Concept explainers
a.1
Prepare a schedule showing units started and completed in the forging department during July.
a.1
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Explanation of Solution
Prepare a schedule showing units started and completed in the forging department during July as follows:
Flow of Physical units: Forging Department | |
Particulars | Units |
Beginning work in process inventory | 5,000 |
Add: units started | 75,000 |
Units in process | 80,000 |
Less: Ending work in process invnetory | 8,000 |
Units transferred to assembly department | 72,000 |
Less: beginning work in process inventory | 5,000 |
Units started and completed | 67,000 |
Table (1)
2.
Compute the equivalent units of direct materials and conversion for the forging department during July.
2.
![Check Mark](/static/check-mark.png)
Explanation of Solution
Prepare a schedule showing units started and completed in the forging department during July as follows:
Particulars | Direct materials | Conversion |
Beginning work in process inventory | 0 | 3,000 |
Units start and complete | 67,000 | 67,000 |
Ending work in process inventory | 8,000 | 6,000 |
Equivalent units of production | 75,000 | 76,000 |
Table (2)
Working note:
Figure (1)
3.
Identify the cost per equivalent unit of input resource for the forging department during July.
3.
![Check Mark](/static/check-mark.png)
Explanation of Solution
Identify the cost per equivalent unit of input resource for the forging department during July as follows:
Particulars | Direct materials | Conversion |
Cost incurred by Forging department (A) | $675,000 | $608,000 |
Equivalent units (B) | 75,000 | 76,000 |
Cost per equivalent unit (A ÷ B) | $9 | $8 |
Table (3)
4.
Prepare the
4.
![Check Mark](/static/check-mark.png)
Explanation of Solution
Prepare the journal entry to transfer units from Forging department to the assembly department during July as follows:
Account titles and Explanation | Debit | Credit |
Work in process inventory - Assembly department | $1,224,000 | |
Work in process inventory - Forging department | $1,224,000 | |
(To record transfer of 72,000 units to the assembly department) |
Table (4)
Working note:
Calculate total unit cost transferred.
Particulars | Amount |
Beginning work in process inventory ($45,000 +$16,000) | $61,000 |
Add: Start and complete cost: | |
Materials (67,000 units × $9) | $603,000 |
Conversion (70,000 units × $8) | $560,000 |
Total cost of units transferred | $1,224,000 |
Table (5)
- Work in process inventory – Assembly department is a current asset, and it is increased. Therefore, debit work in process inventory account for $1,224,000.
- Work in process inventory – Forging department is a current asset, and it is decreased. Therefore, credit work in process inventory –Forging department account for $1,224,000.
5.
Compute cost assigned to ending inventory in the forging department on July 31.
5.
![Check Mark](/static/check-mark.png)
Explanation of Solution
Compute cost assigned to ending inventory in the forging department on July 31 as follows:
b.1
Prepare a schedule showing units started and completed in the assembly department during July.
b.1
![Check Mark](/static/check-mark.png)
Explanation of Solution
Flow of Physical units: Assembly Department | |
Particulars | Units |
Beginning work in process inventory | 4,000 |
Add: units started | 72,000 |
Units in process | 76,000 |
Less: Ending work in process inventory | 16,000 |
Units transferred to assembly department | 60,000 |
Less: beginning work in process inventory | 4,000 |
Units started and completed | 56,000 |
Table (6)
2.
Compute equivalent units of direct materials and conversion for the assembly department in July.
2.
![Check Mark](/static/check-mark.png)
Explanation of Solution
Compute equivalent units of direct materials and conversion for the assembly department in July as follows:
Particulars | Direct materials | Conversion |
Beginning work in process inventory | 4,000 | 3,000 |
Units start and complete | 56,000 | 56,000 |
Ending work in process inventory | - | 4,800 |
Equivalent units of production | 60,000 | 63,800 |
Table (7)
Working note:
Figure (2)
3.
Compute equivalent cost per unit of input resource for the assembly department during July.
3.
![Check Mark](/static/check-mark.png)
Explanation of Solution
Compute equivalent cost per unit of input resource for the assembly department during July as follows:
Particulars | Direct materials | Conversion |
Cost incurred by department (A) | $720,000 | $191,400 |
Equivalent units (B) | 60,000 | 63,800 |
Cost per equivalent unit (A ÷ B) | $12 | $3 |
Table (8)
4.
Prepare journal entry to record transfer units from the assembly department to finished goods inventory during July.
4.
![Check Mark](/static/check-mark.png)
Explanation of Solution
Prepare journal entry to record transfer units from the assembly department to finished goods inventory during July as follows:
Account titles and Explanation | Debit | Credit |
Work in process inventory - Assembly department | $1,920,000 | |
Work in process inventory - Forging department | $1,920,000 | |
(To record transfer of 72,000 units to the assembly department) |
Table (9)
Working note:
Calculate total unit cost transferred.
Particulars | Amount |
Beginning work in process inventory ($68,000 +$3,000) | $71,000 |
Add: Start and complete cost: | |
Materials (60,000 units × $12) | $720,000 |
July forging materials (56,000 units × $17) | $952,000 |
Conversion (59,000 units × $3) | $117,000 |
Total cost of units transferred | $1,920,000 |
Table (10)
- Finished goods inventory is a current asset, and it is increased. Therefore, debit finished goods inventory account for $1,920,000.
- Work in process inventory – Assembly department is a current asset, and it is decreased. Therefore, credit work in process inventory –Assembly department account for $1,920,000.
5.
Compute the cost assigned to ending inventory in the assembly department.
5.
![Check Mark](/static/check-mark.png)
Explanation of Solution
Compute cost assigned to ending inventory in the forging department on July 31 as follows:
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