Chapter 20 Exercises.pdf - 1 Award 10.00 points Problems...

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Unformatted text preview: 1. Award: 10.00 points Problems? Adjust credit for all students. Select each of the items with the best numbered description of its purpose. Description Items 1. Notifies the materials manager to send materials to a production department. Materials requisition 2. Holds costs of indirect materials, indirect labor, and similar costs until assigned to production. Factory overhead account 3. Holds costs of direct materials, direct labor, and applied overhead until products are transferred from production to finished goods (or another department). Goods in process inventory account 4. Standardizes partially completed units into equivalent completed units. Equivalent units of production 5. Holds costs of finished products until sold to customers. Finished goods inventory account 6. Describes the activity and output of a production department for a period. Process cost summary 7. Holds costs of materials until they are used in production or as factory overhead. Raw materials inventory account Explanation: No further explanation details are available for this problem. References eBook & Resources Worksheet Learning Objective: 20­C1 Explain process operations and the way they differ from job order operations. Difficulty: Easy Learning Objective: 20­P1 Record the flow of direct materials costs in process cost accounting. Learning Objective: 20­A1 Compare process cost accounting and job order cost accounting. Learning Objective: 20­P2 Record the flow of direct labor costs in process cost accounting. Learning Objective: 20­P3 Record the flow of factory overhead costs in process cost accounting. 2. Award: 10.00 points Problems? Adjust credit for all students. Prepare journal entries to record the following production activities. 1. Purchased $80,000 of raw materials on credit. Event 1 General Journal Debit Raw materials inventory Accounts payable Credit 80,000 80,000 2. Used $42,000 of direct materials in production. Event 1 General Journal Goods in process inventory Raw materials inventory Debit Credit 42,000 42,000 3. Used $22,500 of indirect materials. Event 1 General Journal Factory overhead Raw materials inventory Explanation: No further explanation details are available for this problem. Hints Hint #1 References Debit eBook & Resources Credit 22,500 22,500 3. Award: 10.00 points Problems? Adjust credit for all students. Prepare journal entries to record the following production activities. 1. Incurred total labor cost of $95,000, which is paid in cash. Event 1 General Journal Factory payroll Debit Cash Credit 95,000 95,000 2. Used $75,000 of direct labor in production. Event 1 General Journal Goods in process inventory Factory payroll Debit Credit 75,000 75,000 3. Used $20,000 of indirect labor. Event 1 General Journal Factory overhead Factory payroll Explanation: No further explanation details are available for this problem. Hints Hint #1 Debit References eBook & Resources Credit 20,000 20,000 4. Award: 10.00 points Problems? Adjust credit for all students. Prepare journal entries to record the following production activities. 1. Paid overhead costs (other than indirect materials and indirect labor) of $38,750. Event 1 General Journal Factory overhead Debit Cash Credit 38,750 38,750 2. Used $75,000 of direct labor in production. Applied overhead at 110% of direct labor costs. Event 1 General Journal Goods in process inventory Factory overhead Explanation: 2. Applied overhead: $75,000 × 110% = $82,500 Hints Hint #1 References eBook & Resources Debit Credit 82,500 82,500 5. Award: 10.00 points Problems? Adjust credit for all students. Prepare journal entries to record the following production activities. 1. Transferred completed products with a cost of $135,600 to finished goods inventory. Event 1 General Journal Finished goods inventory Goods in process inventory Debit Credit 135,600 135,600 2. Sold $315,000 of products on credit. Their cost is $175,000. Event 1 General Journal Accounts receivable Sales 2 Cost of goods sold Explanation: No further explanation details are available for this problem. Hint #1 References eBook & Resources Credit 315,000 315,000 Finished goods inventory Hints Debit 175,000 175,000 6. Award: 10.00 points Problems? Adjust credit for all students. Laffer Lumber produces bagged bark for use in landscaping. Production involves packaging bark chips in plastic bags in a bagging department. The following information describes production operations for October. Direct materials used Direct labor used Predetermined overhead rate (based on direct labor) Goods transferred from bagging to finished goods Bagging Department $ 522,000 $ 130,000 175% $ (595,000) The company's revenue for the month totaled $950,000 from credit sales, and its cost of goods sold for the month is $540,000. 