Luke Corporation produces a variety of products, each within their own division. Equivalent units. Conversion. thanksSample problem 4. Compute the equivalent units of material and conversion in the ending inventory. Equivalent units of i. 2. 50 per direct labor-hour. Compute the costs per equivalent unit for the month. Required;Construct the direct labor budget for the next two months;assuming that the direct labor work force is fully adjusted to the total direct;labor-hours needed each month. Compute the equivalent units of production for materials and Equivalent units of production Required: Materials $ 30,800 $186,690 2,600 Labor $50,625 $33,750 2,500 Overhead $ 246,600 $ 164,400 2,400 1. The concept of equivalent units is applicable to process costing. ) Unit conversion cost All materials are added at the beginning of processing in the Cleaning Department. Equivalent units of materials 10,000. (e) Prepare a production cost report for the Molding Department for CHAPTER PROCESS COSTING Chapter 16-1 Preview Preview of of Chapter Chapter Process cost accounting focuses on the processes involved in mass-producing products that are identical or very similar in nature In contrast, job order cost accounting Calculate the equivalent units of production. 00 Required: 1. Materials Conversion Equivalent units of production 202,000 196,000 Explanation: Equivalent Units (EU) Materials Conversion Units transferred out 190,000 190,000 Work in process, ending: 15,000 units × 80% 12,000 15,000 units × 40% Direct labor$82,060 Overhead$104,116 (All materials added at the beginning of the process. Tons of Pulp Work in process, June 1 . Jul 4, 2018 Equivalent units of production for direct materials and direct labor are Learning Objective: 03-C2 Define and compute equivalent units and explain . In these companies, the manufacturing costs incurred are allocated to the proper The journal entries related to raw material activity for June are: . Compute the cost per equivalent unit for materials, for labor, and for overhead. Instructions (a) Prepare a schedule showing physical units of production. On December 1, Stone Mountain Production Company had a work in process inventory of 1,200 units that were complete as to materials and 50% complete as to labor and overhead. 70 Costs of Ending Work in To figure out total costs, you can apply the outputs formula to the total cost of direct materials. The ending work in process inventory was 75% complete with respect to materials and 50% complete with respect to labor and overhead. (b) Determine the equivalent units of production for materials and conversion costs. Steps 1 and 2: Summarize Output in Physical Units and Compute Output in Equivalent Units; Weighted-Average Method of Process Costing, Assembly Department of Porter Handcraft for April 2009. c) Compute the unit costs of production. The June 30 work in process inventory consisted of 8,000 pounds that were 100% complete with respect to materials and 40% complete with respect to conversion. gif” alt=”incorrect”> eBook Links (2) 4. 43. (Round answers to 2 decimal places, e. D) When units in the beginning inventory are all completed and transferred at the same time. The following costs were incurred by the mixing department during June: Direct materials Direct labor. c. 800 $4. (4) Allocate costs to completed and partially completed units. Required How many units were completed and transferred to finished goods during the period? Compute the equivalent units of production for materials. Compute the physical units accounted for by tracing the physical flow of units. (e) Prepare a production cost report for the Molding Department for Fletcher Company collected the following data regarding production of one of its products. Compute the equivalent units of materials, labor, and overhead in the ending inventory for the month. Equivalent units of production are materials 20,000 and conversion costs 19,000. 20 per unit. Prepare a cost reconciliation for April. Blends together units and costs from prior and current periods. Assign the costs to units completed and transferred out and to ending Work in process inventory. 651 week lecture chapter process costing questions question under what conditions would it be appropriate to use process costing system? process costing is used o Step 4: For each cost column (materials, labor and overhead), divide total costs from Step 2A by total equivalent units from Step 2 to compute cost per equivalent unit. gif” alt=”incorrect”> 1(b) Determine the equivalent units of production with respect to direct materials. There are many causes of materials, labor and overhead variances. Equivalent Units Materials Labor and Overhead Units transferred out . 1. Figure 5-9 The Omega Company manufactures customized motors on a job-order basis. prepare a schedule to compute equivalent units of production by cost component assuming the weighted average method. Required: Compute the equivalent units of production for the first department for June, assuming that the company uses the weighted-average method of accounting for units and costs. Equivalent units of materials Equivalent units of conversion costs (b) Determine the unit costs of production. e. How does a company determine its cost drivers for indirect materials, indirect labor, and other overhead costs? To begin the determination of appropriate cost drivers, an accountant analyzes the activities in the product production process that contribute to the cost of that product. 4-* * Here is a visual showing the computation of equivalent units as to materials. We will look at equivalent units for Department B. Equivalent Units of Production Two half completed products are equivalent to one completed product. Equivalent units of production is a rather arbitrary tool – unless you’re in process costing or run a large manufacturing business in which case it’s completely relevant and you should keep reading. Equivalent units of production measure the work done during the period, expressed in fully completed units. " Labor and manufacturing overhead are incurred uniformly through-out each process. Data for Hollins Company are given in BE3-8. Again, by measuring equivalent units of production. Requirements. ) Quantities Physical Units Equivalent Units Materials Conversion Units to be accounted for Work in Process, Beginning 6,000 Started into Production 34,000 Total Units 40,000 Units Accounted for Transferred Out 24,000 24,000 24,000 WIP, Ending 16,000 12,000 8,000 Total Units 40,000 36,000 32,000 Molitor uses the weighted-average method of costing. ) 4-6 Highlands Company uses the weighted-average method in its process costing system. 00 per direct labor-hour. 25. During June, 40,000 units were completed and Equivalent units are the number of finished units that would have been prepared had there been no partially completed units in a process. •Both systems use the same manufacturing accounts, including Manufacturing Overhead, Raw Materials, Work in Process, and Finished Goods. . b. Can you help me get started with this assignment? Using the weighted average method, equivalent units of production will always be equal to the units completed and transferred out plus the equivalent units remaining in work in process inventory. . There were 10,000 units in the ending work in process that were 50% complete as to conversion costs. B) completed from beginning inventory, started and completed during the month, and units in ending inventory. precisely the same amount of materials, labor, and overhead. of production. 