Homework%20Ch%2017%20Key - Student _ ACCT 3270 Homework...

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Student _______________________ ACCT 3270 Homework Chapter 17 1. The Parson Valve Corporation was recently formed to produce a brass valve that forms an essential part of a compressor manufactured by a major corporation. The direct materials are added at the start of the production process while conversion costs are added uniformly throughout the production process. September is Parson's first month of operations, and therefore, there was no beginning inventory. Direct materials cost for the month totaled $1,400,000, while conversion costs equaled $1,800,000. Accounting records indicate that 800,000 valves were started in September and 700,000 valves were completed. Ending inventory was 20% complete as to conversion costs. Required : a. What is the total manufacturing cost per valve for September? b. Allocate the total costs between the completed valves and the valves in ending inventory. Answer: a. Direct Materials Conversion Costs Total Cost to account for $1,400,000 $1,800,000 $3,200,000 Divided by equiv. units 800,000 720,000 Cost per equivalent units $1.75 $2.50 $4.25 Equivalent unit for conversion costs = 700,000 completed + (100,000 × 0.2 completed) = 700,000 + 20,000 = 720,000 b. Completed units = $4.25 × 700,000 = $2,975,000 Ending work in process = Direct materials = 100,000 × $1.75 = $ 175,000 Conversion costs = 20,000 × $2.50 = 50,000 Total $225,000
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2. Cedar Rapids Chemical placed 220,000 liters of direct materials into the mixing process. At the end of the month, 10,000 liters were still in process, 30% converted as to labor and factory overhead. All direct materials are placed in mixing at the beginning of the process and conversion costs occur evenly during the process. Cedar Rapids Chemical uses weighted-average costing.
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This note was uploaded on 10/12/2011 for the course ECON 101 taught by Professor Mikson during the Spring '08 term at Aarhus Universitet.

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Homework%20Ch%2017%20Key - Student _ ACCT 3270 Homework...

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