This is for E18-17 in Horngren\'s Cost Accounting ISBN: 978-0-13-342885-8 Weight
ID: 2716889 • Letter: T
Question
This is for E18-17 in Horngren's Cost Accounting ISBN: 978-0-13-342885-8
Weighted Average method, spoilage, equivalent units. Consider the following data for November 2014 from Gray Manufacturing Company, which makes silk pennants and uses a process-costing system. All direct materials are added at the begining of the process, and convernsion costs are added evenly during the process. Spoilage is detected upon inspection at the completion of the process. Spoiled units are disposed of at zero net disposal value. Gray Manufacturing uses weighted-average method of process costing.
(a) degree of completion: direct materials, 100%; conversion costs, 50%
(b) degree of completion; direct materials, 100%; conversion costs, 30%
Compute equivalent units for direct materials and conversion costs. Show physical units in the first column of your schedule.
The following questions are extension of E18-17
E18-18 Weighted-average method, assigning costs
For the data in exercise 18-17, summarize the total costs to account for; calculate the cost per equivalent unit for direct materials and conversion costs; and assign costs to units completed and transferred out(including normal spoilage), to abnormal spoilage and to units in ending work in process inventory
E18-19 FIFO method, spoilage, equivalent units. Refer to the information in E18-17. Suppose Gray Manufacturing Company uses the FIFO method of process costing instead of the weighted average method. Compute equivalent units for direct materials and conversion costs. Show physical units in the first column of your schedule.
E18-20 FIFO method, assigning costs
For the data in E18-17, use the FIFO method to summarize the totals costs to account for; calculate the cost per equivalent unit for direct materials and conversion costs; and assign costs to units completed and transferred out(including normal spoilage) to abnormal spoilage, and to units in ending work in process.
Physical Units Direct Materials Conversion costs work in process Nov. 1(a) 1000 1423 1110 started in Nov. 2014 ? Good units completed and transferred out during Nov. 2014 9000 Normal Spoilage 100 Abnormal spoilage 50 Work In Process, Nov. 30(b) 2000 Total Costs added During Nov. 2014 12180 27750Explanation / Answer
Answer:
Solution Exhibit 18-17 calculates equivalent units of work done to date for direct materials and conversion costs.
SOLUTION EXHIBIT 18-17
Summarize Output in Physical Units and Compute Output in Equivalent Units;
Weighted-Average Method of Process Costing with Spoilage,
Gray Manufacturing Company for November 2014.
(Step 1)
(Step 2)
Equivalent Units
Flow of Production
Physical
Units
Direct
Materials
Conversion
Costs
Work in process, beginning (given)
Started during current period
To account for
Good units completed and transferred out
during current period:
Normal spoilage*
100 ´ 100%; 100 ´ 100%
Abnormal spoilage†
50 ´ 100%; 50 ´100%
Work in process, ending‡ (given)
2,000 ´ 100%; 2,000 ´ 30%
Accounted for
Equivalent units of work done to date
1,000
10,150a
11,150
9,000
100
50
2,000
11,150
9,000
100
50
2,000
11,150
9,000
100
50
600
9,750
a From below, 11,150 total units are accounted for. Therefore, units started during current period must be = 11,150 – 1,000 = 10,150.
*Degree of completion of normal spoilage in this department: direct materials, 100%; conversion costs, 100%.
†Degree of completion of abnormal spoilage in this department: direct materials, 100%; conversion costs, 100%.
‡Degree of completion in this department: direct materials, 100%; conversion costs, 30%.
18-18 Weighted-average method, assigning costs (continuation of 18-17).
Solution Exhibit 18-18 summarizes total costs to account for, calculates the costs per equivalent unit for direct materials and conversion costs, and assigns total costs to units completed and transferred out (including normal spoilage), to abnormal spoilage, and to units in ending work in process.
SOLUTION EXHIBIT 18-18
Summarize Total Costs to Account For, Compute Cost per Equivalent Unit, and Assign Total Costs to Units Completed, to Spoiled Units, and to Units in Ending Work in Process;
Weighted-Average Method of Process Costing,
Gray Manufacturing Company, November 2014.
Total
Production
Costs
Direct
Materials
Conversion
Costs
(Step 3) Work in process, beginning (given)
Costs added in current period (given)
Total costs to account for
(Step 4) Costs incurred to date
Divided by equivalent units of work done to date
Cost per equivalent unit
(Step 5) Assignment of costs
Good units completed and transferred out (9,000 units)
$ 2,533
39,930
$42,463
$ 1,423
12,180
$13,603
$13,603
¸11,150
$ 1.22
$ 1,110
27,750
$28,860
$28,860
¸ 9,750
$ 2.96
Costs before adding normal spoilage
Normal spoilage (100 units)
(A) Total cost of good units completed & transf. out
(B) Abnormal spoilage (50 units)
(C) Work in process, ending (2,000 units)
(A)+(B)+(C) Total costs accounted for
$37,620
418
38,038
209
4,216
$42,463
(9,000# ´ $1.22) + (9,000# ´ $2.96)
(100# ´ $1.22) + (100# ´ $2.96)
(50# ´ $1.22) + (50# ´ $2.96)
(2,000#´ $1.22) + (600#´ $2.96)
$13,603 + $28,860
#Equivalent units of direct materials and conversion costs calculated in Step 2 in Solution Exhibit 18-17.
