Review Exercises 1. (CMA) JC Company uses a process-costing system. A unit of pr
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Question
Review Exercises
1. (CMA) JC Company uses a process-costing system. A unit of product passes through three departments—Molding, Assembly, and Finishing—before it is completed. The following activity took place in the Finishing Department during May:
Units
Work in process, May 1
1,400
Transferred in from the Assembly Department
14,000
Spoilage
700
Completed and transferred out to finished goods inventory
11,200
Direct materials are added at the beginning of the processing in the Finishing Department without changing the number of units processed. Conversion costs are added evenly throughout the process. The work-in-process inventory was 70% complete as to conversion costs on May 1 and 40% complete as to conversion costs on May 31. All spoilage is detected at the inspection point, which occurs at the end of the production process; 560 of the units spoiled are considered normal spoilage.
JC Company uses the weighted-average method. The equivalent unit costs for May are as follows:
Equivalent Unit Cost
Transferred-in costs
$5.00
Direct materials
1.00
Conversion costs
3.00
Total manufacturing cost
$9.00
a. Compute the equivalent units of transferred-in costs, direct materials, and conversion costs.
b. Compute the cost of units completed and transferred from the Finishing Department to finished goods inventory during May.
c. Compute the cost assigned to the Finishing Department’s work-in-process inventory on May 31.
d. Compute the cost of abnormal spoilage.
e. Compute the total transferred-in costs of the Finishing Department during May, assuming the transferred-in costs component of the work-in-process inventory of the Finishing Department on May 1 amounted to $6,300.
2. Boucher Company uses a job-costing system. During November, the following costs are incurred on Job 109 to manufacture 200 motors:
Original costs:
Direct materials
$ 6,600
Direct manufacturing labor
8,000
Manufacturing overhead allocated (150% of direct manufacturing labor)
12,000
Total
$26,600
Direct costs of reworking 10 motors:
Direct materials
$1,000
Direct manufacturing labor
1,600
Total
$2,600
a. Prepare the journal entry to record the rework costs, assuming the rework is attributable specifically to Job 109.
b. Compute the cost per finished motor for Job 109, assuming the rework is attributable specifically to this job.
c. Prepare the journal entry to record the rework costs, assuming the rework is common to all jobs.
d. Compute the cost per finished motor for Job 109, assuming the rework is common to all jobs.
Explanation / Answer
solution 1-a) The equivalent units of transferred-in costs, direct materials, and conversion costs:
a. Compute the equivalent units of transferred-in costs, direct materials, and conversion costs.
Ans: Cost of opening workin process = $9660 (as per table shown above)
b. Compute the cost of units completed and transferred from the Finishing Department to finished goods inventory during May.
Ans: Introduced and completed and transferred to finished goods inventory = $88200
c. Compute the cost assigned to the Finishing Department’s work-in-process inventory on May 31.
Ans: cost assigned to the Finishing Department’s closing work-in-process inventory= $29232
d. Compute the cost of abnormal spoilage.
Ans.: $700 + 140 + 420 = $1260
e. Compute the total transferred-in costs of the Finishing Department during May, assuming the transferred-in costs component of the work-in-process inventory of the Finishing Department on May 1 amounted to $6,300.
Ans: total transferred-in costs of the Finishing Department during May = $76300 (as per table provided)
Units Particulars Transfered in Costs Equivalent Units & costs Materials Costs $ Conversions cost Costs $ Total 1400 Opening Work in process $6300 1400 units $1400 420 units $1260 $8960 14000 Introduced and completed $49000 9800 units $9800 9800 units $29400 $88200 (140) spoilage $700 $140 $420 Closing Work in process $20300 4060 $4060 1624 $4872 $29232 15400 Total $76300 13860 11844 $126392Related Questions
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