4. Materials are entered at the beginning of the process. n/r . Equivalent units of production ? A process with 1,600 units of beginning work in process, completed and transferred out 20,000 units during a period. Assume that direct materials are added at the start of the process. Equivalent units of production (b) Cost per equivalent unit (a) Materials $ 92,000 The accumulation of the costs of materials, labor, and overhead to compute equivalent units of production is as follows: Kellogg Company for the month of June Production costs chargeable to the Finishing Department in June in Castilla Company are materials $15,000, labor $29,500, overhead $18,000. Compute the first department's equivalent units of production for materials, labor, and overhead for the month. $96,975. Answer The department started 475,000 units into production during the month and transferred 480,000 completed units to the next department. Compute the direct materials quantity variance. C) When there is no ending inventory. , 200 x 60%) which are 100% complete. The number of equivalent units of production for the period for materials if the first-in, first-out method is used to cost inventories was: 18. c) Determine the total cost of ending work in process inventory and the total cost of units transferred to the second process in June. Issuu is a digital publishing platform that makes it simple to publish magazines, catalogs, newspapers, books, and more online. Compute the equivalent units of production for materials and for labor and overhead for June. Determine the number of equivalent units of production, either on the weighted average or FIFO basis, for each cost component. A different visual depiction of the equivalent units calculation for materials is shown on this slide. The customer would like some modifications made to product C64 that would increase the variable costs by $5. At the beginning of the year, it estimated that 35,000 direct labor-hours would be required for the period’s estimated level of production. chemicals) might need to be given a value, process costing allows for this. Essentially, the concept of equivalent units involves expressing a given for equivalent unit calculations for direct materials, direct labor and overhead. 85 per meter and 0. Transferred out 8960 units 2. The activities performed in a processing department are performed uniformly on all units of production. When materials are added at varying stages of the production process, separate equivalent production figures must be used for materials and for labor and factory overhead. Compute the total cost per equivalent unit for the month. uses the weighted average method in its process costing system. Bakerston Company is a manufacturing firm that uses job-order costing. Units transferred out totaled 17,000. Units transferred out 15,000. Advertising. Basically the fully completed units and the partially completed units are expressed in terms of fully completed units 1. Compute the equivalent units of production for (a) materials and (b) conversion costs. Production costs: 1. The units in the ending work in process inventory were 100% complete with respect to materials and 70% complete with respect to labor and overhead. How much is the total manufacturing cost (2) Compute equivalent units of production for materials and for conversion costs. Compute the number of tons of pulp completed and transferred out during June. The total cost, including direct materials, direct labor and applied overhead, assigned to 1. Selling costs. 6. Equivalent units of production . (3) Determine the cost per equivalent unit. Instructions a) Prepared a schedule showing physical units of production b) Determine the equivalent units of production for materials and conversion costs. The following information summarizes production operations for June. Quality Brick Company produces bricks in two processing departments—Molding and Firing. Equivalent units of production 410,000 390,000 Costs per Equivalent Unit Materials Conversion Costs of beginning work in process inventory $92,000 $58,000 Costs added during the period $851,000 $995,000 Total Cost $943,000 $1,053,000 Equivalent units of production 410,000 390,000 Cost per equivalent unit $2. Compute the unit costs for each cost factor. Direct materials. 2,000 $13. $79,470. REQUIRED: Compute the equivalent units of production for materials and for conversion. So, 10,000 units 70 percent complete are equivalent to 7,000 complete units. Compute the equivalent units of production for materials and for overhead in June. Data relating to tons of pulp processed during June are provided below: Percent Completed Tons of Pulp Materials Labor and overhead Work in process, June 1 21,500 80% 90% Work in process, June 30 28,100 68% 49% Started into production during June 190,100 Requirement 1: Compute the number of tons of Hielta Oy, a Finnish company, processes wood pulp for various manufacturers of paper products. (d) Determine the costs to be assigned to the units transferred and in process for June. A production department's output for the most recent month consisted of 18,000 units completed and transferred to the next stage of production and 18,000 units in ending Work in Process inventory. The production budget calls for producing;4,800 units in June and 5,300 units in July. This calculation results in 5,820 equivalent units as to materials and 5,610 equivalent units as to conversion costs. Direct labor, utilities, and equipment depreciation are often incurred uniformly during processing. Materialsare added 80% at the beginning of the process and 20% when the units are 90% complete. Tons of Pulp, Materials, Labor and Overhead 2. Required: 1. Equivalent units are the sum of units completed and transferred out plus equivalent units of ending work in process. Required: Compute the equivalent units of production for October assuming that the company uses the weighted-average method of accounting for units and costs. Since processes are continuous, when a cost of production report is prepared, the unfinished units in the opening work in process or closing Definition and Explanation of Equivalent Units of Production: After materials, labor and overhead costs have been accumulated in a department, the department’s output must be determined so that unit cost can be computed. The June 1 work in process inventory was 100% complete with respect to materials and 50% complete with respect to conversion. g. b) Compute the costs per equivalent unit for June for the first process. The units in ending Work in Process inventory were 80% complete with respect to both direct materials and conversion costs. Lennox Industries manufactures two products: A and B. For example, if we have 1,000 units in a department that are 75% complete, we would say that this represents 750 equivalent units. (Step 1) (Step 2) Equivalent Units. Assume the company uses the Weighted Average inventory method. 86. L07 L08 LOS L05 Production Costs Costs incurred during month: Materials . 50 Standard ounces per completed unit 8 Actual ounces purchased and used in production 228,000 Actual price paid for materials $1,504,800 Labor: Standard hourly labor rate $22 per hour Production costs chargeable to the Sanding Department in July for Joyful Art are $12,500 for materials, $26,000 for labor, and $10,000 for manufacturing overhead. For units in ending work in process, we would take the units unfinished x a percent complete. I need help. Step 1. Say you’ve mixed enough sugar to make 600,000 units of candy. These beginning units were completed and another 90,000 units were started during the current period. 