
Concept explainers
Introduction:
In
To Determine:
Prepare Roasting department’s process cost summary.

Explanation of Solution
Solution and Explanation:
Dengo Co ( Roasting Department) | |||||
PROCESS COST SUMMARY (FIFO BASIS) | |||||
DIRECT MATERIAL | |||||
DETAILS | NO OF UNITS | % COMPLETE | EQUIVALENT UNIT | COST $ | |
OPENING BALANCE | 3,000 | 100% | 3,000 | 9,900 | |
COST INCURRED DURING THE MONTH | 248,400 | ||||
258,300 | |||||
OPENING UNITS COMPLETED AND TRANSFERRED | 3,000 | 0% | - | ||
UNITS COMPLETED AND TRANSFERRED | 19,200 | 100% | 19,200 | ||
CLOSING WORK IN PROGRESS | 2,400 | 100% | 2,400 | ||
21,600 | |||||
Per Unit cost of Equivalent units | 11.50 | ||||
COST OF OPENING UNITS | - | 9,900.00 | |||
COST OF UNITS COMPLETED AND TRANSFERRED | 220,800 | ||||
COST OF WORK IN PROGRESS | 27,600 | ||||
TOTAL | 258,300 | ||||
CONVERSION COST | TOTAL MATERIAL AND CONVERSION | ||||
DETAILS | NO OF UNITS | % COMPLETE | EQUIVALENT UNIT | COST | |
OPENING BALANCE | 3,000 | 40% | 1,200 | 110,970 | 120,870 |
COST INCURRED DURING THE MONTH | 1,082,970 | 1,331,370 | |||
1,193,940 | 1,452,240 | ||||
OPENING UNITS COMPLETED AND TRANSFERRED | 3,000 | 60% | 1,800 | ||
UNITS COMPLETED AND TRANSFERRED | 19,200 | 100% | 19,200 | ||
WORK IN PROGRESS | 2,400 | 80% | 1,920 | ||
22,920 | |||||
Per Unit cost of Equivalent units | =082970/22920 | 47.25 | |||
OPENING UNITS COMPLETED AND TRANSFERRED | 196,020 | 205,920 | |||
COST OF UNITS COMPLETED AND TARNSFERRED | 907,200 | 1,128,000 | |||
COST OF WORK IN PROGRESS | 90,720 | 118,320 | |||
TOTAL | 1,193,940 | 1,452,240 |
Conclusion
Process cost summary is given above.
Introduction:
In process costing Calculation of Equivalent units can be done either by FIFO basis or Weighted average basis.
To Determine:
Journal entries to record transfer to Blending Department

Answer to Problem 7APSA
Solution
Date | Account Head | $ | $ |
Oct-31 | Blending Department Production Cost Account | 1,333,920 | |
Roasting department Production cost Account | 1,333,920 |
Roasting department costs transferred to Blending department for completed units.
Explanation of Solution
Explanation:
Dengo Co ( Roasting Department) | |||||
PROCESS COST SUMMARY (FIFO BASIS) | |||||
DIRECT MATERIAL | |||||
DETAILS | NO OF UNITS | % COMPLETE | EQUIVALENT UNIT | COST $ | |
OPENING BALANCE | 3,000 | 100% | 3,000 | 9,900 | |
COST INCURRED DURING THE MONTH | 248,400 | ||||
258,300 | |||||
OPENING UNITS COMPLETED AND TRANSFERRED | 3,000 | 0% | - | ||
UNITS COMPLETED AND TRANSFERRED | 19,200 | 100% | 19,200 | ||
CLOSING WORK IN PROGRESS | 2,400 | 100% | 2,400 | ||
21,600 | |||||
Per Unit cost of Equivalent units | 11.50 | ||||
COST OF OPENING UNITS | - | 9,900.00 | |||
COST OF UNITS COMPLETED AND TRANSFERRED | 220,800 | ||||
COST OF WORK IN PROGRESS | 27,600 | ||||
TOTAL | 258,300 | ||||
CONVERSION COST | TOTAL MATERIAL AND CONVERSION | ||||
DETAILS | NO OF UNITS | % COMPLETE | EQUIVALENT UNIT | COST | |
OPENING BALANCE | 3,000 | 40% | 1,200 | 110,970 | 120,870 |
COST INCURRED DURING THE MONTH | 1,082,970 | 1,331,370 | |||
1,193,940 | 1,452,240 | ||||
OPENING UNITS COMPLETED AND TRANSFERRED | 3,000 | 60% | 1,800 | ||
UNITS COMPLETED AND TRANSFERRED | 19,200 | 100% | 19,200 | ||
WORK IN PROGRESS | 2,400 | 80% | 1,920 | ||
22,920 | |||||
Per Unit cost of Equivalent units | =082970/22920 | 47.25 | |||
OPENING UNITS COMPLETED AND TRANSFERRED | 196,020 | 205,920 | |||
COST OF UNITS COMPLETED AND TARNSFERRED | 907,200 | 1,128,000 | |||
COST OF WORK IN PROGRESS | 90,720 | 118,320 | |||
TOTAL | 1,193,940 | 1,452,240 |
Conclusion
Date | Account Head | $ | $ |
Oct-31 | Blending Department Production Cost Account | 1,333,920 | |
Roasting department Production cost Account | 1,333,920 |
Roasting department costs transferred to Blending department for completed units.
Introduction:
In process costing Calculation of Equivalent units can be done either by FIFO basis or Weighted average basis.
To Determine:
Determine impact on costs if ending WIP degree of completion is understated.

Answer to Problem 7APSA
Solution:
Oct Bonus will be lower and Nov Bonus will be higher.
Explanation of Solution
Explanation:
When Degree of completion of closing WIP is understated – the Equivalent units are also understated. The entire cost of October is divided over a smaller base and therefore cost of units transferred to next process is stated at higher costs. The closing Work in progress cost is lower than its correct value. Since the department managers are paid bonuses linked to lower costs and since October costs were reported higher – the bonuses are likely to be lower than the actual entitlement.
However since October cost of WIP is lower – it will result in lower cost in the Month of November and other thing being equal – November Bonus will be higher as the Nov cost is likely to be lower.
Conclusion
Underestimate of degree of completion of units in closing inventory will result in lowering of Equivalent units and will lead to higher cost of production for Units completed and transferred to next process. This Will result in lower Bonus to managers in Oct Month which is likely to get compensated in following month.
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Chapter 20 Solutions
Connect 2-Semester Access Card for Fundamental Accounting Principles
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