ACCOUNTING,CHAP.1-13
26th Edition
ISBN: 9781305088412
Author: WARREN
Publisher: CENGAGE L
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Chapter 20, Problem 20.2CP
Accounting for materials costs
In papermaking operations for companies such as International Paper Company, wet pulp is fed into paper machines, which press and dry pulp into a continuous sheet of paper. The paper is formed at very high speeds (60 mph). Once the paper is formed, the paper is rolled onto a reel at the hack end of the paper machine. One of the characteristics of papermaking is the creation of “broke" paper. Broke is paper that fails to satisfy quality standards and is therefore rejected for final shipment to customers. Broke is recycled hack to the beginning of the process by combining the recycled paper with virgin (new) pulp material. The combination of virgin pulp and recycled broke is sent to the paper machine for papermaking. Broke is fed into this recycle process continuously from all over the facility.
In this industry, it is typical to charge the papermaking operation with the cost of direct materials, which is a mixture of virgin materials and broke. Broke has a much lower cost than does virgin pulp. Therefore, the more broke in the mixture, the lower the average cost of direct materials to the department. Papermaking managers frequently comment on the importance of broke for keeping their direct materials costs down
a. How do you react to this accounting procedure?
b. What “hidden costs” are not considered when accounting for broke as described?
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Chapter 20 Solutions
ACCOUNTING,CHAP.1-13
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 - How does just-in-time processing differ from the...
Ch. 20 - Job order versus process costing Which of the...Ch. 20 - Job order versus process costing Which of the...Ch. 20 - Prob. 20.2APECh. 20 - Units to be assigned costs Keystone Steel Company...Ch. 20 - Equivalent units of materials cost The Filling...Ch. 20 - Equivalent units of materials cost The Rolling...Ch. 20 - Equivalent units of conversion costs The Filling...Ch. 20 - Equivalent units of conversion costs The Rolling...Ch. 20 - Cost per equivalent unit The cost of direct...Ch. 20 - Cost per equivalent unit The cast of direct...Ch. 20 - Cost of units transferred out and ending work in...Ch. 20 - Cost of units transferred out and ending work in...Ch. 20 - Process cost journal entries The cost of materials...Ch. 20 - Process cost journal entries The cost of materials...Ch. 20 - Using process costs for decision making The costs...Ch. 20 - Using process costs for decision making The costs...Ch. 20 - Entries for materials cost flows in a process cost...Ch. 20 - Flowchart of accounts related to service and...Ch. 20 - Entries for flow of factory costs for process cost...Ch. 20 - Factory overhead rate, entry for applying factory...Ch. 20 - Equivalent units of production The Converting...Ch. 20 - Equivalent units of production Units of production...Ch. 20 - Equivalent units of production The following...Ch. 20 - Costs per equivalent unit a. Based upon the data...Ch. 20 - Equivalent units of production Kellogg Company...Ch. 20 - Costs per equivalent unit Georgia Products Inc....Ch. 20 - Equivalent units of production and related costs...Ch. 20 - Cost of units completed and in process a. Based on...Ch. 20 - Errors in equivalent unit computation Napco...Ch. 20 - Cost per equivalent unit The following information...Ch. 20 - Costs per equivalent unit and production costs...Ch. 20 - Cost of production report The debits to Work in...Ch. 20 - Cost of production report The Culling Department...Ch. 20 - Cost of production and journal entries AccuBlade...Ch. 20 - Cost of production and journal entries Lighthouse...Ch. 20 - Process costing for a service company Madison...Ch. 20 - Decision making Mystic Bottling Company bottles...Ch. 20 - Decision making Fix Paper Inc. produces...Ch. 20 - Just-in-time manufacturing The following are some...Ch. 20 - Equivalent units of production: average cost...Ch. 20 - Equivalent units of production: average cost...Ch. 20 - Equivalent units of production: average cost...Ch. 20 - Equivalent units of production and related costs...Ch. 20 - Cost per equivalent unit: average cost method The...Ch. 20 - Cost of production report: average cost method The...Ch. 20 - Cost of production report: average cost method...Ch. 20 - Entries for process cost system FloorMate Carpet...Ch. 20 - Cost of production report Fresh Mountain Coffee...Ch. 20 - Equivalent units and related costs; cost of...Ch. 20 - Work in process account data for two months; cost...Ch. 20 - Cost of production report: average cost method...Ch. 20 - Entries for process cost system Preston Grover...Ch. 20 - Cost of production report Bavarian Chocolate...Ch. 20 - Equivalent units and related costs; cost of...Ch. 20 - Work in process account data for two months; cost...Ch. 20 - Cost of production report: average cost method...Ch. 20 - Ethics in Action Assume that you are the division...Ch. 20 - Accounting for materials costs In papermaking...Ch. 20 - Analyzing unit costs Midstate Containers Inc....Ch. 20 - Communication Jamarcus Bradshaw, plant, manager of...
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