15. Department S had no work in process at the beginning of the period. Required: Assume that the company uses the FIFO method in its process costing system. The company's inventory balances were as follows at the Compute the equivalent units (EU) of production for materials transferred-out of the department. Equivalent units of production Cost per equivalent unit Costs of Ending Work in Process Inventory and the Units Transferred Out: Materials Conversio Total n Ending Work in Process Inventory: Equivalent units of production 40,000 20,000 $146,000 Cost per equivalent unit $2. C2 Define and compute equivalent units and explain their use in process costing. Equivalent units of production measure work done during a period, expressed in fully completed units. Examples of Actual Overhead. If materials are added when the production process begins and direct labor is applied uniformly throughout the process, what are the equivalent units for direct materials and for direct labor, respectively? Liberty University ACCT 212 connect exam 2 complete solutions correct answers key Factory overhead costs may include all of the following except:Indirect labor costs. 53,600 Overhead. E3-11 The Polishing Department of Harbin Company has the following production and manufacturing cost data for September. Compute the unit costs for materials and conversion costs. Computation of equivalent units in ending inventory: Work in process, May 31 (materials 100% complete, labor and overhead 90% complete) Work in process, June 30 (materials 50% complete, conversion 25% complete). Budgeted fixed factory overhead is $19,000, which includes $3,000 of factory equipment depreciation. Overhead At June 30, 8,000 units that were 70% complete remained in the mixing department. Compute the unit product cost that would appear on the job cost sheet for this job. Required: Compute the equivalent units for May for both materials and labor and overhead assuming that the company uses the weighted-average method of accounting for units. Next, calculate the equivalent units. 00 points. The fabricating department has the following production and cost data for the current month. Accountants have devised the concept of an equivalent unit, a physical unit units of material, and 60 equivalent units of conversion (i. (c) Compute the unit costs of production. The percent complete can be different for direct materials, direct labor or overhead. Question 6; Once equivalent units are calculated for materials, this number will also be used for direct labor and factory overhead. Process Costing Chapter 4 Weighted-Average – An Example The first step in calculating the equivalent units is to identify the units completed and transferred out of Assembly Department in June (5,400 units) Weighted-Average – An Example The second step is to identify the equivalent units of production in ending work in process with respect to materials for the month (540 units) and adding The company applies manufacturing overhead on the basis of direct labor hours. o Step 5: For Completed and Transferred Out, multiply equivalent units from Step 2 by cost per equivalent unit from Step 2B for each cost column (materials, labor and overhead). 25. 30 $2. Direct labor was $32,450 and factory overhead was $18,710. Tutor/Lecturer: Syrus - These documents will come in handy for Semester 2 2018 and Semeste View more. a-for each of the tow months , calculate the equivalent units production. Compute the number of equivalent units with respect to both materials used and conversion used in the production department for April using the weighted-average method. Navarro started the month of June with 300,000 tons of iron ore in process in the Calculate equivalent units of production, taking into account beginning work in  Compute the equivalent units of production for materials and for labor and overhead for June. 00 $23. Acc349 Managerial Accounting Week 2 Assignment (P2-4A, P3-3A, P4-1B, P4-3B) P2-4A Compute predetermined overhead rates, apply overhead, and calculate under- or overapplied overhead. Determine the amount of cost that should be assigned to the ending work in process inventory. The equivalent units for conversion costs (labor and overhead) are 400 (1,000 units When calculating the per unit cost using the weighted average method, the beginning  Mar 27, 2019 Process costing system is used for standardized production processes. problem? Compute the predetermined Overhead Rate. Ending work in process was 1,000 units that are 100% complete as to materials and 40% complete as to conversion costs. Beginning inventory consisted of 5,000 units (100% complete as to material, 55% complete as to labor) with a cost of $124,800 materials and $104,500 conversion. The special order would have no effect on the company's total fixed manufacturing overhead costs. Data for a recent month for the first department follow: Units Materials Labor Overhead Prepare journal entries dated March 31 to record the following March activities: (a) purchase of raw materials, (b) direct materials usage, (c) indirect materials usage, (d) factory payroll costs, (e) direct labor costs used in production, (f) indirect labor costs, (g) other overhead costs—credit Other Accounts, (h) overhead applied, (i Materials $510,000 Labor 92,500 Overhead 150,000 Total $752,500 Instructions (a) Compute the physical units of production. Job 492 is an order for 100 units. completed during the period and units in ending inventory. Units started into production 36,000 Units in ending work in process 6,000 Percent complete in ending work in process: Conversion costs 40% Materials 100% Costs incurred: Direct materials $72,000 Direct labor $81,000 Overhead $97,200 Required: 1. Compute the cost of ending inventory and of the units transferred to the next department for April. Direct materials costing $4,080 were placed in production during June, and direct labor of $3,315 and manufacturing overhead of $1,005 were assigned to the process. Use the weighted-average method. , labor and overhead). If materials, labor, and overhead are added at different times in the production process, two separate calculations of equivalent units are necessary, one for the materials and one for conversion costs. The equivalent units of production for materials and conversion are $25,600 $16,000 $41,600* * $41,600 is the June 30 balance in the Work in . Hint: Complete four steps necessary to prepare a production cost report. Direct labor is a variable cost. A process with no beginning work in process, completed and transferred out 65,000 units during a period and had 50,000 units in the ending work in process inventory that were 20% complete. The costs per equivalent unit for the month were: Materials Conversion Cost per equivalent unit $18. Total cost (a) . • Prepare a production cost report for a process cost system and discuss its relationship to the Work in Process Inventory account. A total of 20,100 units were completed and transferred to the next processing department during the period. 2 meters of material at $. $24. Jobs 235, 237, and 238 were completed during June and transferred to finished goods. 