Cornerstones of Cost Management (Cornerstones Series)
4th Edition
ISBN: 9781305970663
Author: Don R. Hansen, Maryanne M. Mowen
Publisher: Cengage Learning
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Chapter 6, Problem 40P
Jacson Company produces two brands of a popular pain medication: regular strength and extra strength. Regular strength is produced in tablet form, and extra strength is produced in capsule form. All direct materials needed for each batch are requisitioned at the start. The work orders for two batches of the products are shown below, along with some associated cost information:
In the Mixing Department, conversion costs are applied on the basis of direct labor hours. Budgeted conversion costs for the department for the year were $60,000 for direct labor and $190,000 for
In the Bottling Department, conversion costs are applied on the basis of machine hours. Budgeted conversion costs for the department for the year were $400,000. Budgeted machine hours were 20,000. It takes one-half minute of machine time to fill a bottle of 100 units.
Required:
- 1. What are the conversion costs applied in the Mixing Department for each batch? The Bottling Department?
- 2. Calculate the cost per bottle for the regular and extra strength pain medications.
- 3. Prepare the
journal entries that record the costs of the 12,000 regular strength batch as it moves through the various operations. - 4. Suppose that the direct materials are requisitioned by each department as needed for a batch. For the 12,000 regular strength batch, direct materials are requisitioned for the Mixing and Bottling departments. Assume that the amount of cost is split evenly between the two departments. How will this change the journal entries made in Requirement 3?
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Jackson Enterprises manufactures two products-a basic gizmo and an advanced model
gizmo. The company is using an activity-based costing system. They have identified three
activities for allocation of indirect costs.
Activity
Materials receiving
Production setup
Cost Driver
Number of parts
Number of setups
Inspection time
Cost-Allocation Rate
$2.00 per part
$500.00 per setup
$90 per hour
Quality inspection
A production run for the basic model is 250 units, for the advanced model, 100 units.
Each unit of product consumes the following activities:
Number of Parts
10
OA. $200.
OB. $162.
Basic Gizmo
O C. $285.
O D. $65.
Advanced Gizmo 15
Direct costs for the two products are as follows:
Direct Materials
$50.00
$95.00
The total cost of an advanced model would be
Number of Setups
1 setup
Basic Gizmo
Advanced Gizmo
per production run
1 setup
per production run
Direct Labor
$75.00
$125.00
Inspection Time
10 minutes
20 minutes
Jackson Enterprises manufactures two products-a basic gizmo and an advanced model
gizmo. The company is using an activity-based costing system. They have identified three
activities for allocation of indirect costs.
Activity
Materials receiving
Production setup
Quality inspection
Cost Driver
Number of parts
Number of setups
Inspection time
Cost-Allocation Rate
$2.00 per part
$500.00 per setup
$90 per hour
A production run for the basic model is 250 units, for the advanced model, 100 units.
Each unit of product consumes the following activities:
Number of Parts
10
Basic Gizmo
O A.
Advanced Gizmo
Direct costs for the two products are as follows:
Direct Materials
$50.00
$95.00
B.
C.
O D.
Basic Gizmo
Advanced Gizmo
$37.
15
The amount of overhead allocated to one unit of the
basic model would be
$65.
$592.
Number of Setups
1 setup
per production run
1 setup
per production run
$162.
