Beruflich Dokumente
Kultur Dokumente
4-2
4-3
4-4
4-5
McGraw-Hill/Irwin
Inc.
Managerial Accounting, 8/e
4-6
4-7
XXX
XXX
(b) Journal entry to record transfer of goods from the first to the second department
in the production sequence:
Work-in-Process Inventory: Department B....................
Work-in-Process Inventory: Department A..........
XXX
XXX
4-8
Transferred-in costs are the costs assigned to partially completed products that
have been completed in one production department and transferred from that
production department into the next department.
4-9
The $182,000 of transferred-in costs were incurred prior to January 1 and in the
mixing department. The costs must have been incurred prior to January 1, because
they are included in the cost of the beginning work-in-process inventory on that
date. Moreover, these costs must have been incurred in the mixing department,
because they have been transferred into the cooking department.
4-10
The name ''weighted-average method'' comes from the fact that the cost per
equivalent unit computed under this method is a weighted average of costs incurred
during the current period and costs incurred during prior periods.
McGraw-Hill/Irwin
Inc.
4-2
4-11
The difference between normal and actual costing lies in the calculation of the
manufacturing-overhead cost of the current period. Under actual costing, the
manufacturing-overhead cost of the current period is the actual overhead cost
incurred during the period. Under normal costing, the current-period manufacturing
overhead is computed as the product of the predetermined overhead rate and the
actual level of the cost driver used to apply manufacturing overhead.
4-12
If manufacturing overhead were applied according to some activity base (or cost
driver) other than direct labor, then direct-labor costs and manufacturing-overhead
costs would be accounted for separately instead of being combined into one
account called "conversion costs." Thus, instead of two columns for direct-material
and conversion costs, there would be three columns: direct material, direct labor,
and manufacturing overhead.
4-13
4-14
McGraw-Hill/Irwin
Inc.
Managerial Accounting, 8/e
SOLUTIONS TO EXERCISES
EXERCISE 4-15 (10 MINUTES)
The general formula for all three cases is the following:
Work-in-process,
beginning
Units started
during month
Units completed
during month
Work-in-process,
ending
9,000 pounds
2.
12,500 yards
3.
72,000 liters
McGraw-Hill/Irwin
Inc.
4-4
145,000
25,000
170,000
100%
75%
100%
20%
145,000
18,750
______
163,750
145,000
5,000
_______
150,000
2,400,000
250,000
2,650,000
100%
70%
2,400,000
250,000
________
2,650,000
2,400,000
175,000
________
2,575,000
2.
3,800
1,700
5,500
100%
20%
3,800
1,700
_____
(1) 5,500
3,800
340
____
(2) 4,140
Equivalent units......................................
16,500
47,000
Costs per equivalent unit.......................
$10.80*
$4.90
$15.70
*$10.80 = $178,200 16,500
McGraw-Hill/Irwin
Inc.
4-6
Total
$ 39,850
272,900
$312,750
$3.15
numberofunits toalcostper
transfer dout equivalentunit
2.
89,000 $3.15
$280,350
............................................................
$16,800
15,600
32,400
$312,750
Direct
Material
103,000
Conversion
97,000
McGraw-Hill/Irwin
Inc.
4-8
(89,000)
14,000
(89,000)
8,000
$9.70
numberofunits toalcostper
transfer dout equivalentunit
2.
Total
$ 102,650
425,300
$527,950
47,000 $9.70
$455,900
..........................................................
$60,450
11,600
72,050
$527,950
Direct
Material
62,500
Conversion
49,000
3.
(47,000)
15,500
(47,000)
2,000
McGraw-Hill/Irwin
Inc.
4-10
Accumulated
by
department
Conversion costs:
Direct-labor
Manufacturing
overhead
Work-in-Process Inventory:
Finishing Department
Batch P25
Accumulated
by
batch
Batch S33
Directmaterial
costs
Work-in-Process Inventory:
Packaging Department
Batch P25
Finished-Goods Inventory
McGraw-Hill/Irwin
Inc.
Managerial Accounting, 8/e
$21.00
-07.50
6.00
.50
$35.00
Scholastic
-0-
$11.25
7.50
6.00
-0-
$24.75
*The two production departments each worked on a total of 6,000 balls, but the Packaging
Department handled only the 2,000 professional balls.