00 per unit and that would require a one-time investment of $43,000 in special molds that would have no salvage value. Consequently, there were 1,000 equivalent units for materials and 350 equivalent units for direct labor and manufacturing overhead. 21-37 LO 5 Compute equivalents units. , A system of accounting in which costs are accumulated and then measured per unit at the end of a period by combining costs per equivalent unit from various departments is a:</p>, <p>Manufacturing costs other than direct materials and direct labor, and are not readily traceable to specific units or batches of production are called:</p><p><br></p>, <p>Which of the following costing systems is Equivalent Units (EU) Materials Labor Overhead Units accounted for as follows: Transferred out 95,000 95,000 95,000 95,000 Work in process, May 31 (materials 60% complete; labor and overhead 20% complete) 15,000 9,000 3,000 3,000 Total units accounted for 110,000 104,000 98,000 98,000 Problem 4-24 (continued) Compute the direct labor cost per equivalent unit for the department using the weighted-average method. Chapter 4: systems design: process costing – types of costing systems used to determine product costs, differences between job-order and process costing, sequential processing departments, parallel processing departments, flow of materials, labor and overhead costs, materials, labor and overhead costs entries, equivalent units of production, weighted average method, production report Production costs chargeable to the Finishing Department in June in Cascio Company are materials $16,560, labor $34,040, overhead $19,960. A department usually has some partially completed units in its ending inventory. Beginning of the year estimated 20,000 direct labor hours required for the period for production, $94,000 fixed manufacturing overhead expenses for the upcoming period and variable manufacturing overhead $2. Labor and overhead. March April ةسماخلا ةرضاحملا Direct materials costing $437,500 were placed in production in Assembly during November, and Direct labor of $200,800 and Manufacturing overhead of $134,275 were assigned to that department. (d) Compute the July 31 Work-in-Process Inventory balance. The following information was obtained from the company's accounts at the end of February. BE3-9. Under the FIFO method, we will calculate equivalent units for 3 things: Units completed from beginning . The June 1 work in process inventory consisted of 5,000 pounds with $16,000 in materials cost and $12,000 in conversion cost. We will use T-Account’s and start with materials Process Cost Flows Process Cost Flows: Next transfer work from Dept A to Dept. in the current department under different heads: direct materials, direct labor and manufacturing overhead costs. and materials, labor, or overhead are added to the product. Maisley Manufacturing decided to analyze certain costs for June of the current year. For materials, equivalent units equals 5,400 units completed and transferred plus 540 equivalent units in ending inventory. ) Converison cost per unit 3. Flow of Production Units Materials Costs Step 2:Compute Equivalent Units of Production(slide 5 of 5) To compute equivalent units for conversion costs, it is necessary to know how direct labor and factory overhead enter the manufacturing process. Answer: A production cost report helps managers answer several important questions: How much does it cost to produce each unit of product for each department? Which production cost is the highest—direct materials, direct labor, or overhead? Where are we having difficulties in the production process? In any particular departments? 45 Explain How and Why a Standard Cost Is Developed . Equivalent units of conversion costs 12,000. Indirect material costs. Compute the cost of ending work in process. during June. The ending work in process units are 30% complete as to conversion costs. Overhead is applied to production at the rate of 60 percent of direct labor. Equivalent units of production in ending work in process Cost per equivalent unit. Compute the equivalent units of production. The journal entry to record June production activities for direct material usage is: Direct materials used $87,000 Direct labor used 160,000 Predetermined overhead rate (based on direct labor) 155% 2. 3. Labor Factory overhead Production Report Finished and transferred to stockroom during month A favorable labor efficiency variance indicates better productivity of direct labor during a period. The consulting firm used the follo Equivalent Units of Production 4-24 Equivalent units are the product of the number of partially completed units and the percentage completion of those units. Finding total equivalent units. 30) = 11,500 equivalent units Equivalent units can be calculated two ways: The First-In, First-Out Method – FIFO is covered in the appendix to this chapter. iii. Students can use the syllabus to plan their studying to maximize their grade and to coordinate the amount and timing of studying for each course. The next step that should be done is to calculate the ending inventory costs for the conversion costs. The table below shows the computation of equivalent units. Equivalent unit calculations are a means to determine how much material and that are in continuous production, but also to labor costs and overhead costs. Assuming McCullough calculates two overhead rates as recommended by the staff accountant, calculate: The ICU and Other overhead rates. c-did the direct matrials cost per equivalent unit increase or decrase between march and april. Causes for favorable labor efficiency variance may include: Hiring of more higher skilled labor (this may adversely impact labor rate variance) Training of work force in improved production techniques and methodologies Question Integrative Case – Luke Corporation Part 2. Instructions. The completed and transferred out units are easier to address than work in process. Equivalent Units of Production Weighted-Average Method The weighted-average method . Equivalent units of production are materials 20,000 and conversion costs 20,000. The total cost, including direct materials, direct labor and applied overhead, assigned to; Patient A and Patient B. 1) Job Number June 1 Work in Process Inventory Direct Materials Direct Labor 235 $2,500 $600 $400 236 $1,500 $800 $1,000 237 $1,000 $1,200 $1,750 238 $800 $1,500 $2,250 Overhead is charged to production at 80% of direct materials cost. BE3-9 Data for Murdock Company are given in BE3-8. It requires the following: direct materials $3,000 direct labor ($10/hr) 1,000 overhead (150% DL$) 1,500 After inspection, 2 units required rework which required 8 additional direct labor hours and $60 of materials. Part 2: Blending Department (e) Compute the equivalent units of production. B Process Cost Flows: New let’s complete the goods in Dept B and sell them Process Cost Flows Equivalent Units of Production Equivalent Units of Production Calculating and Using Equivalent Units of Production To The department started 650,000 units into production during the month and transferred 680,000 completed units to the next department. All materials are added at the beginning of the process. Standard costs Materials (4 ounces at $4) $16 Direct labor (1 hour per unit) $7 Variable overhead (based on direct labor hours) $3. Why we The formula used to calculate equivalent units is as follows: units for the three product costs—direct materials, direct labor, and manufacturing overhead. Manufacturing costs for June: Materials. Easily share your publications and get them in front of Issuu’s The following data is given for the Harry Company: Budgeted production 26,000 units Actual production 27,500 units Materials: Standard price per ounce $6. Costs added during the period . Raw materials were issued for use in production: Molding Department, $23,000; and Firing Department, $8,000. Illustration 3-9 to labor and overhead. If the cost per equivalent unit for March was $2. The equivalent units of production equals the units completed and transferred out (4,800 units) plus the equivalent units remaining in work in process (160 units for materials and 100 units for conversion). produces storage crates that require 1. 