Accounting Principles, Volume 2: Chapters 13 - 26
Accounting Principles, Volume 2: Chapters 13 - 26
12th Edition
ISBN: 9781118978764
Author: Jerry J. Weygandt, Donald E. Kieso, Paul D. Kimmel
Publisher: WILEY
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Chapter 21, Problem 21.5AP

(a)(1)

To determine

Process Costing: Process costing is method of cost accounting in which all the costs that are incurred production process are recorded. Output of one process becomes input for next process. This method is used to apply cost to similar products that are bulk-produced in uninterrupted manner.

Production Cost Report: A report which gives information about the total units produced and total cost incurred during the production process is called production cost report. This report is useful for the management of the company to take decision regarding production and the measure for cost control.

Equivalent Units of Production: It is a evaluation of the work completed during the period expressed in wholly finished units. Equivalent units of production includes the completed units of direct materials and conversion cost of beginning work in process, units completed and transferred out and ending work in process.

Unit Cost of Production: The cost production derived in terms of corresponding units of production is called unit cost of production.

To determine: The equivalent units of production for materials and conversion costs.

(2)

To determine

The unit cost of production for materials and conversion cost.

(3)

To determine

The cost to be assigned to the units transferred out and process for June.

(b)

To determine

To prepare: A production cost report for the month of July for the basketballs.

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Activity Based Costing - practice problem Fontillas Instrument, Inc. manufactures two products: missile range instruments and space pressure gauges. During April, 50 range instruments and 300 pressure gauges were produced, and overhead costs of $89,500 were estimated. An analysis of estimated overhead costs reveals the following activities. Activities 1. Materials handling 2. Machine setups Cost Drivers Number of requisitions Number of setups Total cost $35,000 27,500 3. Quality inspections Number of inspections 27,000 $89.500 The cost driver volume for each product was as follows: Cost Drivers Instruments Gauge Total Number of requisitions 400 600 1,000 Number of setups 200 300 500 Number of inspections 200 400 600 Insructions (a) Determine the overhead rate for each activity. (b) Assign the manufacturing overhead costs for April to the two products using activity-based costing.
Bodhi Company has three cost pools and two doggie products (leashes and collars). The activity cost pool of ordering has the cost drive of purchase orders. The activity cost pool of assembly has a cost driver of parts. The activity cost pool of supervising has the cost driver of labor hours. The accumulated data relative to those cost drivers is as follows: Expected Use of Estimated Cost Drivers by Product Cost Drivers Overhead Leashes Collars Purchase orders $260,000 70,000 60,000 Parts 400,000 300,000 500,000 Labor hours 300,000 15,000 10,000 $960,000 Instructions: (a) Compute the activity-based overhead rates. (b) Compute the costs assigned to leashes and collars for each activity cost pool. (c) Compute the total costs assigned to each product.

Chapter 21 Solutions

Accounting Principles, Volume 2: Chapters 13 - 26

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