1. Prepare journal entry dated October 31 to record its October production activities for direct material usage. Date Oct 31 General Journal Goods in process inventory Raw materials inventory Debit Credit 522,000 522,000 2. Prepare journal entry dated October 31 to record its October production activities for direct labor usage. Date Oct 31 General Journal Goods in process inventory Factory payroll Debit Credit 130,000 3. Prepare journal entry dated October 31 to record its October production activities for overhead allocation. 130,000 Date Oct 31 General Journal Goods in process inventory Factory overhead Debit Credit 227,500 227,500 4. Prepare journal entry dated October 31 to record its October production activities for goods transferred from production to finished goods. Date Oct 31 General Journal Finished goods inventory Goods in process inventory Debit Credit 595,000 595,000 5. Prepare journal entries dated October 31 to record its October activities for credit sales. Date Oct 31 General Journal Accounts receivable Sales Oct 31 Cost of goods sold Explanation: 3. Overhead applied: $130,000 × 175% = $227,500 Hint #1 References eBook & Resources Credit 950,000 950,000 Finished goods inventory Hints Debit 540,000 540,000 7. Award: 10.00 points Problems? Adjust credit for all students. During April, the production department of a process manufacturing system completed a number of units of a product and transferred them to finished goods. Of these transferred units, 60,000 were in process in the production department at the beginning of April and 240,000 were started and completed in April. April's beginning inventory units were 60% complete with respect to materials and 40% complete with respect to labor. At the end of April, 82,000 additional units were in process in the production department and were 80% complete with respect to materials and 30% complete with respect to labor. 1. Compute the number of units transferred to finished goods. Units in beginning inventory 60,000 Units started and completed 240,000 300,000 Total units transferred to finished goods 2. Compute the number of equivalent units with respect to both materials used and labor used in the production department for April using the weighted­average method. Equivalent units of production ­ weighted average Units % Materials % Labor 300,000 100% 300,000 100% Units of ending goods in process 82,000 80% 65,600 30% 382,000 Equivalent units of production Explanation: 2. Equivalent Units of Production–Weighted Average Equivalent Units of Production Units completed & transferred out (300,000 × 100%) Units of ending goods in process Direct materials (82,000 × 80%) Direct labor (82,000 × 30%) Equivalent units of production Hints Hint #1 EUP­ Materials Units completed and transferred out References eBook & Resources Direct Direct Materials Labor 300,000 300,000 65,600 24,600 365,600 324,600 365,600 EUP­ Labor 300,000 24,600 324,600 8. Award: 10.00 points Problems? Adjust credit for all students. During April, the production department of a process manufacturing system completed a number of units of a product and transferred them to finished goods. Of these transferred units, 60,000 were in process in the production department at the beginning of April and 240,000 were started and completed in April. April’s beginning inventory units were 60% complete with respect to materials and 40% complete with respect to labor. At the end of April, 82,000 additional units were in process in the production department and were 80% complete with respect to materials and 30% complete with respect to labor. The production department had $850,000 of direct materials and $650,000 of direct labor cost charged to it during April. Also, its beginning inventory included $118,840 of direct materials cost and $47,890 of direct labor. 1&2.Using the weighted­average method, compute the direct materials cost and the direct labor cost per equivalent unit and assign April's costs to the department’s output. (Round "Cost per EUP" to 2 decimal places.) Equivalent units of production (EUP)­ weighted average method Units % Materials EUP­ Materials % Labor Units completed and transferred out 300,000 100% 300,000 100% Units of ending goods in process 82,000 80% 65,600 30% Equivalent units of production 382,000 24,600 324,600 Materials Costs of beginning goods in process Costs incurred this period $ Labor 118,840 $ 850,000 Total costs Costs ÷ Equivalent units of production EUP $ Cost per equivalent unit of production (rounded to 2 decimals) $ Direct materials ­ prior period $ Direct labor ­ prior period 47,890.00 Direct materials ­ current period 850,000.00 Direct labor ­ current period Total costs to account for: 968,840 Costs 365,600 EUP 2.65 Total costs accounted for 118,840.00 1,666,730.00 1,666,730.00 $ Difference due to rounding cost/unit 0.00 Cost Assignment and Reconciliation Cost of units transferred out EUP Cost per EUP Direct materials 300,000 $ 2.65 Direct labor 300,000 $ 2.15 Total cost $ 795,000.00 645,000.00 Total costs transferred out $ 1,440,000.00 Costs of ending goods in process EUP Cost per EUP Total cost Direct materials 65,600 $ 2.65 173,840.00 Direct labor 24,600 $ 2.15 52,890.00 Total cost of ending goods in process 226,730.00 $ 1,666,730.00 Total costs accounted for Explanation: 1&2. 