58,000 unit During April, Job 403 for the production of 1,100 drills is completed at the following cost per unit: Direct materials $10 Direct manufacturing labor 8 Manufacturing overhead allocated 12 Total manufacturing cost $30 Final inspection of Job 403 discloses 50 defective units and 100 units of normal spoilage attributable to this specific job. 50 Fixed overhead budget $16,000 Actual results and costs Materials purchased Units 10,000 Cost $38,500 Materials used in production Finished product units 2,200 Raw material (ounces) 9,500 Direct labor hours 2,200 15,000 10,000 units + (5,000 units × 0. The predetermined overhead rate is $22 per direct labor hour. During June 37,500 pounds were started into production. b-based on equivlent units of production , did total manufacturing costs per unit increase or decrase between march and april . Makes no distinction between work done in prior or current periods. A production cost report is the Cost Accounting Assignment Help, Compute the cost per unit, Fosson Furniture uses a process cost system to account for its chair factory. Q3. • Compute equivalent units of production and unit costs under the average cost procedure. Assembly supplies. Assume that ending work in process is 25 percent complete for all components of production (material, labor, and overhead). Assigned Direct materials and direct labor hours to jobs as follows: Actual Materials Hours Job 5-3 2,300 112 Job 6-1 8,700 320 Job 6-2 5,420 208 Totals 16,420 640 5. Natawidnyana, Ak. Definition and Explanation of Equivalent Units of Production: After materials, labor and overhead costs have been accumulated in a department, the department's output must be determined so that The ending work in process inventory was 65% complete with respect to materials and 45% complete with respect to labor and overhead. The equivalent units of production for labor and overhead is _____ Exe 4-17) Quantity Schedule, Equivalent Units, and Cost per Equivalent Unit-Weighted Average Method Pureform, Inc. Problem 20-2A Part 2. The equivalent units of production equals the units completed and transferred out plus the equivalent units remaining in work in process. Formula to Compute Equivalent Units of Production. Production Cost Report. Similarities Between Job-Order and Process Costing •Both systems assign material, labor, and overhead costs to products and they provide a mechanism for computing unit product costs. Jan 7, 2019 Computation Managerial Accounting, 15th Edition Problem 4-13 (60 minutes) . Determine the equivalent units of production using the weighted average method. Equivalent unit of production are materials 20,000 Exercise A Using the average cost method, compute the equivalent units of production in each of the following cases: Units started in production during the month, 72,000; units completed and transferred, 52,800; and units in process at the end of the month (100% complete as to materials; 60% complete as to conversion), 19,200. , Manufactures a product that passes through two departments. Weighted-average method of process costing During July, the production department of a process operations system completed and transferred to finished goods 39,000 units that were in process at the beginning of July and 65,000 that were started and completed in July. Units transferred out 15,000 Equivalent unit in ending WIP (10,000 x 30%) + 3,000 18,000. Data relating to tons of pulp processed during June are provided below: Percent Completed Tons of Pulp Materials Labor and Overhead Work in process, June 1 20,000 90% 80% Work in process, June 30 30,000 60% 40% Started into production during Units completed and transferred are finished units and will always be 100% complete for equivalent unit calculations for direct materials, direct labor and overhead. d. Units started into production equaled 28,000 and ending work in process equaled 4,000. Compute the number of equivalent units and the cost per equivalent unit in the Assembly Department for November. Equivalent units of production are materials 21,970 and conversion costs 20,250. Production and cost data for the Molding Department during June 2017 are presented below. equal to the units started or transferred in. ÷ Units Completed and Transferred Out-Materials Equivalent Units of Production-Materials Equivalent Units of Ending Work in Process-Materials The earlier formula used to compute equivalent units of production can be refined to show the computations for materials and for conversion costs as shown above. b) Indirect materials costs and indirect labor costs c) Direct materials costs and overhead costs d) Direct labor costs and overhead costs The next 3 questions refer to the following information. Prepare a cost reconciliation report for the month. Instructions (a) Compute the equivalent units of production for (1) Materials and (2) Conversion costs for the month of April. The June 30 work in process was 40% of the way though the production process. The Work in Process inventory account of a manufacturing Corporation shows a balance of $18,000 at the end of an accounting period. ) Budgets for production and direct manufacturing labor. For example, if all of the direct materials to produce 10,000 units have entered the production process, but those units have received only 20% of their direct labor and overhead costs, equivalent units would be computed as shown in this slide. Department A completed and transferred out 2,100 units and had ending goods in process inventory of 120 units. 50 for labor and overhead, the total cost in the March 31 work in process inventory was: Equivalent units of Production in the Department during June 5,940 5,670 The third step is to identify the equivalent units of production in ending work in process with respect to conversion for the month (270 units) and adding this to the 5,400 units from step one. Compute the equivalent units of production using 25. ) Brief Exercise 16-9 Production costs chargeable to the Finishing Department in June in Cascio Company are materials $12,498, labor $37,342, overhead $20,020. equal to the units (a) Prepare a schedule showing physical units of production. In order to compute equivalent units of production using the FIF0 method of process costing, work for the period must be broken down into parts: A) completed during the period and units in ending inventory. To compute the cost of direct materials put into production, just multiply the quantities for Beginning, Inputs, and Ending by the $2 cost per unit: The June 1 work in process inventory was 100% complete with respect to materials and 50% complete with respect to conversion. , CPMA Calculating and Using Equivalent Units of Production To calculate the cost per equivalent unit for the period: Cost per Materials are entered at the beginning of the process. (c) Compute the costs transferred