Process Job Costing and Equivalent Units of Production Bay Manufacturing produce

Question

Process Job Costing and Equivalent Units of Production Bay Manufacturing produces paint. The company has two processes: mixing and packaging. The ingredients for the paint are mixed in large batches and then transferred to the packaging department, where one-gallon cans are filled, capped, labeled, and boxed. There was no work in process on February 1. The materials are all brought to the packaging department up front and charged to the job. Nothing is transferred to finished goods until the entire job is complete. The materials costs include the packaging, material, and the cost transferred from the mixing department. On February 2, 15,000 gallons (job 2-1) were transferred into the packaging department from the mixing department and completed on February 19. The costs incurred to complete job 2-1 in the packaging department are as follows:    Materials                        56,250    Labor                        11,250    Overhead (applied based on direct labor hours)                          7,500 On February 20, another 20,000 gallons (job 2-2) were transferred into the packaging department. Job 2-2 was 50% complete as to labor at the end of the month. The costs incurred (unit cost unchanged from job 2-1) to complete job 2-2 in the packaging department are as follows:    Materials                        75,000    Labor                        15,000    Overhead (applied based on direct labor hours)                        10,000 INSTRUCTIONS: 1. Compute the physical units of production. 2. Compute the cost per unit to complete packaging for labor, materials, overhead, and total. 3. Compute equivalent units and cost of work in process as of the end of February. 4. Record journal entries for:     a. the movement of materials from materials inventory to each job     b. the allocation of payroll to each job     c. the application of overhead to each job     d. the movement of work in process to finished goods Part 1: Units to be accounted for: Units Work in process                                 - Started in production    Total units #VALUE! Units accounted for: Completed and transferred out    Work in process    Total units #VALUE! Part 2: Material Labor Overhead Total Total costs to be incurred, job 2-1          Units                        15,000                    15,000                    15,000 Cost per unit to be incurred #VALUE! #VALUE! #VALUE! #VALUE! Part 3: Work in process, February 28 Equivalent units Material Labor Overhead Total 20,000 units transferred in          Costs incurred 100% 50% 50% Equivalent gallons #VALUE! #VALUE! #VALUE! Cost per unit #VALUE! #VALUE! #VALUE! Total cost in WIP February 28 #VALUE! #VALUE! #VALUE! #VALUE! Part 4: Debit Credit Work in process, job 2-1    Work in process, job 2-2 #VALUE!     Materials inventory #VALUE! Work in process, job 2-1    Work in process, job 2-2 #VALUE!     Payroll Summary #VALUE! Work in process, job 2-1    Work in process, job 2-2 #VALUE!     Overhead #VALUE! Finished goods inventory        Work in process, job 2-1    Process Job Costing and Equivalent Units of Production Bay Manufacturing produces paint. The company has two processes: mixing and packaging. The ingredients for the paint are mixed in large batches and then transferred to the packaging department, where one-gallon cans are filled, capped, labeled, and boxed. There was no work in process on February 1. The materials are all brought to the packaging department up front and charged to the job. Nothing is transferred to finished goods until the entire job is complete. The materials costs include the packaging, material, and the cost transferred from the mixing department. On February 2, 15,000 gallons (job 2-1) were transferred into the packaging department from the mixing department and completed on February 19. The costs incurred to complete job 2-1 in the packaging department are as follows:    Materials                        56,250    Labor                        11,250    Overhead (applied based on direct labor hours)                          7,500 On February 20, another 20,000 gallons (job 2-2) were transferred into the packaging department. Job 2-2 was 50% complete as to labor at the end of the month. The costs incurred (unit cost unchanged from job 2-1) to complete job 2-2 in the packaging department are as follows:    Materials                        75,000    Labor                        15,000    Overhead (applied based on direct labor hours)                        10,000 INSTRUCTIONS: 1. Compute the physical units of production. 2. Compute the cost per unit to complete packaging for labor, materials, overhead, and total. 3. Compute equivalent units and cost of work in process as of the end of February. 4. Record journal entries for:     a. the movement of materials from materials inventory to each job     b. the allocation of payroll to each job     c. the application of overhead to each job     d. the movement of work in process to finished goods Part 1: Units to be accounted for: Units Work in process                                 - Started in production    Total units #VALUE! Units accounted for: Completed and transferred out    Work in process    Total units #VALUE! Part 2: Material Labor Overhead Total Total costs to be incurred, job 2-1          Units                        15,000                    15,000                    15,000 Cost per unit to be incurred #VALUE! #VALUE! #VALUE! #VALUE! Part 3: Work in process, February 28 Equivalent units Material Labor Overhead Total 20,000 units transferred in          Costs incurred 100% 50% 50% Equivalent gallons #VALUE! #VALUE! #VALUE! Cost per unit #VALUE! #VALUE! #VALUE! Total cost in WIP February 28 #VALUE! #VALUE! #VALUE! #VALUE! Part 4: Debit Credit Work in process, job 2-1    Work in process, job 2-2 #VALUE!     Materials inventory #VALUE! Work in process, job 2-1    Work in process, job 2-2 #VALUE!     Payroll Summary #VALUE! Work in process, job 2-1    Work in process, job 2-2 #VALUE!     Overhead #VALUE! Finished goods inventory        Work in process, job 2-1   

Explanation / Answer

Solution :

Part 1: Units to be accounted for: 15000 Gallons Units 20000 Gallons units Work in process 0 0 Started in production 2-Feb 20-Feb Total units 15000 20000 Units accounted for: 15000 Gallons Units 20000 Gallons units Completed and transferred out 19-Feb 20-Feb Work in process 0 0 Total units 15000 Gallons Units 20000 Gallons units Part 2: Material Labor Overhead Total Total costs to be incurred, job 2-1 56250 11250 7500 75000 Units 15000 15000 15000 15000 Cost per unit to be incurred 5 1 0.666667 5 Part 3: Work in process, February 28 0 0 0 0 Equivalent units Material Labor Overhead Total 20,000 units transferred in 75000 15000 10000 100000 Costs incurred 100% 50% 50% Equivalent gallons 20000 20000 20000 20000 Cost per unit 3.75 0.75 0.5 5 Total cost in WIP February 28 0 0 0 0 Part 4: Debit Credit Work in process, job 2-1 0 0 Work in process, job 2-2 0 0     Materials inventory 0 0 Work in process, job 2-1 15000 0 Work in process, job 2-2 20000 0     Payroll Summary 75000 100000 Work in process, job 2-1 15000 Work in process, job 2-2 20000 0     Overhead 7500 10000 17500 Finished goods inventory 15000 on 19 Feb 20000 on 20 Feb     Work in process, job 2-1 15000 20000

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