Chapter 3 PROBLEM SET A.docx - Chapter 3 PROBLEM SET A...

Chapter 3 PROBLEM SET
A
Maria Edvenna Young
Problem 3-2A
1.
Direct Direct
Equivalent units of production Materials Labor
Units completed & transferred out ....................... 700,000 700,000
Units of ending goods in process .........................
Direct materials (180,000 x 100%) ................... 180,000
Direct labor (180,000 x 30%) ............................ ______ 54,000
Equivalent units of production .............................. 880,000 754,000
2.
Cost per equivalent unit of production
Direct
Materials
Direct
Labor
Costs of beginning goods in process ................ $ 420,000 $ 139,000
Costs incurred this period .................................. 2,220,000 3,254,000
Total costs ............................................................ $2,640,000 $3,393,000
÷ Equivalent units of production ........................ 880,000 EUP 754,000 EUP
Cost per equivalent unit of production .............. $3.00 per EUP $4.50 per EUP
3. Assigning product costs to units
Costs transferred out
Direct materials (700,000 EUPx$3.00 per EUP) ......... $2,100,000
Direct labor (700,000 EUP x $4.50 per EUP) .............. 3,150,000
Total costs transferred out .......................................... $5,250,000
Cost of ending goods in process
Direct materials(180,000 EUP x $3.00 per EUP) ........ 540,000
Direct labor (54,000 EUP x $4.50 per EUP) ................ 243,000
Total costs of ending goods in process .................... 783,000
Total costs accounted for* ............................................ $6,033,000
*This equals the sum of the total direct materials cost and the
total direct labor costs ($2,640,000 + $3,393,000 = $6,033,000).
4.
MEMORANDUM
To: Plant Manager

From: Accounting
Subject: Percentage of Completion Error Analysis
If an error were made in determining the percentage of completion for the units in ending
inventory with respect to labor, then the cost per equivalent unit of production and cost of
direct labor for transferred units are overstated and total cost of ending goods in process
for direct labor and overall cost ending inventory are understated.
Problem 3-3A
a.
Mar 31 Raw Materials Inventory ................................................ 250,000
Accounts Payable ................................................... 250,000
Raw materials purchased.
b.
Mar 31 Goods in Process Inventory .......................................... 168,000
Raw Materials Inventory .......................................... 168,000
Direct materials used in production.
c.