to the Blending Department for July. BE3-8 Production costs chargeable to the Finishing Department in June in Hollins Company are materials $12,000, labor $29,500, and overhead $18,000. The methods used rely on different variables and are known as the weighted average method or the First-In First Out (FIFO) method. The June production data for Common terms you will see when determine ending work in process percent complete:  Equivalent Units of Production. • Distinguish between normal and abnormal spoilage. Super-Tech Industries had the following department information about physical units and percentage of completion: Physical Units Work in process, June 1 (75%) 8,000 Completed and transferred out 18,000 Work in process, June 30 (50%) 12,000 If materials are added at the beginning of the production process, what is the total number of equivalent 6-11 6-24 (15-25 min. PA 1 . (Round your answers to 2 decimal places. Manufacturing overhead. The costs added during the month amounted to $179,374. Some usual causes of the variances computed in part 1, 2 and 3 of this problem are given below: Favorable direct materials price variance: Decrease in price of raw materials, discount for bulk purchase, purchase of low grade materials, inaccuracy in setting direct materials Determinet the Equivalent units of production for materials and conversion costs [ 1 Answers ]. Tip Top Painting Company has the following production data for January: • Beginning work in process, 0 units • Units transferred out, 35,000 • Units in ending work in process, 4,000, which are 30% complete for conversion costs Materials are added only at the beginning of the process. Compute the Bottling Department equivalent units for the month of February. Determine how many units were started and completed. completed from beginning inventory, units started and completed during the period, and units partially completed in ending inventory. Roletter Company Budget for Production and Direct Manufacturing Labor for the Quarter Ended March 31, 2015 January February March Quarter Budgeted sales (units) 10,000 14,000 7,000 31,000 Add target ending finished goods Calculate the equivalent units of production for the month, assuming the company uses the weighted average method. Last year, the managers at Luke developed and began marketing a new chewing gum, Bubbs, to sell in vending machines. BE3-8 Production costs chargeable to the Finishing Department in July in Murdock Company are materials $9,000, labor $23,800, overhead $18,000. Overhead is applied at the rate of $9 per direct labor hour. Equivalent units of production are 25,000 for materials and 18,000 for conversion costs. + = 1 I Made R. Required: Determine equivalent units of production for June. Physical Direct Conversion. Completed production for June totaled 15,200 units. a. Required: Compute the cost of the units transferred to the next department during the period Ch03 - authorSTREAM Presentation. Nature of Process Cost Systems : Nature of Process Cost Systems Use to apply costs to similar products that are mass produced in a continuous fashion Examples include the production of Ice Cream, Cereal, Paint, and Soft Drinks Once started, production continues until product is completed; processing is the same for the entire run LO 1: Understand who uses Materials. LO 5 Compute equivalents units. The Polishing Department of Harbin Company has the following production and manufacturing cost data for September. 00 for materials and $4. Weighted-average Method Method used to compute equivalent units of production which considers the degree of completion (weighting) of the units completed and transferred out and the ending work in process. At the end of the period, ABC had incurred 35% of the labor and manufacturing overhead costs required to complete the 1,000 green widgets. Question 17 Zhang Industries budgets production of 300 units in June and 310 units in July. Information relating to the company’s operations in March follows: a. (4) Show the assignment of costs to units transferred out and in process. Requirement 2: Determine the costs per equivalent unit for May. This step uses the basic cost flow equation presented in Chapter 2 "How Is Job Costing Used to Track Production Costs?" to identify the physical flow of units (the basic cost flow equation applies to costs and to units): Transfer to Next Department Equivalent Units of Production A measure of the work done during the period, expressed in fully completed units. Production costs chargeable to the Finishing Department in June in Cascio Company are materials $16,000, labor $29,500, overhead $18,000. Equivalent Units of Production = Actual Number of units in process of manufacture X Percentage of Work Completed. A few of the many overhead costs are: Electricity used to power the production equipment Direct materials; Direct labor; Manufacturing overhead; Advertising . References Complete this question by entering your answers in  4-8 Under the weighted-average method, the equivalent units of production consist of units . University Data relating to tons of pulp processed during June are provided below: Required: 1. d) Determine the costs to be assigned to the unit transferred out and in The ending inventory units were 100 percent complete as to material and 50 percent as to labor. Determine the unit production costs for material I need the solutions for these 2 problems to help in my examination preparation. Use the weighted average method, and round unit costs to two decimal places. produces beads for jewelry making use. The job cost sheets of the two uncompleted jobs show charges of $6,000 and $3,000 for materials, and charges of $4,000 and $2,000 for direct labor. Products in a process costing environment typically flow in a sequence from one department to another. This would involve adding the cost included in the opening work in process on account of direct materials, direct labor and manufacturing overhead costs to the corresponding amounts added during the period on account of the relevant cost component. 00 per hour. First, we must compute the equivalent units of production for each cost category: Its Work in Process T-account for the Mixing Department for June follows (all Compute the cost per equivalent unit for materials, for labor, and for overhead. Weighted-Average Method 1. Cinder Company had the following department information for the month: Total materials costs $ 80,000. In order to fairly calculate the amount of work done in a department, we use a measure called equivalent units. Equivalent units of production is a term applied to the work-in-process inventory at the end of an accounting period. Determine the total of each production cost incurred for April (direct labor, direct materials, and applied overhead), and the total cost assigned to each job (including the balances from March 31). Yes Compute the department's equivalent units of production for the month for direct materials. (b) Compute the unit costs for the month. Equivalent unit calculations are a means to determine how much material and labor are tied up in units that are continuously in production. All direct materials are added at the beginning of the process. The costs per equivalent unit for the month were as follows: Required: 1. Equivalent units represent the number of units of work done, expressed as completed units. Equivalent units are the sum of the units completed and transferred out plus equivalent units of ending work in process. The closing stock of 200 units in a process, 60% complete in respect of material, wages and overhead, is equivalent to 120 units (i. Equivalent Units of Production Materials Labor and Overhead Units transferred out . 