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Business Accounting ACCOUNTING W/WILEYPLUS NEXGEN >LL<

(a) Prepare a schedule showing physical units of production. Prepare a schedule showing physical units of production. Particulars Units Units to be accounted for: Work in process, June 1 0 Add: Started into production 22,000 Total units 22,000 Units accounted for: Units Completed and transferred out[equation(1)] 20,000 Work in process , June 30 2,000 Total units 22,000 Table (1) Process costing : The method of cost accounting which is used to determine cost of that product which passes through various processes. Physical Units: Units which can be seen and touched or which are tangible in nature are called as physical units. Compute the amount of units completed and transferred out Given, Beginning work in process is 0. Units started into production are 22,000 units. Ending work in process units is 2,000 units. The formula to compute amount of units completed and transferred out is: Units Completed and Transferred Out = ( Beginning Balance + Units Started − Ending Balance ) Substitute 0 for beginning balance 22,000 for units started and 2,000 for ending balance in above formula. Units Completed and Transferred Out = 0 units + 22 , 000 units − 2 , 000 units = 20 , 000 units (1) Therefore, total physical units are 22,000 units . (b) Calculate the equivalent units of production for materials and conversion costs. Equivalent units of production for materials and conversion costs are 22,000 and 20,800 units respectively. Equivalents units for production The activity of a processing department in terms of fully completed units is known as equivalent units. It includes the completed units of direct materials and conversion cost of beginning work in process, units completed and transferred out, and ending work in process. Compute the equivalent units in the ending work in process. Equivalent units in direct materials Direct materials are added at the beginning of the process; hence, the equivalent units of direct materials in the ending working process will be 2,000. Equivalent units in conversion cost Given, Conversion costs are 40% of completed. Ending work in process units are 2,000 units. Equivalent units of conversion cost of ending work in process is ( Equivalent Units of Conversion Cost of Ending Inventory ) = ( Number of Units Ending Work in Process × Percentage of Completion ) Substitute, 2,000 for number of units of ending work in process and 40% for percentage of completion in above formula. ( Equivalent Units of Conversion Cost of Ending Inventory ) = 2 , 000 units × 40 % = 800 units R company Production Cost Report Equivalents Units Particulars Direct Material Conversion Cost Completed and transferred out 20,000 20,000 Add: Ending work in process[refer working note] 2000 800 Total Equivalents Units 22,000 20,800 Table (2) Hence, equivalent units of production for materials and conversion costs are 22,000 and 20,800 units respectively. (c) Calculate the unit cost of production. The unit cost of production for materials and conversion costs are $9 and $8 respectively. Cost per unit Total unit cost is the cost incurred by the company to produce one unit of product. The unit cost is calculated by dividing the units produced with the total cost. Prepare production cost report as follows to determine cost per equivalent unit. R company Production Cost Report (Partial) For the Month Ended June 30, 2017 Particulars Direct materials Conversion cost Total cost Cost $198,000 $166,400 $364,400 Total Cost $198,000 $166,400 $364,400 Equivalent units 22,000 units 20,800 units Cost per equivalent unit $ 198 , 000 22 , 000 = $ 9 $ 166 , 400 20 , 800 = $ 8 $17 Table (3) Working note: Compute the conversion cost Particulars Amount($) Labor cost 53,600 Add:Overhead cost 112,800 Total conversion cost 166,400 Table (4) Therefore unit cost of production is $17. (d) Calculate the cost to be assigned to the units transferred out and process for June. Cost to be assigned to the units transferred out and process for June is $340,000 and $24,400 respectively. Determine the cost to be assigned to the units transferred out and process for June as follows: R Company Production Cost Report Cost Assignment Particulars Units Direct Materials Conversion Costs Total Costs Cost per equivalent units $9 $8 $17 Completed and transferred out 20,000 unit Total Cost per Equivalent Units $17 Cost Assigned to Equivalent units completed and transferred out(A) ( 20000 × $ 17 ) = $ 340 , 000 $340,000 Ending work in process inventory Equivalents units in ending work in process 2,000 units 800 units Cost per Equivalent Unit $9 $8 Cost assigned to ending work in process(B) ( 2000 × $ 9 ) = $ 18 , 000 ( 800 × $ 8 ) = $ 6 , 400 $24,400 Total Cost Accounted ( ( A ) + ( B ) ) $364,400 Table (5) Therefore, the cost to be assigned to the units transferred out and process in is mentioned above. (e) Prepare a production report for the molding department for the month of June. Prepare production cost report for company R as follows: R Company Production Cost Report Molding Department For the month ended June, 2017 Particulars Physical Units Equivalent Units Materials Units Conversion Cost Units to be accounted for: Work in process June 1 0 Add Started into production 22,000 Total units 22,000 Units to account for: Completed and transferred out 20,000 20,000 20,000 Ending work in process 2000 2,000 800 Total physical units 22,000 Total equivalent Units 22,000 20,800 Cost Particulars Direct materials Conversion cost Total cost Cost added during the period $198,000 $166,400 $364,400 Total Cost Accounted for $198,000 $166,400 $364,400 Total equivalent units 22,000 20,800 Cost per equivalent units $ 198 , 000 22 , 000 = $ 9 $ 166 , 400 20 , 800 = $ 8 $17 Cost Assignment Completed and Transferred out: Equivalent units completed and transferred out 20,000 Cost per equivalent units $17 Cost Assigned to Equivalent units completed and transferred out(A) ( 20000 × $ 17 ) = $ 340 , 000 $340,000 Ending work in process inventory: 2,000 800 Cost assigned for ending inventory $9 $8 Cost assigned to ending work in process(B) ( 2000 × $ 9 ) = $ 18 , 000 ( 800 × $ 8 ) = $ 6 , 400 24,400 Total Cost Accounted for ( ( A ) + ( B ) ) 364,400 Table (6)

