Process Costing – Packaging Department Direct materials are added 70% at the beg
ID: 2491004 • Letter: P
Question
Process Costing – Packaging Department
Direct materials are added 70% at the beginning of the process and the remaining 30% are added when the chips are 50% complete with the packaging process. Direct labor and overhead are added evenly throughout the process.
Table 8 – Unit and cost information
Cost
Physical Units
Transferred-in
Direct Materials
Direct Labor
Overhead
Beg WIP
1,000 (40% complete)
$2,450
$110.40
$165
$141.44
Transferred In
30,000
$73,500
End WIP
2,200 (30% complete)
Added during Qtr 1:
Direct Materials -- $4,835.02
Direct Labor – 1,580 hrs @ $8.10 per hour
Overhead – OH is applied based on predetermined OH rate and actual DL hours
1. Determine the number of units completed during quarter 1.
2. Compute the equivalent units using the weighted average method
3. Compute the cost per equivalent unit using the weighted average method
4. Compute the cost of goods transferred to finished goods inventory
5. Compute the ending balance in WIP, Packaging
Table 10 – Actual Results (calculate revenue and COGS)
Units sold
Sales Price
Revenue
Units sold
Cost per unit
COGS
Table 11 – DM Variances (potatoes only)
Price Variance
Usage Variance
Total Variance
Calculations:
Table 12 – Direct Labor Variances
Rate Variance
Efficiency Variance
Total Variance
Calculations:
#13 Calculations (Minimum price on special order)
Table 14 – Actual OH cost for Quarter 1
Description
Cost
Indirect Materials
$1,750
Indirect Labor
$15,000
Machine Maintenance
$1,416.20
Electricity
$1,235.75
Depreciation
$1,050
Quality Testing
$4,615
Amount of applied OH:
Amount of actual OH:
Under or Over- Applied Amount:
New COGS amount:
Cost
Physical Units
Transferred-in
Direct Materials
Direct Labor
Overhead
Beg WIP
1,000 (40% complete)
$2,450
$110.40
$165
$141.44
Transferred In
30,000
$73,500
End WIP
2,200 (30% complete)
Explanation / Answer
The number of units completed = Number of units started during the period - ending work in process + beginning work in process
= 30,000 - 2,200 + 1,000
= 28,800 units
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