Horngren's Cost Accounting: A Managerial Emphasis (16th Edition)
16th Edition
ISBN: 9780134475585
Author: Srikant M. Datar, Madhav V. Rajan
Publisher: PEARSON
expand_more
expand_more
format_list_bulleted
Concept explainers
Videos
Textbook Question
Chapter 17, Problem 17.46P
Multiple processes or operations, costing. The Sedona Company is dedicated to making products that meet the needs of customers in a sustainable manner. Sedona is best known for its KLN water bottle, which is a BPA-free, dishwasher-safe, bubbly glass bottle in a soft silicone sleeve.
The production process consists of three basic operations. In the first operation, the glass is formed by re-melting cullets (broken or refuse glass). In the second operation, the glass is assembled with the silicone gasket and sleeve. The resulting product is finished in the final operation with the addition of the polypropylene cap.
Consulting studies have indicated that of the total conversion costs required to complete a finished unit, the forming operation requires 60%, the assembly 30%, and the finishing 10%.
The following data are available for March 2017 (there is no opening inventory of any kind):
| Cullets purchased | $67,500 |
| Silicone purchased | $24,000 |
| Polypropylene used | $ 6,000 |
| Total conversion costs incurred | $68,850 |
| Ending inventory, cullets | $ 4,500 |
| Ending inventory, silicone | $ 3,000 |
| Number of bottles completed and transferred | 12,000 |
| Inventory in process at the end of the month: | |
| Units formed but not assembled | 4,000 |
| Units assembled but not finished | 2,000 |
- 1. What is the cost per equivalent unit for conversion costs for KLN bottles in March 2017?
- 2. Compute the cost per equivalent unit with respect to each of the three materials: cullets, silicone, and polypropylene.
- 3. What is the cost of goods completed and transferred out?
- 4. What is the cost of goods formed but not assembled?
- 5. What is the cost of goods assembled but not finished?
Expert Solution & Answer
Trending nowThis is a popular solution!
Students have asked these similar questions
Direct, indirect, fixed, and variable costs. California Tires manufactures two types of tires that it
sells as wholesale products to various specialty retail auto supply stores. Each tire requires a three-step
process. The first step is mixing. The mixing department combines some of the necessary direct materials
to create the material mix that will become part of the tire. The second step includes the forming of each
tire where the materials are layered to form the tire. This is an entirely automated process. The final step is
finishing, which is an entirely manual process. The finishing department includes curing and quality control.
1. Costs involved in the process are listed next. For each cost, indicate whether it is a direct variable,
direct fixed, indirect variable, or indirect fixed cost, assuming "units of production of each kind of tire"
is the cost object.
Costs:
Rubber
Mixing department manager
Material handlers in each department
Custodian in factory
Night guard in factory…
Note: Use FIFO method in answering the requirements
1. Equivalent production for materials, labor and overhead.
2. Unit cost for materials, labor and overhead
3. Total costs of units completed and transferred
4. Total costs of units in process, end
Way Cool produces two different models of air conditioners. The company produces the mechanical systems in its components
department. The mechanical systems are combined with the housing assembly In Its finishing department. The activities, costs, and
drivers associated with these two manufacturing processes and the production support process follow.
Process Activity
Components Changeover
Machining
Setups
Finishing Welding
Support
Inspecting
Rework
Purchasing
Providing space
Providing utilities
Units produced
Welding hours
Batches
Number of inspections
Machine hours
Setups
Rework orders
Purchase orders
Required 1
Overhead Cost
$ 559,650
411,510
74,000
$1,045,160
$ 288,640
257,600
55,000
601,240
$
$ 194,540
30,800
37,960
$ 263,300
Additional production Information concerning its two product lines follows.
Required 2
Model 145
1,200
1,200
455
475
3,350
20
150
365
Driver
Number of batches
Machine hours
Number of setups
Required 3
Welding hours
Number of inspections
Rework orders
Purchase…
Chapter 17 Solutions
Horngren's Cost Accounting: A Managerial Emphasis (16th Edition)
Ch. 17 - Give three examples of industries that use...Ch. 17 - In process costing, why are costs often divided...Ch. 17 - Explain equivalent units. Why are equivalent-unit...Ch. 17 - What problems might arise in estimating the degree...Ch. 17 - Name the five steps in process costing when...Ch. 17 - Name the three inventory methods commonly...Ch. 17 - Describe the distinctive characteristic of...Ch. 17 - Describe the distinctive characteristic of FIFO...Ch. 17 - Prob. 17.9QCh. 17 - Identify a major advantage of the FIFO method for...
