Cost Management
Cost Management
8th Edition
ISBN: 9781259917028
Author: BLOCHER, Edward
Publisher: Mcgraw-hill Education,
Question
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Chapter 6, Problem 44P

1.

a.

To determine

Calculate the costs per equivalent unit for direct materials and conversion using the FIFO method.

1.

a.

Expert Solution
Check Mark

Explanation of Solution

Equivalent units: Equivalent units are the number of units that could have been performed given the amount of work actually performed, and for both partially complete units and complete units, the quantity of other production inputs used.

Calculate the costs per equivalent unit:

Production Quantity Information
 Physical UnitsDirect MaterialsConversion 
Input  100% 20% 
 Beginning WIP4,000(4,000)(800) 
 Units started18,000   
Units to account for22,000   
 
Output 100%40% 
 Units Finished17,00017,00017,000 
 Ending WIP5,0005,0002,000 
 Units accounted for22,000   
Total Equivalent units 18,00018,200 
 
Unit Cost Determination
  Direct MaterialsConversionTotal
Beginning WIP ---
Current Costs $59,040$92,092$151,132
Divide by: Equivalent units 18,00018,200 
Costs per equivalent unit $3.2800$5.0600$8.3400

Table (1)

Hence, the costs per equivalent unit for direct materials is $3.2800, and for conversion is $5.0600.

b.

To determine

Calculate the costs of goods completed and transferred out.

b.

Expert Solution
Check Mark

Explanation of Solution

Transferred-out costs:  The costs that are incurred at the time of production of the previous process. These costs are brought to the next process to calculate the total production cost. The transferred in costs include the cost of direct materials and the conversion cost of the previous process.

Calculate cost of goods completed and transferred out.

Cost of goods completed and transferred out)=Transferred out units ×Total cost per unit=17,000 units×$8.3400per unit=$141,780

Hence, the costs of goods completed and transferred out is $141,780.

c.

To determine

Calculate the costs remaining in the Work-in-process inventory account.

c.

Expert Solution
Check Mark

Explanation of Solution

Calculate Ending WIP inventory for direct materials.

Ending WIP, Direct materials)=(Direct materials, Ending ×Cost per unit (Requirement a.))=(5,000 units×100%)×$3.2800per unit=$16,400

Calculate Ending WIP inventory for conversion.

Ending WIP, Direct materials)=(Conversion, Ending ×Cost per unit (Requirement 2))=(5,000 units×40%)×$5.0600per unit=$10,120

Hence, the cost of the Work-in-process inventory at October 31 is $16,400, and for conversion is $10,120.

2.

To determine

Discuss the exchange rate between the Country U dollar and Country C yuan.

2.

Expert Solution
Check Mark

Explanation of Solution

The responsibility of the controller is to prepare accurate production reports. The request by the manager is the violation of this responsibility of the controller. The best available estimate of percentage completion is to be used by the controller as required by the ethical principles of integrity and objectivity.

Production Quantity Information
 Physical UnitsDirect MaterialsConversion 
Input  100% 20% 
 Beginning WIP4,000(4,000)(800) 
 Units started18,000   
Units to account for22,000   
 
Output 100%60% 
 Units Finished17,00017,00017,000 
 Ending WIP5,0005,0003,000 
 Units accounted for22,000   
Total Equivalent units 18,00019,200 
 
Unit Cost Determination
  Direct MaterialsConversionTotal
Beginning WIP ---
Current Costs $59,040$92,092$151,132
Divide by: Equivalent units 18,00019,200 
Costs per equivalent unit $3.2800$4,7965$8.0765

Table (2)

The change of ending inventory completion from 40% to 60% would have a significant effect on cost per equivalent unit and on equivalent units, as there is a high level of ending work-in-process. The result of this change would be a decline in the total costs per unit from $8.3400 to $8.0765.

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Chapter 6 Solutions

Cost Management

Ch. 6 - Prob. 11QCh. 6 - Prob. 12QCh. 6 - Prob. 13QCh. 6 - Prob. 14QCh. 6 - Prob. 15QCh. 6 - Prob. 16QCh. 6 - Prob. 17QCh. 6 - Fill in the missing amount for each of the...Ch. 6 - Fill in the missing amount for each of the...Ch. 6 - Fill in the missing amount for each of the...Ch. 6 - Fill in the missing amount for each of the...Ch. 6 - Beginning Work-in-Process is 2,000 units; 44,000...Ch. 6 - Weighted-average costs per equivalent unit are $2...Ch. 6 - Abnormal spoilage was 100 units and normal...Ch. 6 - The abnormal spoilage is 300 units and the cost...Ch. 6 - There is no spoilage, the beginning WIP Inventory...Ch. 6 - Process costing is a good fit for companies in...Ch. 6 - Required Calculate the number of tons completed...Ch. 6 - The food-processing industry, like most process...Ch. 6 - Required Prepare a physical flow schedule and...Ch. 6 - Murray Chemical Company refines a variety of...Ch. 6 - Prob. 32ECh. 6 - Prob. 33ECh. 6 - Prob. 34ECh. 6 - Taxes R Us (TRU), an income tax preparation firm,...Ch. 6 - Required Compute the equivalent units and costs...Ch. 6 - Weatherly Lumber Company processes wood pulp for...Ch. 6 - Prob. 38PCh. 6 - Arsenio Company manufactures a single product that...Ch. 6 - Prob. 40PCh. 6 - Prob. 41PCh. 6 - Required Complete the production cost report for...Ch. 6 - Alvis Construction Supply Company has a department...Ch. 6 - Prob. 44PCh. 6 - Sanyo Corporation manufactures a popular model of...Ch. 6 - Required Prepare the production cost report of the...Ch. 6 - BDB Company manufactures its one product by a...Ch. 6 - Required Prepare a production cost report for May...Ch. 6 - APCO Company manufactures various lines of...Ch. 6 - Required Prepare the production cost report using...Ch. 6 - Healthy Selections Cereals, Inc. (HSC) is a large...Ch. 6 - Required Prepare the production cost report for...Ch. 6 - Prob. 53P
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