Acct 212: Copy 2 of Fall D 2012 chpter 20

Edison Company manufactures wool blankets and accounts for product costs using process costing. The following information is available regarding its May inventories.

The following additional information describes the company’s production activities for May.

  Raw materials purchases (on credit

)

2

50,000

  Factory payroll cost (paid in cash)

1,850,300

  Other overhead cost (Other Accounts credited)

82,000

  Materials used

Direct

200,500

 Indirect

  Labor used

1,060,300

7

90

,000

  Overhead rate as a percent of direct labor

115

%

  Sales (on credit)

3,000,000

The predetermined overhead rate was computed at the beginning of the year as 115% of direct labor cost.

Required:

1(a)

Compute the cost of products transferred from production to finished goods. (Omit the “$” sign in your response.)

  Cost of products transferred

$   

1(b)

Compute the cost of goods sold. (Omit the “$” sign in your response.)

  Cost of goods sold

2(a)

Prepare journal entry dated

May 31

to record the raw materials purchases. (Omit the “$” sign in your response.)

2(b)

Prepare journal entry dated May 31 to record the direct materials usage. (Omit the “$” sign in your response.)

2(c)

Prepare journal entry dated May 31 to record the indirect materials usage. (Omit the “$” sign in your response.)

2(d)

Prepare journal entry dated May 31 to record the payroll costs. (Omit the “$” sign in your response.)

2(e)

Prepare journal entry dated May 31 to record the direct labor costs. (Omit the “$” sign in your response.)

2(f)

Prepare journal entry dated May 31 to record the indirect labor costs. (Omit the “$” sign in your response.)

2(g)

Prepare journal entry dated May 31 to record the other overhead costs. (Omit the “$” sign in your response.)

2(h)

Prepare journal entry dated May 31 to record the overhead applied. (Omit the “$” sign in your response.)

2(i)

Prepare journal entry dated May 31 to record the goods transferred from production to finished goods.(Omit the “$” sign in your response.)

2(j)

Prepare journal entry dated May 31 to record the sale of finished goods. (Omit the “$” sign in your response.)

Fairfax Company uses weighted-average process costing to account for its production costs. Direct labor is added evenly throughout the process. Direct materials are added at the beginning of the process. During September, the company transferred 760,000 units of product to finished goods. At the end of September, the goods in process inventory consists of 203,000 units that are 90% complete with respect to labor. Beginning inventory had $438,165 of direct materials and $188,540 of direct labor cost. The direct labor cost added in September is $3,582,260, and the direct materials cost added is $2,932,335.

Determine the equivalent units of production with respect to direct labor.

  Equivalent units

Determine the equivalent units of production with respect to direct materials.

2.

Compute both the direct labor cost and the direct materials cost per equivalent unit. (Round your answers to 2 decimal place. Omit the “$” sign in your response.)

Per equivalent
unit

  Direct labor

cost

  Direct materials

cost

3(a)

Compute both direct labor cost and direct materials cost assigned to units completed and transferred out. (Due to rounding of cost per unit, the total costs accounted for in the cost summary may not equal to sum of all the costs given in the problem. Round your per unit costs to 2 decimal places and final answers to the nearest dollar amount.)

Cost transferred
out

$    

3(b)

Compute both direct labor cost and direct materials cost assigned to ending goods in process inventory. (Due to rounding of cost per unit, the total costs accounted for in the cost summary may not equal to sum of all the costs given in the problem. Round your per unit costs to 2 decimal places and final answers to the nearest dollar amount.)

Costs of ending goods in process

Li Company produces large quantities of a standardized product. The following information is available for its production activities for January.

  Raw materials

  Factory overhead incurred

  Beginning inventory

16,000

  Indirect materials used

80,500   

  Raw materials purchased (on credit)

280,000

  Indirect labor used

40,000

  Direct materials used

(171,500

  Other overhead costs

159,920   

(80,500

  Total factory overhead incurred

280,420   

  Ending Inventory

44,000

  Factory overhead applied

  Factory payroll 

     (140% of direct labor cost)

  Direct labor used

200,300

  Total factory overhead applied

  Total payroll cost (paid in cash)

240,300

Additional information about units and costs of production activities follows.