(a) Prepare a schedule showing physical units of production. Prepare a schedule showing physical units of production. Particulars Units Units to be accounted for: Work in process, June 1 0 Add: Started into production 22,000 Total units 22,000 Units accounted for: Units Completed and transferred out[equation(1)] 20,000 Work in process , June 30 2,000 Total units 22,000 Table (1) Process costing : The method of cost accounting which is used to determine cost of that product which passes through various processes. Physical Units: Units which can be seen and touched or which are tangible in nature are called as physical units. Compute the amount of units completed and transferred out Given, Beginning work in process is 0. Units started into production are 22,000 units. Ending work in process units is 2,000 units. The formula to compute amount of units completed and transferred out is: Units Completed and Transferred Out = ( Beginning Balance + Units Started − Ending Balance ) Substitute 0 for beginning balance 22,000 for units started and 2,000 for ending balance in above formula. Units Completed and Transferred Out = 0 units + 22 , 000 units − 2 , 000 units = 20 , 000 units (1) Therefore, total physical units are 22,000 units . (b) Calculate the equivalent units of production for materials and conversion costs. Equivalent units of production for materials and conversion costs are 22,000 and 20,800 units respectively. Equivalents units for production The activity of a processing department in terms of fully completed units is known as equivalent units. It includes the completed units of direct materials and conversion cost of beginning work in process, units completed and transferred out, and ending work in process. Compute the equivalent units in the ending work in process. Equivalent units in direct materials Direct materials are added at the beginning of the process; hence, the equivalent units of direct materials in the ending working process will be 2,000. Equivalent units in conversion cost Given, Conversion costs are 40% of completed. Ending work in process units are 2,000 units. Equivalent units of conversion cost of ending work in process is ( Equivalent Units of Conversion Cost of Ending Inventory ) = ( Number of Units Ending Work in Process × Percentage of Completion ) Substitute, 2,000 for number of units of ending work in process and 40% for percentage of completion in above formula. ( Equivalent Units of Conversion Cost of Ending Inventory ) = 2 , 000 units × 40 % = 800 units R company Production Cost Report Equivalents Units Particulars Direct Material Conversion Cost Completed and transferred out 20,000 20,000 Add: Ending work in process[refer working note] 2000 800 Total Equivalents Units 22,000 20,800 Table (2) Hence, equivalent units of production for materials and conversion costs are 22,000 and 20,800 units respectively. (c) Calculate the unit cost of production. The unit cost of production for materials and conversion costs are $9 and $8 respectively. Cost per unit Total unit cost is the cost incurred by the company to produce one unit of product. The unit cost is calculated by dividing the units produced with the total cost. Prepare production cost report as follows to determine cost per equivalent unit. R company Production Cost Report (Partial) For the Month Ended June 30, 2017 Particulars Direct materials Conversion cost Total cost Cost $198,000 $166,400 $364,400 Total Cost $198,000 $166,400 $364,400 Equivalent units 22,000 units 20,800 units Cost per equivalent unit $ 198 , 000 22 , 000 = $ 9 $ 166 , 400 20 , 800 = $ 8 $17 Table (3) Working note: Compute the conversion cost Particulars Amount($) Labor cost 53,600 Add:Overhead cost 112,800 Total conversion cost 166,400 Table (4) Therefore unit cost of production is $17. (d) Calculate the cost to be assigned to the units transferred out and process for June. Cost to be assigned to the units transferred out and process for June is $340,000 and $24,400 respectively. Determine the cost to be assigned to the units transferred out and process for June as follows: R Company Production Cost Report Cost Assignment Particulars Units Direct Materials Conversion Costs Total Costs Cost per equivalent units $9 $8 $17 Completed and transferred out 20,000 unit Total Cost per Equivalent Units $17 Cost Assigned to Equivalent units completed and transferred out(A) ( 20000 × $ 17 ) = $ 340 , 000 $340,000 Ending work in process inventory Equivalents units in ending work in process 2,000 units 800 units Cost per Equivalent Unit $9 $8 Cost assigned to ending work in process(B) ( 2000 × $ 9 ) = $ 18 , 000 ( 800 × $ 8 ) = $ 6 , 400 $24,400 Total Cost Accounted ( ( A ) + ( B ) ) $364,400 Table (5) Therefore, the cost to be assigned to the units transferred out and process in is mentioned above. (e) Prepare a production report for the molding department for the month of June. Prepare production cost report for company R as follows: R Company Production Cost Report Molding Department For the month ended June, 2017 Particulars Physical Units Equivalent Units Materials Units Conversion Cost Units to be accounted for: Work in process June 1 0 Add Started into production 22,000 Total units 22,000 Units to account for: Completed and transferred out 20,000 20,000 20,000 Ending work in process 2000 2,000 800 Total physical units 22,000 Total equivalent Units 22,000 20,800 Cost Particulars Direct materials Conversion cost Total cost Cost added during the period $198,000 $166,400 $364,400 Total Cost Accounted for $198,000 $166,400 $364,400 Total equivalent units 22,000 20,800 Cost per equivalent units $ 198 , 000 22 , 000 = $ 9 $ 166 , 400 20 , 800 = $ 8 $17 Cost Assignment Completed and Transferred out: Equivalent units completed and transferred out 20,000 Cost per equivalent units $17 Cost Assigned to Equivalent units completed and transferred out(A) ( 20000 × $ 17 ) = $ 340 , 000 $340,000 Ending work in process inventory: 2,000 800 Cost assigned for ending inventory $9 $8 Cost assigned to ending work in process(B) ( 2000 × $ 9 ) = $ 18 , 000 ( 800 × $ 8 ) = $ 6 , 400 24,400 Total Cost Accounted for ( ( A ) + ( B ) ) 364,400 Table (6)