18-19 FIFO method, spoilage, equivalent units.
Solution Exhibit 18-19 calculates equivalent units of work done in the current period for direct materials and conversion costs.
SOLUTION EXHIBIT 18-19
Summarize Output in Physical Units and Compute Output in Equivalent Units;
First-in, First-out (FIFO) Method of Process Costing with Spoilage,
Gray Manufacturing Company for November 2014.
(Step 1)
(Step 2)
Equivalent Units
Flow of Production
Physical
Units
Direct
Materials
Conversion
Costs
Work in process, beginning (given)
Started during current period
To account for
Good units completed and transferred out during current period:
From beginning work in process||
1,000 ´ (100% -100%); 1,000 ´ (100% - 50%)
Started and completed
8,000 ´ 100%; 8,000 ´ 100%
Normal spoilage*
100 ´ 100%; 100 ´ 100%
Abnormal spoilage†
50 ´ 100%; 50 ´ 100%
Work in process, ending‡
2,000 ´ 100%; 2,000 ´ 30%
Accounted for
Equivalent units of work done in current period
1,000
10,150a
11,150
1,000
8,000#
100
50
2,000
____
11,150
0
8,000
100
50
2,000
10,150
500
8,000
100
50
600
9,250
a From below, 11,150 total units are accounted for. Therefore, units started during current period must be 11,150 – 1,000 = 10,150.
||Degree of completion in this department: direct materials, 100%; conversion costs, 50%.
#9,000 physical units completed and transferred out minus 1,000 physical units completed and transferred out from beginning work-in-process inventory.
*Degree of completion of normal spoilage in this department: direct materials, 100%; conversion costs, 100%.
†Degree of completion of abnormal spoilage in this department: direct materials, 100%; conversion costs, 100%.
‡Degree of completion in this department: direct materials, 100%; conversion costs, 30%.
18-20 FIFO method, assigning costs (continuation of 18-19).
Solution Exhibit 18-20 summarizes total costs to account for, calculates the costs per equivalent unit for direct materials and conversion costs, and assigns total costs to units completed and transferred out (including normal spoilage), to abnormal spoilage, and to units in ending work in process.
SOLUTION EXHIBIT 18-20
Summarize Total Costs to Account For, Compute Cost per Equivalent Unit, and Assign Total Costs to Units Completed, to Spoiled Units, and to Units in Ending Work in Process;
FIFO Method of Process Costing,
Gray Manufacturing Company, November 2014.
Total
Production
Costs
Direct
Materials
Conversion
Costs
(Step 3) Work in process, beginning (given)
Costs added in current period (given)
Total costs to account for
(Step 4) Costs added in current period
Divided by equivalent units of work done in current period
Cost per equivalent unit
(Step 5) Assignment of costs:
Good units completed and transferred out (9,000 units)
$ 2,533
39,930
$42,463
$ 1,423
12,180
$13,603
$12,180
¸10,150
$ 1.20
$ 1,110
27,750
$28,860
$27,750
¸ 9,250
$ 3
Work in process, beginning (1,000 units)
Costs added to beg. work in process in current period
Total from beginning inventory before normal spoilage
Started and completed before normal spoilage (8,000 units)
Normal spoilage (100 units)
(A) Total costs of good units completed and transferred out
(B) Abnormal spoilage (50 units)
(C) Work in process, ending (2,000 units)
(A)+(B)+(C) Total costs accounted for
$ 2,533
1,500
4,033
33,600
420
38,053
210
4,200
$42,463
$1,423 + $1,110
(0a ´ $1.20) + (500a ´ $3)
(8,000a ´ $1.20) + (8,000a ´ $3)
(100a ´ $1.20) + (100a ´ $3)
(50a ´ $1.20) + (50a ´ $3)
(2,000a´ $1.20) + (600a´ $3)
$13,603 + $28,860
a Equivalent units of direct materials and conversion costs calculated in Step 2 in Solution Exhibit 18-19.
(Step 1)
(Step 2)
Equivalent Units
Flow of Production
Physical
Units
Direct
Materials
Conversion
Costs
Work in process, beginning (given)
Started during current period
To account for
Good units completed and transferred out
during current period:
Normal spoilage*
100 ´ 100%; 100 ´ 100%
Abnormal spoilage†
50 ´ 100%; 50 ´100%
Work in process, ending‡ (given)
2,000 ´ 100%; 2,000 ´ 30%
Accounted for
Equivalent units of work done to date
1,000
10,150a
11,150
9,000
100
50
2,000
11,150
9,000
100
50
2,000
11,150
9,000
100
50
600
9,750
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