A manufacturer uses process costing. It has one direct material cost pool and one conversion cost pool. Information for the month is as follows: Beginning of Month 5,000 units End of Month 3,000 units Work in process: Conversion (% of completion in WIP): 70% 40% Costs of Materials in WIP: Costs of Conversion in WIP: $ 90,000 $ 80,000 ? ? During the month: Units started during the month: Costs incurred for Materials: 33,000 units $320,000 $290,000 Costs incurred for Conversion: Total Spoiled Units detected: 1,000 units Other Income Statement Information: $999,000 $200,000 Inspection occurs when units are 95% converted, and inspection determines if the units are “acceptable" or “spoiled". Normal Spoilage is based on 3% of units started. Sales: Admin expenses 85% of direct materials is added at the beginning of the process, and the remaining 15% of direct materials (for packaging) is added immediately after inspection. There were no finished goods or raw material inventories at any point of the process. Required: Part A: Calculate the value of ending WIP, and prepare an Income Statement for the month assuming that process costing is based on modified FIFO, Part B: Calculate the value of ending WIP, and prepare an Income Statement for the month assuming that process costing is based on Weighted Average. (you can omit the compamy nате аnd period from the incoтe statement)
A manufacturer uses process costing. It has one direct material cost pool and one conversion cost pool. Information for the month is as follows: Beginning of Month 5,000 units End of Month 3,000 units Work in process: Conversion (% of completion in WIP): 70% 40% Costs of Materials in WIP: Costs of Conversion in WIP: $ 90,000 $ 80,000 ? ? During the month: Units started during the month: Costs incurred for Materials: 33,000 units $320,000 $290,000 Costs incurred for Conversion: Total Spoiled Units detected: 1,000 units Other Income Statement Information: $999,000 $200,000 Inspection occurs when units are 95% converted, and inspection determines if the units are “acceptable" or “spoiled". Normal Spoilage is based on 3% of units started. Sales: Admin expenses 85% of direct materials is added at the beginning of the process, and the remaining 15% of direct materials (for packaging) is added immediately after inspection. There were no finished goods or raw material inventories at any point of the process. Required: Part A: Calculate the value of ending WIP, and prepare an Income Statement for the month assuming that process costing is based on modified FIFO, Part B: Calculate the value of ending WIP, and prepare an Income Statement for the month assuming that process costing is based on Weighted Average. (you can omit the compamy nате аnd period from the incoтe statement)
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Concept explainers
Process Costing
Process costing is a sort of operation costing which is employed to determine the value of a product at each process or stage of producing process, applicable where goods produced from a series of continuous operations or procedure.
Job Costing
Job costing is adhesive costs of each and every job involved in the production processes. It is an accounting measure. It is a method which determines the cost of specific jobs, which are performed according to the consumer’s specifications. Job costing is possible only in businesses where the production is done as per the customer’s requirement. For example, some customers order to manufacture furniture as per their needs.
ABC Costing
Cost Accounting is a form of managerial accounting that helps the company in assessing the total variable cost so as to compute the cost of production. Cost accounting is generally used by the management so as to ensure better decision-making. In comparison to financial accounting, cost accounting has to follow a set standard ad can be used flexibly by the management as per their needs. The types of Cost Accounting include – Lean Accounting, Standard Costing, Marginal Costing and Activity Based Costing.
Topic Video
Question
Transcribed Image Text:A manufacturer uses process costing. It has one direct material cost pool and one
conversion cost pool. Information for the month is as follows:
Beginning of Month
End of Month
Work in process:
Conversion (% of completion in WIP):
5,000 units
3,000 units
70%
40%
$ 90,000
$ 80,000
Costs of Materials in WIP:
?
Costs of Conversion in WIP:
?
During the month:
Units started during the month:
33,000 units
$320,000
$290,000
Costs incurred for Materials:
Costs incurred for Conversion:
Total Spoiled Units detected:
1,000 units
Other Income Statement Information:
$999,000
$200,000
Sales:
Admin expenses
Inspection occurs when units are 95% converted, and inspection determines if the units
are “acceptable" or “spoiled". Normal Spoilage is based on 3% of units started.
85% of direct materials is added at the beginning of the process, and the remaining 15%
of direct materials (for packaging) is added immediately after inspection.
There were no finished goods or raw material inventories at any point of the process.
Required:
Part A: Calculate the value of ending WIP, and prepare an Income Statement for
the month assuming that process costing is based on modified FIFO,
Part B: Calculate the value of ending WIP, and prepare an Income Statement for
the month assuming that process costing is based on Weighted Average.
(you can omit the company name and period from the income statement)
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
Step by step
Solved in 4 steps with 6 images
Knowledge Booster
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
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education