ACCOUNTING W/WILEYPLUS NEXGEN >LL<

ACCOUNTING W/WILEYPLUS NEXGEN >LL<

7th Edition

ISBN: 9781119494904

Author: Kimmel

Publisher: WILEY

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ACCOUNTING W/WILEYPLUS NEXGEN >LL<

Ch. 16 - Prob. 1Q Ch. 16 - Prob. 2Q Ch. 16 - Prob. 3Q Ch. 16 - Prob. 4Q Ch. 16 - Prob. 5Q Ch. 16 - Prob. 6Q Ch. 16 - Prob. 7Q Ch. 16 - Prob. 8Q Ch. 16 - Prob. 9Q Ch. 16 - Prob. 10Q

Ch. 16 - Prob. 11Q Ch. 16 - Prob. 12Q Ch. 16 - Prob. 13Q Ch. 16 - Prob. 14Q Ch. 16 - Prob. 15Q Ch. 16 - Prob. 16Q Ch. 16 - Prob. 17Q Ch. 16 - Prob. 18Q Ch. 16 - Prob. 19Q Ch. 16 - Prob. 20Q Ch. 16 - Prob. 21Q Ch. 16 - Prob. 22Q Ch. 16 - Prob. 1BE Ch. 16 - Prob. 2BE Ch. 16 - Prob. 4BE Ch. 16 - Prob. 5BE Ch. 16 - Prob. 6BE Ch. 16 - Prob. 7BE Ch. 16 - Prob. 8BE Ch. 16 - Prob. 9BE Ch. 16 - Prob. 10BE Ch. 16 - Prob. 11BE Ch. 16 - Prob. 12BE Ch. 16 - Prob. 1DIE Ch. 16 - Prob. 2DIE Ch. 16 - Prob. 3DIE Ch. 16 - Prob. 4DIE Ch. 16 - Prob. 1E Ch. 16 - Prob. 2E Ch. 16 - Prob. 3E Ch. 16 - Prob. 4E Ch. 16 - Prob. 5E Ch. 16 - Prob. 6E Ch. 16 - Prob. 7E Ch. 16 - Prob. 8E Ch. 16 - Prob. 9E Ch. 16 - Prob. 10E Ch. 16 - Prob. 11E Ch. 16 - Prob. 12E Ch. 16 - Prob. 13E Ch. 16 - Prob. 14E Ch. 16 - Prob. 15E Ch. 16 - Prob. 16E Ch. 16 - Prob. 17E Ch. 16 - Prob. 18E Ch. 16 - Prob. 19E Ch. 16 - Prob. 20E Ch. 16 - Prob. 1AP Ch. 16 - Prob. 2AP Ch. 16 - Prob. 3AP Ch. 16 - Prob. 4AP Ch. 16 - Prob. 5AP Ch. 16 - Prob. 6AP Ch. 16 - Prob. 7AP Ch. 16 - Prob. 16CD Ch. 16 - Prob. 1EYCT Ch. 16 - Prob. 2EYCT Ch. 16 - Prob. 4EYCT Ch. 16 - Prob. 5EYCT Ch. 16 - Prob. 6EYCT

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