Ch. 17 - Identify the main difference between journal...Ch. 17 - The standard-costing method is particularly...Ch. 17 - Why should the accountant distinguish between...Ch. 17 - Transferred-in costs are those costs incurred in...Ch. 17 - Theres no reason for me to get excited about the...Ch. 17 - Assuming beginning work in process is zero, the...Ch. 17 - The following information concerns Westheimer...Ch. 17 - Sepulveda Corporation uses a process costing...Ch. 17 - Penn Manufacturing Corporation uses a...Ch. 17 - Kimberly Manufacturing uses a process-costing...Ch. 17 - Equivalent units, zero beginning inventory....Ch. 17 - Journal entries (continuation of 17-21). Refer to...Ch. 17 - Zero beginning inventory, materials introduced in...Ch. 17 - Weighted-average method, equivalent units. The...Ch. 17 - Weighted-average method, assigning costs...Ch. 17 - FIFO method, equivalent units. Refer to the...Ch. 17 - FIFO method, assigning costs (continuation of...Ch. 17 - Operation costing. The Carter Furniture Company...Ch. 17 - Weighted-average method, assigning costs....Ch. 17 - FIFO method, assigning costs. 1. Do Exercise 17-29...Ch. 17 - Transferred-in costs, weighted-average method....Ch. 17 - Transferred-in costs, FIFO method. Refer to the...Ch. 17 - Operation costing. Egyptian Spa produces two...Ch. 17 - Standard-costing with beginning and ending work in...Ch. 17 - Equivalent units, comprehensive. Louisville Sports...Ch. 17 - Weighted-average method. Hoffman Company...Ch. 17 - Journal entries (continuation of 17-36). Required...Ch. 17 - FIFO method (continuation of 17-36). 1. Do Problem...Ch. 17 - Transferred-in costs, weighted-average method...Ch. 17 - Transferred-in costs, FIFO method (continuation of...Ch. 17 - Weighted-average method. McKnight Handcraft is a...Ch. 17 - FIFO method (continuation of 17-41). 1. Complete...Ch. 17 - Transferred-in costs, weighted-average method....Ch. 17 - Transferred-in costs, FIFO method. Refer to the...Ch. 17 - Standard costing, journal entries. The Warner...Ch. 17 - Multiple processes or operations, costing. The...Ch. 17 - Benchmarking, ethics. Amanda McNall is the...
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.Similar questions
- Benson Pharmaceuticals uses a process-costing system to compute the unit costs of the over-the-counter cold remedies that it produces. It has three departments: mixing, encapsulating, and bottling. In mixing, the ingredients for the cold capsules are measured, sifted, and blended (with materials assumed to be uniformly added throughout the process). The mix is transferred out in gallon containers. The encapsulating department takes the powdered mix and places it in capsules (which are necessarily added at the beginning of the process). One gallon of powdered mix converts into 1,500 capsules. After the capsules are filled and polished, they are transferred to bottling, where they are placed in bottles that are then affixed with a safety seal, lid, and label. Each bottle receives 50 capsules. During March, the following results are available for the first two departments: Overhead in both departments is applied as a percentage of direct labor costs. In the mixing department, overhead is 200% of direct labor. In the encapsulating department, the overhead rate is 150% of direct labor. Required: 1. Prepare a production report for the mixing department using the weighted average method. Follow the five steps outlined in the chapter. (Note: Round to two decimal places for the unit cost.) 2. Prepare a production report for the encapsulating department using the weighted average method. Follow the five steps outlined in the chapter. (Note: Round to four decimal places for the unit cost.) 3. CONCEPTUAL CONNECTION Explain why the weighted average method is easier to use than FIFO. Explain when weighted average will give about the same results as FIFO.arrow_forwardReducir, Inc., produces two different types of hydraulic cylinders. Reducir produces a major subassembly for the cylinders in the Cutting and Welding Department. Other parts and the subassembly are then assembled in the Assembly Department. The activities, expected costs, and drivers associated with these two manufacturing processes are given below. Note: In the assembly process, the materials-handling activity is a function of product characteristics rather than batch activity. Other overhead activities, their costs, and drivers are listed below. Other production information concerning the two hydraulic cylinders is also provided: Required: 1. Using a plantwide rate based on machine hours, calculate the total overhead cost assigned to each product and the unit overhead cost. 2. Using activity rates, calculate the total overhead cost assigned to each product and the unit overhead cost. Comment on the accuracy of the plantwide rate. 3. Calculate the global consumption ratios. 