  Units

  Costs

  Beginning goods in process inventory

2,600

  Started

26,000

       Direct materials

3,000  

  Ending goods in process inventory

4,900

       Direct labor

3,500  

       Factory overhead

4,000  

10,500   

  Status of ending goods in process inventory

  Direct materials added

171,500   

     Materials—Percent complete

 %

  Direct labor added

200,300   

     Labor and overhead—Percent complete

75

  Overhead applied (140% of direct labor)

280,420   

  Total costs

662,720   

92,911   

During January, 22,000 units of finished goods are sold for $160 cash each. Cost information regarding finished goods follows.

  Beginning finished goods inventory

150,000

  Cost transferred in

569,809

(598,390

  Ending finished goods inventory

121,419

Prepare journal entry dated January 31 to record the purchase of raw materials. (Omit the “$” sign in your response.)

Jan. 31

Prepare journal entry dated January 31 to record the direct materials usage. (Omit the “$” sign in your response.)

1(c)

Prepare journal entry dated January 31 to record the indirect materials usage. (Omit the “$” sign in your response.)

1(d)

Prepare journal entry dated January 31 to record the factory payroll costs. (Omit the “$” sign in your response.)

1(e)

Prepare journal entry dated January 31 to record the direct labor costs used in production. (Omit the “$” sign in your response.)

1(f)

Prepare journal entry dated January 31 to record the indirect labor costs. (Omit the “$” sign in your response.)

1(g)

Prepare journal entry dated January 31 to record the other overhead costs—credit Other Accounts.(Omit the “$” sign in your response.)

1(h)

Prepare journal entry dated January 31 to record the overhead applied. (Omit the “$” sign in your response.)

1(i)

Prepare journal entry dated January 31 to record the goods transferred to finished goods. (Omit the “$” sign in your response.)

1(j)

Prepare journal entries dated January 31 to record the sale of finished goods. (Omit the “$” sign in your response.)

Prepare a process cost summary report for this company, showing costs charged to production, units cost information, equivalent units of production, cost per EUP, and its cost assignment and reconciliation. (Due to rounding of cost per unit, the total costs accounted for in the cost summary may not equal to sum of all the costs given in the problem. Round your cost per EUP answers to 2 decimal places and consider the same in the other calculations. Round other answers to the nearest dollar amount. Omit the “$” sign in your response.)

LI COMPANY

Process Cost Summary

For Month Ended January 31

  Costs Charged to Production

  Costs of beginning goods in process

  Costs incurred this period

  Total costs to account for

Unit cost information

Units to account for

Units accounted for

  Total units to account for

  Total units accounted for

Equivalent units of production

Direct Materials 

Direct Labor

Factory Overhead

 EUP

  Equivalent units of production

Cost per EUP

Direct Materials     

Direct Labor     

Factory Overhead     

  Cost per EUP

 Per EUP

Cost assignment and reconciliation

  Costs transferred out

  Costs of ending goods in process

Ogden Co. manufactures a single product in one department. All direct materials are added at the beginning of the manufacturing process. Direct labor and overhead are added evenly throughout the process. The company uses monthly reporting periods for its weighted-average process cost accounting. During October, the company completed and transferred 24,600 units of product to finished goods inventory. Its 4,200 units of beginning goods in process consisted of $20,800 of direct materials, $203,300 of direct labor, and $100,040 of factory overhead. It has 3,000 units (100% complete with respect to direct materials and 90% complete with respect to direct labor and overhead) in process at month-end. After entries to record direct materials, direct labor, and overhead for October, the company’s

Goods in Process Inventory

account follows.

Acct. No.133

Explanation

Balance

Oct.  1   

  Balance

324,140  

31   

504,900  

829,040  

1,224,300  

2,053,340  

  Applied overhead

963,840  

3,017,180  

1.

Prepare the company’s process cost summary for October using the weighted-average method. (Due to rounding of cost per unit, the total costs accounted for in the cost summary may not equal to sum of all the costs given in the problem. Round your cost per EUP answers to 2 decimal places and consider the same in the other calculations. Round other answers to the nearest dollar amount. Omit the “$” sign in your response.)

OGDEN CO.

For Month Ended October 31

    EUP    

$

  EUP      

$  per EUP

Prepare the journal entry dated October 31 to transfer the cost of completed units to finished goods inventory. (Omit the “$” sign in your response.)

Oct. 31