Chapter 15

# Chapter 15 - CHAPTER 15 PROCESS COSTING SOLUTIONS 15.1...

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C HAPTER 15 P ROCESS C OSTING SOLUTIONS 15.1 Firms that mass produce relatively identical products 15.2 In process costing, different units of the same batch might be at different stages of completion (either in WIP or FG), whereas in job costing a job is either in process or completed. This means that under process costing, we need to allocate the costs of a batch between completed and in-process units. 15.7 Because processes often require inputs at different stages, Materials may be added at the beginning of the process, whereas conversion costs are incurred uniformly throughout the process. 15.13 Standard process costing uses predetermined rates for materials, labor, and overhead. 15.31 This series of three exercises (15.31 – 15.33) walk students through the five steps of preparing a process costing report. This particular exercise concerns the first two steps, tracking physical units and computing equivalent units. Using the information provided, we have: Total Detail for each cost pool Step 1: Track Physical Flow Materials Conversion Beginning inventory - June 1 0 Started during June 250,000 Total physical units to account for 250,000 Step 2: Compute Equivalent Units Units completed during June 175,000 175,000 (100% of 175,000) 175,000 (100% of 175,000) Units in process on June 30 75,000 75,000 (100% of 75,000) 30,000 (0.40 × 75,000) Total physical units accounted for 250,000 250,000 205,000 Notice that the percentage of completion varies between materials and conversion costs. Thus, the number of equivalent units also varies. For materials, each unit in WIP is equivalent to a finished unit as it has consumed all of the requisite materials. In contrast, each unit is only 0.40

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of a finished unit in terms of conversion costs, because the unit in WIP is only 40% complete with respect to conversion costs. 15.38 Igloo has only one cost pool because it only tracks conversion costs. Using the information provided, Igloo’s standard process costing report for January is: Total Detail Step 1: Track Physical Flow Beginning inventory – January 1 0 Started during January 150,000 Total physical units to account for 150,000 Step 2: Compute Equivalent Units Units completed during January 145,000 145,000 (100% of 145,000) Units in process on January 31 5,000 1,500 (30% of 5,000) Total physical units accounted for 150,000 146,500 Step 3: Collect costs to allocate Using predetermined rates – go to step 4 Step 4: Calculate the rate per equivalent unit
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## This note was uploaded on 02/08/2012 for the course ACG 2023 taught by Professor Goslinga during the Fall '10 term at University of Florida.

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Chapter 15 - CHAPTER 15 PROCESS COSTING SOLUTIONS 15.1...

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