4. Calculate the consumption ratios for welding and materials handling (Assembly) and show that two drivers, welding hours and number of parts, can be used to achieve the same ABC product costs calculated in Requirement 2. Explain the value of this simplification. 5. Calculate the consumption ratios for inspection and engineering, and show that the drivers for these two activities also duplicate the ABC product costs calculated in Requirement 2.arrow_forwardGibson Manufacturing produces two keyboards, one for laptop computers and the other for desktop computers. The production process is automated, and the company has found activity-based costing useful in assigning overhead costs to its products. The company has identified five major activities involved in producing the keyboards. Activity Materials receiving & handling Production setup Assembly Quality inspection Packing and shipping Activity measures for the two kinds of keyboards follow: Laptops Desktops Required Allocation Base Cost of material Number of setups Number of parts Inspection time Number of orders Labor Cost $ 1,190 1,080 Material Number of Number of Cost $ 5,600 7,500 Setups 31 11 Parts 47 28 Allocation Rate 2% of material cost $ 113.00 per setup $ 5.00 per part $ 1.30 per minute $ 12.00 per order Number of Inspection Time Orders 6,800 minutes 5,200 minutes 67 22 a. Compute the cost per unit of laptop and desktop keyboards, assuming that Gibson made 210 units of each…arrow_forward
- Mack's Juices produces and bottles a line of fruit juices. The manufacturing process entails mixing and adding juices and other ingredients at the bottling plant, which is a part of Blending Division. The finished product is packaged in a company-produced glass bottle and packed in cases of 24 bottles each. Because the appearance of the bottle heavily influences sales volume, Mack's developed a unique bottle production process at the company’s container plant, which is a part of Packaging Division. Blending Division uses all of the container plant’s production. Each division (Blending and Packaging) is considered a separate profit center and evaluated as such. As the new corporate controller, you are responsible for determining the proper transfer price to use for the bottles produced for Blending Division. At your request, Packaging Division’s general manager asked other bottle manufacturers to quote a price for the number and sizes demanded by Blending Division. These competitive…arrow_forwardUsing the direct method and step down method, identify which method is more accurate in producing the front end assemblies. Using the figure and justify why the method is more accurate.arrow_forwardHanshabenarrow_forward
- Part A KM Sdn. Bhd. (KM) produces two different types of high quality handbags, Luxury and Superior. Each design is made in small batches. The bags are all made on the same special equipment that is expected to operate at capacity. The equipment must be switched over to a new design and set up to prepare for the production of each batches of products. When completed, each batch of products is immediately shipped to a wholesaler. Shipping costs vary with the number of shipments. KM uses activity-based costing and provides the following budgeted information for the year ended 31 December 2017: Luxury (RM) Total (RM) Superior (RM) 412,920 120,000 Direct material Direct labour Manufacturing overhead: Set up Shipping Design Plant utilities and administration Total 379,290 98,000 792,210 218,000 65,930 73,910 166,000 243,000 1,559,050 Other information follows: Luxury 6,050 1,450 130 Superior 3,350 2,600 60 Total Number of bags Hours of production Number of batches Number of designs 9,400…arrow_forwardVishnuarrow_forwardWeighted-average method. Hoffman Company manufactures car seats in its Boise plant. Each car seat passes through the assembly department and the testing department. This problem focuses on the assembly department. The process-costing system at Hoffman Company has a single direct-cost category (direct materials) and a single indirect-cost category (conversion materials are added at the costs). Direct beginning of the process. Conversion costs are added evenly during the process. When the assembly department finishes work on each car seat, it is immediately transferred to testing. Hoffman Company uses the weighted-average method of process costing. Data for the assembly department for October 2019 are as follows: Physical Units (Car Seats) Direct Materials Conversion Costs Work in process, October 1ª 4,000 $1,248,000 $ 241,650 Started during October 2019 22,500 Completed during October 2019 26,000 Work in process, October 31b 500 Total costs added during October $4,635,000 $2,575,125…arrow_forward