29) Zhang Corporation uses process costing. PROBLEM 4–17 Cost Flows The direct labor;rate is $8. Equivalent Units SO 5 Compute equivalents units. Identify Cost Drivers. Compute the unit costs for materials and conversion costs . Conversion cost per unit is computed by adding direct labor and factory overhead divided by the total equivalent production figure. Equivalent units in the ending Work In Process = UNDER MATERIALS, 975 (Equivalent units in ending WIP) * 14. It also includes the computations for the unit costs for material, labor, and factory overhead that are obtained by dividing the equivalent production into the respective Compute the equivalent units of production for both materials and conversion costs for the Assembly Department for September using the weighted-average method. Summarize the physical flow of units and compute the equivalent units for direct materials, direct labor, and overhead. Equivalent units is the term used to represent the total number of units that would have been completed within a processing department as a result of the productive efforts during a period. This concept is used to determine the cost per unit of completed product. Help managers: set selling prices that will lead to profits compute cost of goods sold for the income statement compute the cost of inventory for the balance sheet Assign these costs to the company’s product or Again, by measuring equivalent units of production. 70 Cost of ending work in process $92,000 $54,000 inventory Units 35. (Round answers to 2 decimal places. Compute the equivalent units of production for both materials and conversion costs for the Shaping Department for October using the weighted-average method. Then we must compute the cost per equivalent unit for each cost category: Base Fab Department Costs per Equivalent Unit Costs: Cost of beginning work in process inventory . ) (a) Compute equivalent units of production for materials and for conversion costs. Cost per equivalent unit $ E4-8) Helox, Inc. Direct labor. JOB ORDER AND PROCESS COSTING By: Bahaidr Beadin 2. Learning Objective 2 Compute the equivalent units of production using the weighted-average method. ) Materials Cost per equivalent unit $ I 83. Compute the total budgeted overhead to be reported on the factory overhead budget for the month. 18,000. It contains the calculation of equivalent production for the period that consists of the units finished during the month plus the equivalent units of work in process. Compute the cost of finished gallons for July. Unit costs of materials Unit costs of conversion costs An equivalent unit of production is an expression of the amount of work done by a manufacturer on units of output that are partially completed at the end of an accounting period. SOLUTION: a. To assess the equivalent units of production requires careful reasoning about the amount of direct material injected into production for each department, relative to the Production costs chargeable to the Finishing Department in June in Hollins Company are materials $12,000, labor $29,500, and overhead $18,000. A company's beginning Work in Process inventory consisted of 29,000 units that were 20% complete with respect to direct labor. Suppose that your chocolate milk factory pays $2 for each gallon of chocolate syrup. Compute equivalent units. 5. , manufactures a product that passes through two production processes. Actual overhead are the manufacturing costs other than direct materials and direct labor. (a) Prepare a schedule showing physical units of production. Hielta Oy, a Finnish company, processes wood pulp for various manufacturers of paper products. A review of the company’s accounting records revealed the following per-unit costs and production volumes:ABProduction volume (units)2,5005,000Direct material$ 40$ 60Direct labor:2 hours at $12243 hours at $1236Manufacturing overhead:2 Variable factory overhead is $1. the equivalent units of production with respect to direct labor. 1 The comptroller wants to set the standards according to a study done by a consulting firm for a company. Prepare the journal entry to record the cost of units completed and transferred out. 10. Cost accounting (the umbrella accounting concept above process costing) is essentially Work in process, June 30 30,000 60% 40% Started into production during June 190,000 . EXERCISE 4–7 Process Costing Journal Entries Chocolaterie de Geneve, SA, is located in a French-speaking canton in Switzerland. 3-35. The incurrence of overhead is usually so closely related to labor costs or labor hours that overhead is thought to be incurred in the same ratio as labor expense for Compute the equivalent units of production for (a) materials and (b) conversion costs. Started 1,100 units that are 40% complete as to converstion costs and 100% complete as to materials at July 31 Costs: Beginning work in process $0 Materials 45,010 Labor 14,080 Manufacturing overhead 18,810 To compute equivalent units of production using the FIFO method of process costing, work for the current period must be stated in units a. Compute both the Materials part way through a process (e. With no beginning work in process inventory, how much is the conversion cost per unit if ending work in process was 25% complete and total conversion costs equaled $50,000? • Discuss the concept of equivalent units in a process cost system. $ 198000 Labor. Furthermore, the output of a processing department must be homogeneous. Total conversion costs $120,000. During April, the production department of a process manufacturing system completed a number of units of a product and transferred them to finished goods. A syllabus is one way an instructor can communicate expectations to students. The ending inventory is 10% complete for materials and 70% complete for labor and overhead. Compute equivalent units of production for materials and for conversion costs. Omit the "$" sign in your response. 00 $7. Process costing systems consider overhead costs to include those The journal entry to record June production activities for direct material usage is:. Use the following to answer questions 10 - 12 C, Inc. Instructions Compute the unit costs for materials and conversion costs. LO 8. under FIFO ( keep in mind, you may have different percent complete for materials, labor and overhead):. award: 0 out of 2. Materials Conversion Equivalent units of production 10. Beginning Units Ending. For the third week in March: Required: (a) (b) (c) (d) Compute the total units to account for. 00 $14. (a) Compute the equivalent units of production for July. The cost components include transferred-in (if multidepartmental), direct material, direct labor, and overhead. It added 13,400 units of direct materials during the period at a cost of $93,800; 10,050 units were completed during the period; and 3,350 units were 30% completed as to labor and overhead at the end of the period. 1 direct labor hours at $15. Compute the equivalent units of production and the cost per equivalent units for materials and for conversion costs. 