Chapter06 Solutions-Hansen6e

# 99 exercises 61 1 work in processcooking 90000 work

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EXERCISES 6–1 1. Work in Process—Cooking ........... 90,000 Work in Process—Dicing ......... 90,000 Work in Process—Canning ........... 175,000 Work in Process—Cooking ..... 175,000 Finished Goods .............................. 270,000 Work in Process—Canning ..... 270,000 2. WIP—Dicing WIP—Cooking WIP—Canning 120,000 90,000 90,000 175,000 175,000 270,000 110,000 100,000 30,000 25,000 5,000 Finished Goods 270,000 6–2 1. Hair cutting is a repetitive, homogeneous service. Thus, a process costing approach can be used. 2. Cost per haircut = \$ 15,000/1,500 = \$10 3. Most services require the use of direct materials. Hair cutting, for example, may use water, shampoo, and talcum. Furthermore, dentists, doctors, and fu- neral directors all use direct materials in providing services. In some cases, the cost of direct materials can be significant (consider crowns, large fillings, caskets, etc.). Certain services may use little or no direct materials, e.g., letter sorting and counseling. 100
6–3 1. The space heaters are a homogeneous, mass-produced product. Each product produced receives the same dose of manufacturing costs. 2. Unit cost = \$110,000/10,000 = \$11 per unit 6–4 1. Physical flow schedule: Units, beginning WIP ........ 0 Units completed ................. 350,000 Units started ...................... 370,000 Units, ending WIP ............... 20,000 Units to account for .......... 370,000 Units accounted for ........... 370,000 2. (a) Direct Materials (b) Conversion Costs Completed ...................... 350,000 350,000 Ending WIP: (20,000 × 100%) ......... 20,000 (20,000 × 80%) ........... 16,000 Equivalent units ............. 370,000 366,000 3. a. Unit direct materials = \$1,850,000/370,000 = \$5.00 b. Unit conversion costs = (\$366,000 + \$823,500*)/366,000 = 3.25 c. Total manufacturing unit cost = \$ 8.25 *Overhead applied: Direct labor cost: 1.5 × \$366,000 = \$549,000 Inspections: \$20 × 3,725 = 74,500 Purchasing: \$500 × 400 = 200,000 Total \$823,500 4. a. Cost of units transferred out: 350,000 × \$8.25 = \$2,887,500 b. Journal entry: Work in Process—Welding .......................... 2,887,500 Work in Process—Plate Cutting .......... 2,887,500 c. Cost of EWIP = (20,000 × \$5.00) + (16,000 × \$3.25) = \$152,000 101

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6–5 Antler Company Mixing Department Production Report for 2010 Unit Information Units to account for: Units in beginning WIP 0 Units started 150,000 Units to account for 150,000 Units accounted for: Equivalent Units Physical Direct Conversion Flow Materials Costs Units completed 126,000 126,000 126,000 Units in ending WIP 24,000 24,000 22,800 Total units accounted for 150,000 150,000 148,800 Cost Information Costs to account for: Direct Conversion Materials Costs Total Costs in beginning WIP \$ 0 \$ 0 \$ 0 Costs added by department 150,000 744,000 894,000 Total costs to account for \$150,000 \$744,000 \$894,000 Cost per equivalent unit \$ 1.00 \$ 5.00 \$ 6.00 Costs accounted for: Units completed (126,000 × \$6.00) \$756,000 Ending work in process (24,000 × \$1.00) + (22,800 × \$5.00) 138,000 Total costs accounted for \$894,000 102
6–6 1. Physical flow schedule: Units, beginning work in process ........................... 60,000 Units started ............................................................. 75,000 Units to account for ................................................. 135,000 Units completed and transferred out: Started and completed ........................................ 63,000 From beginning work in process ....................... 60,000 Units, ending work in process ................................. 12,000 Total units accounted for ......................................... 135,000 2. Equivalent units—Weighted average method: Direct Materials Conversion Costs Units completed .................................. 123,000 123,000 Units, ending work in process: 12,000 × 100% ................................. 12,000 12,000 × 25% ................................... 3,000 Equivalent units of output .................. 135,000 126,000 3. Equivalent units—FIFO method: Direct Materials Conversion Costs Units started and completed 63,000 63,000 Units, beginning work in process: 60,000 × 0% ..................................... 0

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