Fundamental Accounting Principles
Fundamental Accounting Principles
23rd Edition
ISBN: 9781259536359
Author: John J Wild, Ken Shaw Accounting Professor, Barbara Chiappetta Fundamental Accounting Principles
Publisher: McGraw-Hill Education
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Chapter 20, Problem 19QS
To determine

Concept Introduction:

Equivalent Units of Production:

The equivalent units of production can be defined as the units which are partially completed to be counted as fully completed units based on their percentage of work done on them.

For example, the units in ending inventory are 1,000 units and 60 % completed. Thus, the equivalent units for ending inventory will be = 1,000 units X 60 % = 600 units.

Cost per equivalent unit:

Cost per equivalent unit can be defined as the costs that are incurred during the process to the equivalent units of production.

Costs assigned to Units transferred and units in ending inventory:

The costs are assigned to units transferred and units in ending inventory on the basis of equivalent units in materials and conversion and cost per units assigned.

The costs assigned to units transferred are calculated as under

Costs assigned to units transferred =Equivalent units of materials X Cost per equivalent units  +Equivalent units of conversion X Cost per equivalent units

The costs assigned to ending inventory are calculated as under

Costs assigned to ending inventory =Equivalent units of materials X Cost per equivalent units  +Equivalent units of conversion X Cost per equivalent units

To assign:

Direct materials costs to the molding department’s for

1. Units transferred to package department

2. Units that remain in the molding department at month-end i.e. ending inventory

Using weighted average method

Expert Solution & Answer
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Answer to Problem 19QS

Solution:

Direct materials costs to the molding department’s for

1. Units transferred to package department = $ 25,500

2. Ending inventory = $ 3,600

Explanation of Solution

The direct materials costs assigned to units transferred and ending inventory are calculated as under

First, the equivalent units for materials will be calculated.

Equivalent units for Material = Units completed and transferred  + (Units in ending inventory X Percent of completion)

Given,

• Units completed and transferred = 17,000 units (i.e. 2,000 units + 18,000 units 3,000 units)

• Units in Ending inventory = 3,000 units

• Percent of Completion for ending inventory = 80 %

Equivalent units for materials is

Equivalent units for Material = Units completed and transferred  + (Units in ending inventory X Percent of completion)Equivalent units for Material =17,000 units+(3,000 units X 80%)Equivalent units for Material =19,400 units

The equivalent units for materials is = 19,400 units.

Now, the cost per equivalent unit will be calculated

Cost per equivalent units=Beginning meterial cost+Total cost added during the processEquivalent units of production

Here given,

• Beginning Materials cost = $ 1,200

• Total cost added during the process = $ 27,900

• Equivalent units of production = 19,400 units

Cost per equivalent units=Beginning material cost+Total cost added during the processEquivalent units of production Cost per equivalent units=$ 1,200+$ 27,90019,400 units Cost per equivalent units=$ 1.50

Now, the cost assigned to units transferred out and ending inventory will be calculated as under

Costs assigned to units transferred =Equivalent units of materials X Cost per equivalent units

1. For units transferred to packaging department, the cost will be assigned as under

Given,

Equivalent units for units transferred for materials = 17,000 units

Cost per equivalent unit = $ 1.50 per unit

Costs assigned to units transferred =Equivalent units of materials X Cost per equivalent units Costs assigned to units transferred =17,000 units X $ 1.05 per unitCosts assigned to units transferred =$ 25,500

The cost assigned to units transferred to packaging department using weighted average method = $ 25,500.

2. For units in ending inventory, the cost will be assigned as under

Given,

Equivalent units for ending inventory for materials = 2,400 units

Cost per equivalent unit = $ 1.50 per unit

Costs assigned to ending inventory =Equivalent units of materials X Cost per equivalent units Costs assigned to ending inventory =2,400 units X $ 1.05 per unitCosts assigned to ending inventory =$ 3,600

The cost assigned to ending inventory using weighted average method = $ 3,600

Conclusion

Thus, the direct materials costs to the molding department’s units transferred to package department and units that remain in the molding department at month-end i.e. ending inventory have been assigned using weighted average method.

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Chapter 20 Solutions

Fundamental Accounting Principles

Ch. 20 - Prob. 11DQCh. 20 - Prob. 12DQCh. 20 - Prob. 13DQCh. 20 - Prob. 14DQCh. 20 - Prob. 15DQCh. 20 - Prob. 16DQCh. 20 - Prob. 17DQCh. 20 - Prob. 1QSCh. 20 - Prob. 2QSCh. 20 - Prob. 3QSCh. 20 - Prob. 4QSCh. 20 - Prob. 5QSCh. 20 - Prob. 6QSCh. 20 - Prob. 7QSCh. 20 - Prob. 8QSCh. 20 - Prob. 9QSCh. 20 - Prob. 10QSCh. 20 - Prob. 11QSCh. 20 - Prob. 12QSCh. 20 - Prob. 13QSCh. 20 - Prob. 14QSCh. 20 - Prob. 15QSCh. 20 - Prob. 16QSCh. 20 - Prob. 17QSCh. 20 - Prob. 18QSCh. 20 - Prob. 19QSCh. 20 - Prob. 20QSCh. 20 - Prob. 21QSCh. 20 - Prob. 22QSCh. 20 - Prob. 23QSCh. 20 - Recording costs of labor P2 Prepare journal...Ch. 20 - Prob. 25QSCh. 20 - Prob. 26QSCh. 20 - Prob. 27QSCh. 20 - Prob. 1ECh. 20 - Prob. 2ECh. 20 - Prob. 3ECh. 20 - Prob. 4ECh. 20 - Prob. 5ECh. 20 - Prob. 6ECh. 20 - Prob. 7ECh. 20 - Prob. 8ECh. 20 - Prob. 9ECh. 20 - Prob. 10ECh. 20 - Prob. 11ECh. 20 - Prob. 12ECh. 20 - Prob. 13ECh. 20 - Prob. 14ECh. 20 - Prob. 15ECh. 20 - Prob. 16ECh. 20 - Prob. 17ECh. 20 - Prob. 18ECh. 20 - Exercise 20-19 Production cost flows P1 P2 P3 P4...Ch. 20 - Exercise 20-20 Weighted average: Process cost...Ch. 20 - Exercise 20-21 Recording costs of...Ch. 20 - Prob. 22ECh. 20 - Prob. 23ECh. 20 - Exercise 20-24 Recording cost of completed...Ch. 20 - Prob. 25ECh. 20 - Prob. 26ECh. 20 - Prob. 27ECh. 20 - Prob. 1APSACh. 20 - Prob. 2APSACh. 20 - Prob. 3APSACh. 20 - Prob. 4APSACh. 20 - Prob. 5APSACh. 20 - Prob. 6APSACh. 20 - Prob. 7APSACh. 20 - Prob. 1BPSBCh. 20 - Prob. 2BPSBCh. 20 - Prob. 3BPSBCh. 20 - Prob. 4BPSBCh. 20 - Prob. 5BPSBCh. 20 - Prob. 6BPSBCh. 20 - Prob. 7BPSBCh. 20 - Prob. 20SPCh. 20 - Prob. 20CPCh. 20 - Prob. 1GLPCh. 20 - Prob. 1BTNCh. 20 - Prob. 2BTNCh. 20 - Prob. 3BTNCh. 20 - Prob. 4BTNCh. 20 - Prob. 5BTNCh. 20 - Prob. 6BTNCh. 20 - This chapter's opener featured Jeff Keari and his...Ch. 20 - Prob. 8BTNCh. 20 - Prob. 9BTN
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