- Makani Handcraft is a manufacturer of picture frames for large retailers. Every picture frame passes through two departments: the assembly department and the finishing department. This problem focuses on the assembly department. The process-costing system at Makani has a single direct-cost category (direct materials) and a single indirect-cost category (conversion costs). Direct materials are added at the beginning of the process. Conversion costs are added evenly during the assembly department's process. Consider the following data for the assembly department in June 2020: Physical units (Frames) Direct materials Direct labour Work in progress (June 1) 80 $1,500 $150 Completed during June 500 Work in progress June 30 200 Total costs added during June $17,800 $11,500 Degree of completion is as follows: Work in progress (June 1): 100% 60% Work in progress June 30 100% 25% Required: Compute the costs assigned to products using two methods: 1. Weighted average method (WAM); | 2. First in…arrow_forwardBhojraj Fabricators Inc. machines metal parts for the automotive industry. Under the traditional manufacturing approach, the parts are machined through two processes: milling and finishing. Parts are produced in batch sizes of 70 parts. A part requires 3 minutes in milling and 8 minutes in finishing. The move time between the two operations for a complete batch is 9 minutes. Under the lean philosophy, the part is produced in a cell that includes both the milling and finishing operations. The operating time is unchanged; however, the batch size is reduced to 3 parts and the move time is eliminated. Determine the value-added, non-value-added, and total lead times, and the value-added ratio under the traditional and lean manufacturing methods. If required, round percentages to one decimal place. Line Item Description Traditional Philosophy Lean Manufacturing Philosophy Value-added time Non-value-added time Total lead time 779 33 Value-added ratio (as a percent)arrow_forwardMunoz Manufacturing produces two keyboards, one for laptop computers and the other for desktop computers. The production process is automated, and the company has found activity-based costing useful in assigning overhead costs to its products. The company has identified five major activities involved in producing the keyboards. Activity Materials receiving & handling Production setup Quality inspection Assembly Packing and shipping Allocation Base Cost of material Number of setups Number of parts Inspection time Number of orders Activity measures for the two kinds of keyboards follow: Allocation Rate 2% of material cost $112.00 per setup $7.00 per part $1.20 per minute $ 8.00 per order Laptops. Desktops Labor Cost $ 1,350 Material Cost Number of Setups 1,240 $ 6,500 7,100 31 Number of Parts 50 13 28 Inspection Time 6,800 minutes 4,600 minutes Number of Orders 62 22 Required a. Compute the cost per unit of laptop and desktop keyboards, assuming that Munoz made 200 units of each type of…arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
Cornerstones of Cost Management (Cornerstones Ser...AccountingISBN:9781305970663Author:Don R. Hansen, Maryanne M. MowenPublisher:Cengage Learning
Managerial Accounting: The Cornerstone of Busines...AccountingISBN:9781337115773Author:Maryanne M. Mowen, Don R. Hansen, Dan L. HeitgerPublisher:Cengage Learning
Managerial AccountingAccountingISBN:9781337912020Author:Carl Warren, Ph.d. Cma William B. TaylerPublisher:South-Western College Pub
Financial And Managerial AccountingAccountingISBN:9781337902663Author:WARREN, Carl S.Publisher:Cengage Learning,
Cornerstones of Cost Management (Cornerstones Ser...
Accounting
ISBN:9781305970663
Author:Don R. Hansen, Maryanne M. Mowen
Publisher:Cengage Learning
Managerial Accounting: The Cornerstone of Busines...
Accounting
ISBN:9781337115773
Author:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Publisher:Cengage Learning
Managerial Accounting
Accounting
ISBN:9781337912020
Author:Carl Warren, Ph.d. Cma William B. Tayler
Publisher:South-Western College Pub
Financial And Managerial Accounting
Accounting
ISBN:9781337902663
Author:WARREN, Carl S.
Publisher:Cengage Learning,
Cost Classifications - Managerial Accounting- Fixed Costs Variable Costs Direct & Indirect Costs; Author: Accounting Instruction, Help, & How To;https://www.youtube.com/watch?v=QQd1_gEF1yM;License: Standard Youtube License