4. ABC Company manufactures a product through three process departments, In the
ID: 2339145 • Letter: 4
Question
4. ABC Company manufactures a product through three process departments, In the first process,all month of September Production units: in process, September l (20% complete) Started during September in process, September 30 (60% complete) 1,000 units 5,000 units 1,500 units Manufacturing costs: Work in process, beginning Direct materials Conversion costs $14,730 $45,000 $154,440 Assume the beginning balance of work in process includes direct materials $1,770 (1) Prepare production report for September using FIFO process costing. (2) Prepare all necessary journal entries for the first process using FIFO. (3) Determine the ending balance of work in process using weighted average. Ralph Co manufactures products on a job-order basis. Job 4 is an order for 100 units. It requires $3,000 direct materials, SI,000 direct labor, and S 1,500 overhead applied based on 150% the direct labor hours. After inspection, 2 units required rework which required $80 additional direct labor costs and $60 of materials. 5. (1) If the rework is considered normal spoilage due to the nature of the job, determine the cost of Job 4. Prepare the journal entry for overhead. for overhead. entry for overhead control? (2) If the rework is considered normal spoilage, determine the cost of Job 4. Prepare the journal entry (3) If the rework is considered abnormal spoilage, determine the cost of Job 4. Prepare the journalExplanation / Answer
As per policy, we cannot able to post solution more than one question.
Answer 1
Company Name
First Process production Report
First in First out (FIFO) Method
Month ended September 30
Summary of Physical units
Units in beginning WIP inventory
1000
Units started during month
5000
Total unit to be accounted for
6000
Units completed and transferred out
(1000+5000-1500)
4500
Units in ending WIP inventory
1500
Total unit accounted for
6000
Equivalent Units of production
Particulars
Physical units
Direct material
Conversion Cost
%
units
%
units
units in beginning WIP inventory
1000
0%
0
80%
800
Units in Started and completed (4500-1000)
3500
100%
3500
100%
3500
units in ending WIP inventory
1500
100%
1500
60%
900
Equivalent Units of production
5000
5200
Summary of cost to be accounted
Direct material
Conversion Cost
Total
Cost in beginning WIP
1770
12960
14730
Cost incurred during Month (Add)
45000
154400
199400
total cost to be accounted for
46770
167360
214130
cost per Equivalent Unit
Cost incurred during Month
45000
154400
Equivalent Units of production
5000
5200
Cost per Equivalent Unit
9.000000
29.692308
38.692308
Assign costs to units transferred out and units in ending WIP inventory
cost assigned to units transferred out
Direct material
1770
Conversion Cost
12960
Cost in beginning WIP
14730
Direct material (0*9)
0
Conversion Cost (800*29.6923076923077)
23754
Cost incurred for complete beginning WIP
23754
Direct material (3500*9)
31500
Conversion Cost (3500*29.6923076923077)
103923
Cost of units in Started and completed
135423
cost assigned to units transferred out
173907
cost assigned to units ending work in progress
Direct material (1500*9)
13500
Conversion Cost (900*29.6923076923077)
26723
cost assigned to units ending work in progress
40223
Total cost assigned
214130
Step for solution
Step 1
Equivalent Units of production = Physical units multiplied by % of completion
Step 2
Calculate total cost to be accounted for
Step 3
Cost per Equivalent Unit =Cost incurred during Month / Equivalent Units of production
Step 4
Cost assigned to units transferred out = Cost in beginning WIP + Cost incurred for complete beginning WIP + Cost of units in Started and completed
Step 5
Cost assigned to units ending work in progress = equivalent units in ending WIP inventory * Cost per Equivalent Unit
For direct material 100% unit completed it means remaining 0% completed in this month.
For conversion cost 20% unit completed it means (100-20) remaining 80% completed in this month.
beginning WIP 14730 , which include 1770 for direct material and remaining (14730-1770=12960) for conversion cost
Answer 2
journal entries
date
account title
debit
credit
1
Work in progress - First Process
45000
Raw material inventory
45000
(To record direct material used in production process.)
2
Work in progress - First Process
154400
Conversion Cost
154400
(To conversion cost applied to Work in progress - First Process.)
3
Work in progress - Second Process
173907
Work in progress - First Process
173907
(To record cost of unit transferred to next process.)
Answer 3
Company Name
Assembly Department production Report
Weighted average Method
Month ended September 30
Summary of Physical units
Units in beginning WIP inventory
1000
Units started during month
5000
Total unit to be accounted for
6000
Units completed and transferred out
4500
Units in ending WIP inventory
1500
Total unit accounted for
6000
Equivalent Units of production
Particulars
Physical units
Direct material
Conversion Cost
%
units
%
units
units in beginning WIP inventory
1000
100%
1000
100%
1000
Units in Started and completed (4500-1000)
3500
100%
3500
100%
3500
units in ending WIP inventory
1500
100%
1500
60%
900
Equivalent Units of production
6000
5400
Summary of cost to be accounted
Direct material
Conversion Cost
Total
Cost in beginning WIP
1770
12960
14730
Cost incurred during Month (Add)
45000
154400
199400
total cost to be accounted for
46770
167360
214130
cost per Equivalent Unit
total cost to be accounted for
46770
167360
Equivalent Units of production
6000
5400
Cost per Equivalent Unit
7.795000
30.992593
38.787593
Assign costs to units transferred out and units in ending WIP inventory
cost assigned to units transferred out
units completed and transferred out
4500
4500
Cost per Equivalent Unit
7.795000
30.992593
cost assigned to units transferred out
35078
139467
174544
cost assigned to units ending work in progress
equivalent units in ending WIP inventory
1500
900
Cost per Equivalent Unit
7.795000
30.992593
cost assigned to units ending work in progress
11693
27893
39586
Total cost assigned
214130
Step for solution
Step 1
Equivalent Units of production = Physical units multiplied by % of completion
Step 2
Calculate total cost to be accounted for
Step 3
Cost per Equivalent Unit = total cost to be accounted for / Equivalent Units of production
Step 4
Cost assigned to units transferred out = units completed and transferred out * Cost per Equivalent Unit
Step 5
Cost assigned to units ending work in progress = equivalent units in ending WIP inventory * Cost per Equivalent Unit
As per policy, we cannot able to post solution more than one question.
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