Accounting
27th Edition
ISBN: 9781337272094
Author: WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher: Cengage Learning,
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Textbook Question
Chapter 20, Problem 20.20EX
Madison Electric Company uses a fossil fuel (coal) plant for generating electricity. the facility can generate 900 megawatts (million watts) per hour. The plant operates 600 hours during March. Electricity is used as it is generated; thus, there are no inventories at the beginning or end of the period. The March conversion and fuel costs are as follows:
| Conversion costs | $40,500,000 |
| Fuel | 10,800,000 |
| Total | $51,300,000 |
Madison also has a wind farm that can generate 100 megawatts per hour. the wind farm receives sufficient wind to run 300 hours for March. The March conversion costs for the wind farm (mostly
| Conversion costs | $2,700,000 |
a. Determine the cost per megawatt hour (MWh) for the fossil fuel plant and the wind farm to identify the lowest cost facility in March,
b. Why are equivalent units of production not needed in determining the cost per megawatt hour (MWh) for generating electricity?
c. What advantage does the fossil fuel plant have over the wind farm?
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Monroe Materials processes a purchased material, PM-20, and produces three outputs, Alpha, Beta, and Gamma. In
February, the costs to process PM-20 are $524,000 for materials and $196,000 for conversion costs. The results of the
processing follow:
Units
Produced
Sales Value
per Unit
Alpha
24,000
$ 9.60
Beta
Gamma
19,200
4,800
18.00
80.00
Required:
Assign costs to Alpha, Beta, and Gamma for February using the physical quantities method.
Product
Cost Assigned
Alpha
Beta
Gamma
Total
$
0
Monroe Materials processes a purchased material, PM-20, and produces three outputs, Alpha, Beta, and Gamma. In February, the
costs to process PM-20 are $1,084,000 for materials and $644,000 for conversion costs. The results of the processing follow:
Units
Produced
Sales Value
per Unit
Alpha
Beta
31,000
$ 9.60
24,800
Gamma
6,200
18.00
80.00
Required:
Assign costs to Alpha, Beta, and Gamma for February using the net realizable value method.
Product
Cost Assigned
Alpha
Beta
Gamma
Total
S
0
XYZ Company incurred the following costs for the month of August when it observed an activity level of 5,000 units Vanable co 532.500 Fixed costs $25,000; Mixed costs $21,500, Total costs $79,000. During October, the activity level was 16,000 units and the cnts incurred were $178,000 If the activity level were expected to be 7,000 units for the month of December, what amount of al costs would be expected? Select one DaS106,000 Ob$124,000 Oc None of the answers given a S115.000 S97.000
Chapter 20 Solutions
Accounting
Ch. 20 - Which type of cost system, process or job order,...Ch. 20 - In job order cost accounting, the three elements...Ch. 20 - Prob. 3DQCh. 20 - Why is the cost per equivalent unit often...Ch. 20 - What is the purpose for determining the cost per...Ch. 20 - Rameriz Company is a process manufacturer with two...Ch. 20 - What is the most important purpose of the cost of...Ch. 20 - Prob. 8DQCh. 20 - Prob. 9DQCh. 20 - Prob. 10DQ
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