should be. It increases the cost of goods sold. Hence, it decreases the income, reduces the retained earnings and reduces the balance of balance sheet.

Yours,
X

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Chapter 3 Solutions

Managerial Accounting

Ch. 3 - Prob. 6DQCh. 3 - Prob. 7DQCh. 3 - Prob. 8DQCh. 3 - Direct labor costs Flow through what accounts in a...Ch. 3 - Prob. 10DQCh. 3 - Prob. 11DQCh. 3 - Prob. 12DQCh. 3 - 13. List the four steps in accounting for...Ch. 3 - 14. APPLE Companies such as Apple commonly...Ch. 3 - 15. GOOGLE Are there situations where Google can...Ch. 3 - Prob. 16DQCh. 3 - Prob. 17DQCh. 3 - Prob. 18DQCh. 3 - Prob. 19DQCh. 3 - Process vs. job order operations C1 For each of...Ch. 3 - Prob. 2QSCh. 3 - Prob. 3QSCh. 3 - Physical flow reconciliation C2 The following...Ch. 3 - Prob. 5QSCh. 3 - Prob. 6QSCh. 3 - Prob. 7QSCh. 3 - Prob. 8QSCh. 3 - Prob. 9QSCh. 3 - Prob. 10QSCh. 3 - Prob. 11QSCh. 3 - Prob. 12QSCh. 3 - Prob. 13QSCh. 3 - Prob. 14QSCh. 3 - Prob. 15QSCh. 3 - Prob. 16QSCh. 3 - Prob. 17QSCh. 3 - Prob. 18QSCh. 3 - Prob. 19QSCh. 3 - Prob. 20QSCh. 3 - Prob. 21QSCh. 3 - Prob. 22QSCh. 3 - Prob. 23QSCh. 3 - Prob. 24QSCh. 3 - Prob. 25QSCh. 3 - Prob. 26QSCh. 3 - Prob. 1ECh. 3 - Prob. 2ECh. 3 - Prob. 3ECh. 3 - Prob. 4ECh. 3 - Prob. 5ECh. 3 - Prob. 6ECh. 3 - Prob. 7ECh. 3 - Prob. 8ECh. 3 - Prob. 9ECh. 3 - Prob. 10ECh. 3 - Prob. 11ECh. 3 - Prob. 12ECh. 3 - Exercise 16-13AFIFO: Completing a process cost...Ch. 3 - Prob. 14ECh. 3 - Prob. 15ECh. 3 - Exercise 16-16 Weighted average: Process cost...Ch. 3 - Prob. 17ECh. 3 - Prob. 18ECh. 3 - Prob. 19ECh. 3 - Prob. 20ECh. 3 - Prob. 21ECh. 3 - Prob. 22ECh. 3 - Prob. 23ECh. 3 - Prob. 24ECh. 3 - Prob. 25ECh. 3 - Prob. 26ECh. 3 - Prob. 1PSACh. 3 - Prob. 2PSACh. 3 - Prob. 3PSACh. 3 - Prob. 4PSACh. 3 - Problem 16-5AA FIFO: Process cost summary;...Ch. 3 - Prob. 6PSACh. 3 - Prob. 7PSACh. 3 - Prob. 1PSBCh. 3 - Prob. 2PSBCh. 3 - Prob. 3PSBCh. 3 - Problem 16-4B Weighted average: Process cost...Ch. 3 - Problem 16-5BA FIFO: Process cost summary;...Ch. 3 - Prob. 6PSBCh. 3 - Prob. 7PSBCh. 3 - Prob. 3SPCh. 3 - Prob. 3CPCh. 3 - Prob. 1GLPCh. 3 - Prob. 1AACh. 3 - Prob. 2AACh. 3 - Prob. 3AACh. 3 - Prob. 1BTNCh. 3 - Prob. 2BTNCh. 3 - Prob. 3BTNCh. 3 - Prob. 4BTNCh. 3 - Prob. 5BTNCh. 3 - Prob. 6BTN
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