Direct Labor
$75.00
$125.00
Inspection Time
10 minutes
20 minutes
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PBB Company manufactures high end product. Because of the high volume of this type of
product, the company employs a process cost system using the weighted average method to
determine costs. Product Parts are manufactured in the Molding Department and
transferred to the assembly Department were they are partially assembled. After assembly,
the product is sent to packaging department. Cost per unit data for the high end product
has been completed through the Molding department. Annual cost and production figures
for the assembly Department are presented below:
Production Data
Beg. Inventory 50% Complete as to Assembly materials; 20% complete 3,000
as to Conversion
units
45,000
Transferred In during the year
units
40,000
Transferred to Packaging Department
units
4,000
Ending Inventory 80% complete
units
Cost Data:
Transferred-In
Materials
Conversion
Current Period
P 1,240,800
P 97,020
P 236,470
Work in Process, beginning
82,200
6,660
11,930
Damage product are identified on inspection…
Chapter 6 Solutions
Cornerstones of Cost Management (Cornerstones Series)
Ch. 6 - What is a process? Provide an example that...Ch. 6 - Describe the differences between process costing...Ch. 6 - Prob. 3DQCh. 6 - What are transferred-in costs?Ch. 6 - Explain why transferred-in costs are a special...Ch. 6 - What is a production report? What purpose does...Ch. 6 - Can process costing be used for a service...Ch. 6 - What are equivalent units? Why are they needed in...Ch. 6 - How is the equivalent unit calculation affected...Ch. 6 - Describe the five steps in accounting for the...
Ch. 6 - Under the weighted average method, how are...Ch. 6 - Under what conditions will the weighted average...Ch. 6 - In assigning costs to goods transferred out, how...Ch. 6 - Prob. 14DQCh. 6 - What is operation costing? When is it used?Ch. 6 - Lamont Company produced 80,000 machine parts for...Ch. 6 - Lising Therapy has a physical therapist who...Ch. 6 - Fleming, Fleming, and Johnson, a local CPA firm,...Ch. 6 - During October, McCourt Associates incurred total...Ch. 6 - Tomar Company produces vitamin energy drinks. The...Ch. 6 - Apeto Company produces premium chocolate candy...Ch. 6 - Jackson Products produces a barbeque sauce using...Ch. 6 - Gunnison Company had the following equivalent...Ch. 6 - Jackson Products produces a barbeque sauce using...Ch. 6 - Morrison Company had the equivalent units schedule...Ch. 6 - Shorts Company has three process departments:...Ch. 6 - A local barbershop cuts the hair of 1,200...Ch. 6 - Friedman Company uses JIT manufacturing. There are...Ch. 6 - Lacy, Inc., produces a subassembly used in the...Ch. 6 - Softkin Company manufactures sun protection...Ch. 6 - Heap Company manufactures a product that passes...Ch. 6 - K-Briggs Company uses the FIFO method to account...Ch. 6 - The following data are for four independent...Ch. 6 - Using the data from Exercise 6.18, compute the...Ch. 6 - Holmes Products, Inc., produces plastic cases used...Ch. 6 - Dama Company produces womens blouses and uses the...Ch. 6 - Fordman Company has a product that passes through...Ch. 6 - Using the same data found in Exercise 6.22, assume...Ch. 6 - Baxter Company has two processing departments:...Ch. 6 - Tasty Bread makes and supplies bread throughout...Ch. 6 - Under either weighted average or FIFO, when...Ch. 6 - During the month of June, the mixing department...Ch. 6 - As goods are transferred from a prior process to a...Ch. 6 - During March, Hanks Manufacturing started and...Ch. 6 - Proteger Company manufactures insect repellant...Ch. 6 - Swasey Fabrication, Inc., manufactures frames for...Ch. 6 - Refer to the data in Problem 6.31. Assume that the...Ch. 6 - Hatch Company produces a product that passes...Ch. 6 - FIFO Method, Single Department Analysis, One Cost...Ch. 6 - Hepworth Credit Corporation is a wholly owned...Ch. 6 - Muskoge Company uses a process-costing system. The...Ch. 6 - Prob. 37PCh. 6 - Healthway uses a process-costing system to compute...Ch. 6 - FIFO Method, Two-Department Analysis Refer to the...Ch. 6 - Jacson Company produces two brands of a popular...Ch. 6 - Golding Manufacturing, a division of Farnsworth...Ch. 6 - Larkin Company produces leather strips for western...Ch. 6 - Novel Toys, Inc., manufactures plastic water guns....Ch. 6 - Prob. 44P
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