60,000 240,000 300,000 Equivalent Units of Production Units completed & transferred out (300,000 × 100%) Units of ending goods in process Direct materials (82,000 × 80%) Direct labor (82,000 × 30%) Equivalent units of production Direct Direct Materials Labor 300,000 300,000 65,600 24,600 365,600 324,600 $ 697,890 324,600 $ 650,000.00 $ 47,890 650,000 Total costs to account for: 300,000 365,600 Cost per equivalent unit of production Units in beginning inventory Units started and completed Total units transferred to finished goods EUP­ Labor 2.15 Cost per equivalent unit Costs of beginning goods in process Costs incurred this period Total costs ÷ Equivalent units of production Cost per equivalent unit of production Direct Materials $ 118,840 850,000 $ 968,840 365,600 $ 2.65 per EUP Direct Labor $ 47,890 650,000 697,890 324,600 $ 2.15 per EUP Cost Assignment and Reconciliation Costs of units transferred out Direct materials (300,000 EUP × $2.65 per EUP) Direct labor (300,000 EUP × $2.15 per EUP) Total costs transferred out Costs of ending goods in process Direct materials (65,600 EUP × $2.65 per EUP) Direct labor (24,600 EUP × $2.15 per EUP) Total costs of ending goods in process Total costs accounted for* $ 795,000 645,000 173,840 52,890 *Equals costs to account for of $1,666,730 ($968,840 + $697,890). Hints Hint #1 References eBook & Resources $ 1,440,000 226,730 $ 1,666,730 9. Award: 10.00 points Problems? Adjust credit for all students. During April, the production department of a process manufacturing system completed a number of units of a product and transferred them to finished goods. Of these transferred units, 60,000 were in process in the production department at the beginning of April and 240,000 were started and completed in April. April's beginning inventory units were 60% complete with respect to materials and 40% complete with respect to labor. At the end of April, 82,000 additional units were in process in the production department and were 80% complete with respect to materials and 30% complete with respect to labor. Prepare the number of equivalent units with respect to both materials used and labor used in the production department for April using the FIFO method. Equivalent units of production ­ FIFO Units % Materials % Labor EUP­ Labor 60,000 40% 24,000 60% 36,000 Units started and completed 240,000 100% 240,000 100% 240,000 Units in ending work in process 82,000 80% 65,600 30% 142,000 Equivalent units of production 329,600 Explanation: Equivalent units of production–FIFO Equivalent Units of Production Units to complete beginning goods in process Direct materials (60,000 × 40%) Direct labor (60,000 × 60%) Units started and completed Units in ending work in process Direct materials (82,000 × 80%) Direct labor (82,000 × 30%) Equivalent units of production Hints Hint #1 EUP­ Materials Units to complete beginning goods in process References eBook & Resources Direct Materials Direct Labor 24,000 36,000 240,000 240,000 65,600 24,600 329,600 300,600 24,600 300,600 10. Award: 10.00 points Problems? Adjust credit for all students. During April, the production department of a process manufacturing system completed a number of units of a product and transferred them to finished goods. Of these transferred units, 60,000 were in process in the production department at the beginning of April and 240,000 were started and completed in April. April’s beginning inventory units were 60% complete with respect to materials and 40% complete with respect to labor. At the end of April, 82,000 additional units were in process in the production department and were 80% complete with respect to materials and 30% complete with respect to labor. The production department had $850,000 of direct materials and $650,000 of direct labor cost charged to it during April. Also, its beginning inventory included $118,840 of direct materials cost and $47,890 of direct labor. Using the FIFO method, prepare the direct materials cost and the direct labor cost per equivalent unit and assign April's costs to the department’s output. (Round "Cost per EUP" to 2 decimal places.) Equivalent units of production (EUP)­ FIFO method Units % Materials EUP­ Materials % Labor EUP­ Labor Units to complete beginning goods in process 60,000 40% 24,000 60% 36,000 Units started and completed 240,000 100% 240,000 100% 240,000 Units in ending work in process 82,000 80% 65,600 30% 382,000 Equivalent units of production Cost per equivalent unit of production Costs incurred this period 300,600 Materials $ Total costs Costs ÷ Equivalent units of production EUP $ Cost per equivalent unit of production (rounded to 2 decimals) $ Labor 850,000 $ 850,000 Costs 329,600 EUP 2.58 Direct materials ­ prior period $ Direct labor ­ prior period 47,890.00 Direct materials ­ current period 850,000.00 Direct labor ­ current period 650,000.00 $ Total costs accounted for * Difference due to rounding cost/unit 118,840.00 1,666,730.00 1,666,394.00 $ 336.00 * Assignment of costs to output of department Costs of goods transferred out Cost of beginning goods in process inventory Direct materials Direct labor Total cost $ 118,840.00 47,890.00 Total beginning inventory value Costs to complete beginning goods in process $ EUP Cost per EUP 24,000 $ 2.58 $ 61,920.00+/-1 Direct labor 36,000 $ 2.16 77,760.00+/-1 Total costs to complete 139,680.00 Total cost of units in beginning inventory Cost of units started and completed this period $ 306,410.00+/-2 EUP Cost per EUP Direct materials 240,000 $ 2.58 Direct labor 240,000 $ 2.16 Total cost $ 619,200.00 518,400.00 Total cost of units started and completed 1,137,600.00 Total costs of goods transferred out Cost of ending goods in process inventory $ 1,444,010.00 EUP Cost per EUP Direct materials 65,600 $ 2.58 Direct labor 24,600 $ 2.16 Total costs of ending goods in process Total cost $ 169,248.00 53,136.00 222,384.00 $ 1,666,394.00 Total costs accounted for Explanation: Equivalent units of production–FIFO Equivalent Units of Production Units to complete beginning goods in process 166,730.00 Total cost Direct materials Direct Materials Direct Labor $ 650,000 650,000 300,600 $ Total costs to account for: Total costs to account for: 24,600 329,600 2.16 Direct materials (60,000 × 40%) Direct labor (60,000 × 60%) Units started and completed Units in ending work in process Direct materials (82,000 × 80%) Direct labor (82,000 × 30%) Equivalent units of production 24,000 36,000 240,000 240,000 65,600 24,600 329,600 300,600 Cost per equivalent unit Costs incurred this period ÷ Equivalent units of production Cost per equivalent unit of production Direct Materials $ 850,000 329,600 $ 2.58 per EUP Direct Labor $ 650,000 300,600 $ 2.16 per EUP Assignment of costs to output of department–FIFO Costs of goods transferred out Cost of beginning goods in process inventory Direct materials Direct labor Costs to complete beginning goods in process Direct materials (24,000 EUP × $2.58 per EUP) Direct labor (36,000 EUP × $2.16 per EUP) Total costs to complete Cost of units started and completed this period Direct materials (240,000 EUP × $2.58 per EUP) Direct labor (240,000 EUP × $2.16 per EUP) Total cost of units started and completed Total costs of goods transferred out Cost of ending goods in process inventory Direct materials (65,600 EUP × $2.58 per EUP) Direct labor (24,600 EUP × $2.16 per EUP) Total costs of ending goods in process Total costs accounted for $ 118,840.00 47,890.00 $ 166,730.00 61,920.00 77,760.00 139,680.00 619,200.00 518,400.00 1,137,600.00 1,444,010.00 169,248.00 53,136.00 222,384.00 $ 1,666,349.00 *Equals costs to account for of $1,666,730 after a rounding difference of $336. Hints Hint #1 References eBook & Resources 11. Award: 10.00 points Problems? Adjust credit for all students. The production department in a process manufacturing system completed 80,000 units of product and transferred them to finished goods during a recent period. Of these units, 24,000 were in process at the beginning of the period. The other 56,000 units were started and completed during the period. At period end, 16,000 units were in process. Prepare the department’s equivalent units of production with respect to direct materials under each of three separate assumptions using the Weighted ­average method for process costing. Equivalent units of production (EUP)­ weighted average method 1. All direct materials are added to products when processing begins. Units % Materials EUP­ Materials Goods completed 80,000 100% 80,000 Ending goods in process Total EUP 16,000 96,000 100% 16,000 96,000 2. Direct materials are added to products evenly throughout the process. Beginning goods in process inventory was 50% complete, and ending goods in process inventory was 75% complete. Units % Materials EUP­ Materials Goods completed 80,000 100% 80,000 Ending goods in process 16,000 75% 12,000 Total EUP 92,000 96,000 3. One­half of direct materials is added to products when the process begins and the other half is added when the process is 75% complete as to direct labor. Beginning goods in process inventory is 40% complete as to direct labor, and ending goods in process inventory is 60% complete as to direct labor. Units % Materials EUP­ Materials Goods completed 80,000 100% 80,000 Ending goods in process 16,000 50% 8,000 Total EUP Explanation: 1. EUP for Materials Goods completed (80,000 EUP × 100%) = 80,000 Ending goods in process (16,000 EUP × 100%) = 16,000 2. EUP for Materials Goods completed (80,000 EUP × 100%)= 80,000 Ending goods in process (16,000 EUP × 75%) = 12,000 3. EUP for Materials Goods completed (80,000 EUP × 100%) = 80,000 Ending goods in process (16,000 EUP × 50%) = 8000 96,000 88,000 Hints Hint #1 References eBook & Resources 12. Award: 10.00 points Problems? Adjust credit for all students. The production department in a process manufacturing system...
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