Financial And Managerial Accounting
15th Edition
ISBN: 9781337902663
Author: WARREN, Carl S.
Publisher: Cengage Learning,
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Chapter 27, Problem 19E
Process activity analysis
The Brite Beverage Company bottles soft drinks into aluminum cans. The manufacturing process consists of three activities:
- 1. Mixing: water, sugar, and beverage concentrate are mixed.
- 2. Filling: mixed beverage is filled into 12-oz. cans.
- 3. Packaging: properly filled cans are boxed into cardboard “fridge packs.”
The activity costs associated with these activities for the period are as follows:
The activity costs do not include materials costs, which are ignored for this analysis. Each can is expected to contain 12 ounces of beverage. Thus, after being filled, each can is automatically weighed. If a can is too light, it is rejected, or “kicked,” from the filling line prior to being packaged. The primary cause of kicks is heat expansion. With heat expansion, the beverage overflows during filling, resulting in underweight cans.
This process begins by mixing and filling 6,300,000 cans during the period, of which only 6,000,000 cans are actually packaged. Three hundred thousand cans are rejected due to underweight kicks.
A process improvement team has determined that cooling the cans prior to filling them will reduce the amount of overflows due to expansion. After this improvement, the number of kicks is expected to decline from 300,000 cans to 63,000 cans, thus increasing the number of filled cans to 6,237,000 [6,000,000 + (300,000 − 63,000)].
- A. Determine the total activity cost per packaged can under present operations.
- B. Determine the amount of increased packaging activity costs from the expected improvements.
- C. Determine the expected total activity cost per packaged can after improvements. Round to three decimal places.
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Required information
Use the following information for the Problems below. (Algo)
[The following information applies to the questions displayed below.]
Tamar Company manufactures a single product in two departments: Forming and Assembly. Information for
the Forming process for May follows.
Beginning work in process
inventory
Units started this period
Units completed and
transferred out
Ending work in process
inventory
Beginning work in process
inventory
Direct materials
Conversion
Costs added this period
Direct materials
Conversion
Total costs to account for
Direct
MaterialsConversion
Percent Percent
Complete Complete
40%
Units
5,700 100%
41,040
42,180
4,560 100%
$ 37,620
421,686 $ 459,306
943,920
4,115,286 5,059,206
5,518,512
olem 3-4A (Algo) FIFO: Production cost report LO C2, P4
$
80%
me that Tamar uses the FIFO method of process costing. The units started and completed for may total 19,200.
ired:
Prepare the Forming department's production cost report for May using FIFO.
Prepare…
Required:(a) Compute the equivalent units for direct materials (From Moulding & Direct materialsadded) and conversion costs.(b) Compute the: Cost per equivalent unit for direct materials and conversion costs Total cost of the skis completed and transferred out to the Packing Department. Cost of the unexpected losses Cost of ending work in process inventory in the Spraying Department.
Weighted Average Method, Nonuniform Inputs, MultipleDepartmentsBenson Pharmaceuticals uses a process-costing system to compute the unit costs of the overthe-counter cold remedies that it produces. It has three departments: mixing, encapsulating,and bottling. In mixing, the ingredients for the cold capsules are measured, sifted, and blended(with materials assumed to be uniformly added throughout the process). The mix is transferredout in gallon containers. The encapsulating department takes the powdered mix and places it incapsules (which are necessarily added at the beginning of the process). One gallon of powderedmix converts into 1,500 capsules. After the capsules are filled and polished, they are transferredto bottling, where they are placed in bottles that are then affixed with a safety seal, lid, and label.Each bottle receives 50 capsules.During March, the following results are available for the first two departments:
Overhead in both departments is applied as a percentage of…
Chapter 27 Solutions
Financial And Managerial Accounting
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