Tambin Inc. produces a gasoline additive that, when added to the gas tank of the average automobile, is designed to increase gas mileage by 10%. The company's controller suspects that the year-end dollar balances shown below in the inventory accounts may be incorrect. Work in process, December 31 (materials 100 % complete; conversion 50% complete) Finished goods, December 31 Work in process, beginning of year (materials 100% complete; conversion 80% complete) Units Started into production Costs added during the year Units completed during the year 31,000 36,000 There were no finished goods inventories at the beginning of the year. The company uses the weighted-average method of process costing. There is only one processing department. A review of the company's inventory and cost records shows the following: Units 26,000 745,000 Costs 740,000 $ 66,000 $119,500 Costs Materials $756,000 Conversion $ 28,000 $ 54,000 $2,060,000
Tambin Inc. produces a gasoline additive that, when added to the gas tank of the average automobile, is designed to increase gas mileage by 10%. The company's controller suspects that the year-end dollar balances shown below in the inventory accounts may be incorrect. Work in process, December 31 (materials 100 % complete; conversion 50% complete) Finished goods, December 31 Work in process, beginning of year (materials 100% complete; conversion 80% complete) Units Started into production Costs added during the year Units completed during the year 31,000 36,000 There were no finished goods inventories at the beginning of the year. The company uses the weighted-average method of process costing. There is only one processing department. A review of the company's inventory and cost records shows the following: Units 26,000 745,000 Costs 740,000 $ 66,000 $119,500 Costs Materials $756,000 Conversion $ 28,000 $ 54,000 $2,060,000
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Variance Analysis
In layman's terms, variance analysis is an analysis of a difference between planned and actual behavior. Variance analysis is mainly used by the companies to maintain a control over a business. After analyzing differences, companies find the reasons for the variance so that the necessary steps should be taken to correct that variance.
Standard Costing
The standard cost system is the expected cost per unit product manufactured and it helps in estimating the deviations and controlling them as well as fixing the selling price of the product. For example, it helps to plan the cost for the coming year on the various expenses.
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Transcribed Image Text:Required:
1. Determine the equivalent units and the costs per equivalent unit for materials and conversion for the year. (Round your "Cost
per equivalent unit" answers to 2 decimal places.)
Equivalent units of production
Cost per equivalent unit
Cost of ending work in process inventory
Cost of finished goods inventory
2. Determine the amount of cost that should be assigned to the ending work in process and finished goods inventories.
Materials
Journal entry worksheet
A
Note: Enter debits before credits.
Event
1
Materials
Record entry
3. Prepare the necessary correcting journal entry to adjust the work in process and finished goods inventories to the correct
balances as of December 31. (Round intermediate calculations to 2 decimal places.)
Conversion
General Journal
Conversion
Record the entry to adjust the work in process and finished goods inventories
Clear entry
$
$
Total
0
0
Debit
Credit
View general journal
Transcribed Image Text:Tambin Inc. produces a gasoline additive that, when added to the gas tank of the average automobile, is designed to increase
gas mileage by 10%. The company's controller suspects that the year-end dollar balances shown below in the inventory
accounts may be incorrect.
Work in process, December 31 (materials 100% complete;
conversion 50% complete)
Finished goods, December 31
Work in process, beginning of year (materials 100% complete;
conversion 80% complete)
Units
Started into production
Costs added during the year
Units completed during the year
31,000
36,000
There were no finished goods inventories at the beginning of the year. The company uses the weighted-average method of
process costing. There is only one processing department.
A review of the company's inventory and cost records shows the following:
Units
26,000
745,000
Costs
740,000
$ 66,000
$119,500
Costs
Materials
$756,000
Conversion
$ 28,000 $ 54,000
$2,060,000
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