9. In cost accounting, equivalent units are the units in production multiplied by the complete for all components of production (material, labor, and overhead). cost of ending inventory $47,280 cost of units transferred to next department $552,500 cost of ending inventory = equivalent units of production x cost per equivalent unit Dazzle, Inc. Incurred total manufacturing overhead costs of $18,400 during the month of June. Production costs chargeable to the Finishing Department in June in Castilla Company are materials $17,400, labor $30,900, overhead $18,900. a) Determine the equivalent units for June for the first process. What are the equivalent units of production? A company's beginning work in process inventory consisted of 20,000 units that were 1/5 complete with respect to direct labor. Managerial ACCT Week 4 - Chapter 4. The equivalent units of production for the period were: 80,000 equivalent units. Data relating to tons of pulp processed during June are provided below: Percent Completed. Equivalent units of production are 25,000 for materials and 20,000 for conversion costs. Logan Products computes its predetermined overhead rate annually on the basis of direct labor hours. Equivalent unit in ending WIP (10,000 x 30%) 3,000 . Labor and manufacturing overhead are incurred uniformly through-out each process. Yes. (3) Determine the unit costs of production. Materials 120,000 to Finished Goods Direct labor 79,500 Overhead 97,000. dipak co. Production costs chargeable to the Finishing Department in June in Cascio Company are materials $16,560, labor $34,040, overhead $19,960. $ 364, 4000. Data relating to tons of pulp processed during June are provided below: Percent Completed Tons of Pulp Materials Labor and overhead Work in process, June 1 21,500 80% 90% Work in process, June 30 28,100 68% 49% Started into production during June 190,100 Requirement 1: Compute the number of tons of Job Order and Process Costin Accounting 1. It processes wood pulp for various manufacturers of paper products. Since the overhead costs are not directly traceable to products, the overhead costs must be allocated, assigned, or applied to goods produced. ii. The Weighted-Average Method – This method will be covered in the main portion of the chapter. (d) Determine the costs to be assigned to the units transferred out and in process. Compute the equivalent cost per unit for direct materials, direct labor and overhead for June. If there was no beginning work-in-process inventory and no ending work-in-process inventory, under the weighted-average process costing method, the number of equivalent units for direct materials would be. (b) Prepare the production cost report for Plant A for June 2005. Work in ProcessTransferred OutWork in Process ÷ Units Completed and Transferred Out-Materials Equivalent Units of Production-Materials Equivalent Units of Ending Work in Process-Materials The earlier formula used to compute equivalent units of production can be refined to show the computations for materials and for conversion costs as shown above. REQUIRED: Compute the equivalent units of production for the first department for June, assuming that the company uses the weighted-average method of accounting for units and costs. The company uses direct labor hours to assign overhead to individual jobs, and the Identify Cost Drivers. Therefore, proper costing methodology for 100 units in process would entail 80 equivalent units of material, and 60 equivalent units of conversion (i. Process Costing Chapter 4 9/16/2013 We can restate the three-step process more quickly by saying that, when using the weighted-average method, equivalent units of production will always be equal to the units completed and transferred out plus the equivalent units remaining in work in process inventory. Overhead. Equivalent Units (EU) Materials. A quantity schedule for the month of May for the The equivalent units of production equals the units completed and transferred out (5,400 units) plus the equivalent units remaining in work in process (540 units for materials and 270 units for conversion). Equivalent units of production are materials 20,830 and conversion costs 19,780. of June. These partially completed units complicate the determination of a department’s output for a given period and the unit cost that should be assigned to that output. Process cost procedures Materials $198,000 Labor 50,400 Overhead 112,800 Total $361,200 Hint: Complete four steps necessary to prepare a production cost report. Determine the cost of ending work in process inventory and of the units transferred out to the next department. process costing questions solutions accounting principles (9th edition) jerry weygandt paul kimmel donald kieso 958 chapter 21 process costing 23. Materials $198,000 Labor 50,400 Overhead 112,800 Total $361,200. Cost Accounting Systems Gather information to determine the production cost per unit. 112,800 Total. Required: Assume that the company uses the weighted-average process costing. These beginning units were completed and another 104,400 units were started during the current period. Compute the equivalent units for the month for the first department. Factory rent. Under the Weighted Average inventory valuation method, what are the equivalent units of production for the Sewing Department for direct materials and for direct labor and overhead, respectively? Compute the equivalent units of production for conversion. Labor and overhead are also called conversion costs because they “convert” the materials into a product. Test Bank for Managerial Accounting 5th Edition by John Wild, Ken Equivalent units of production refer to the number of units that could have been started and Production costs chargeable to the Sanding Department in July for Joyful Art are $30,000 for materials, $26,000 for labor, and $10,000 for manufacturing overhead. Question ; Ship Co. Labor. Compute the cost per equivalent unit for February. (b) Compute the material cost per unit and the conversion cost per unit for July. Materials, labor, and overhead are added evenly throughout the process. cost system. It is the number of completed units of an item that a company could theoretically have produced, given the amount of direct materials, direct labor, and manufacturing overhead costs incurred during that period for the items not yet completed. Use direct materials, direct labor, and overhead costs. 8 (Cost of equivalent unit) = 14430; this is the equivalents units in the ending WIP. 4-* Here is a visual showing the computation of equivalent units as to materials. The equivalent units of Why do we calculate equivalent units separately for direct materials, direct labor, and manufacturing overhead? Answer: Equivalent units in work in process are often different for direct materials, direct labor, and manufacturing overhead because these three components of production may enter the process at varying stages. Acquatic Manufacturing uses a job order cost system in each of its three manufacturing departments. In the month of June, department X had 10,000 units in beginning work in process that were 70% complete. Determine the equivalent units of production using the FIFO method. By determining what cost the part processed material has incurred such as labor or overhead an "equivalent unit" relative to the value of a finished process can be calculated. Determine the cost transferred to finished goods. Compute the equivalent units of production for materials and for conversion costs for the month of July. compute the equivalent units of production for materials and for labor and overhead for june

3wxs, skfid1z, 7hqwoau, x6, pg78k, f2, ybtu46pi, vfd, bk, lqrn, mnxkuh,