3.
Journal entries:
Work-in-Process Inventory: Preparation Department..........
Raw-Material Inventory..................................................
39,500*
39,500
45,000*
45,000
45,000*
45,000
129,500*
129,500
McGraw-Hill/Irwin
Inc.
4-12
36,000*
36,000
66,500*
99,000
165,500
3,500
2,500*
1,000
Finished-Goods Inventory......................................................
Work-in-Process Inventory: Packaging Department...
70,000*
70,000
McGraw-Hill/Irwin
Inc.
Managerial Accounting, 8/e
SOLUTIONS TO PROBLEMS
PROBLEM 4-25 (45 MINUTES)
1.
2.
Physical
Units
40,000
190,000
230,000
180,000
50,000
230,000
Equivalent units:
Percentage
of
Completion
with
Physical Respect to
Units
Conversion
40,000
38%
190,000
230,000
100%
55%
Equivalent Units
Direct
Material Conversion
180,000
50,000
180,000
27,500
230,000
207,500
McGraw-Hill/Irwin
Inc.
4-14
Direct
Material
$110,500
430,000
$540,500
230,000
$2.35
Conversion
$ 22,375
320,000
$342,375
207,500
$1.65
Total
$132,875
750,000
$882,875
$4.00
numberofunits toalcostper
transfer dout equivalentunit
180,000 $4.00
$720,000
50,000 $2.35
$117,500
..........................................................
units of unit of
direct material direct material
...........................................................
McGraw-Hill/Irwin
Inc.
Managerial Accounting, 8/e
Conversion:
numberof costper
equivalent equivalent
unitsof unitof
conversion conversion
27,500 $1.65
45,375
....................................................................
$162,875
$720,000
162,875
$882,875
McGraw-Hill/Irwin
Inc.
4-16
2.
Physical
Units
10,000
100,000
110,000
80,000
30,000
110,000
Equivalent units:
Physical
Units
Work in process, April 1........... 10,000
Units started during April......... 100,000
Total units to account for......... 110,000
Units completed and
transferred out during April. 80,000
Work in process, April 30
30,000
Total units accounted for......... 110,000
Total equivalent units...............
3.
Percentage
of
Completion
with
Respect to
Conversion
20%
100%
33 1/3%
Equivalent Units
Direct
Material Conversion
80,000
30,000
______
110,000
80,000
10,000
_____
90,000
Conversion
Total
$4,500 $26,500
158,400 356,400
$162,900
90,000
$1.81
$382,900
$3.81
numberofunits toalcostper
t ransfer dout equivalentunit
80,000 $3.81
$304,800
30,000 $2.00
$60,000
..........................................................
numberof costper
equivalent equivalent
unitsof unitof
directmaterial directmaterial
............................................................
Conversion:
McGraw-Hill/Irwin
Inc.
4-18
numberof costper
equivalent equivalent
unitsof unitof
conversion conversion
5.
10,000 $1.81
18,100
..................................................................
$78,100
$304,800
78,100
$382,900
McGraw-Hill/Irwin
Inc.
Managerial Accounting, 8/e
2.
Physical
Units
210,000
1,100,000
1,310,000
1,000,000
310,000
1,310,000
Equivalent units:
McGraw-Hill/Irwin
Inc.
4-20
Percentage
of
Completion
with
Physical Respect to
Units
Conversion
210,000
83%
1,100,000
1,310,000
1,000,000
310,000
1,310,000
100%
48%
Equivalent Units
Direct
Material Conversion
1,000,000
310,000
________
1,310,000
1,000,000
148,800
________
1,148,800
Conversion cost
Conversion cost
Direct
Material
Conversion
Total
a
$ 300,000 $620,800 $ 920,800
1,403,000 3,400,000b 4,803,000
$1,703,000 $4,020,800 $5,723,800
1,310,000
1,148,800
c
$1.30
$3.50d
$4.80e
=
=
=
=
=
=
=
=
McGraw-Hill/Irwin
Inc.
Managerial Accounting, 8/e
numberofunits toalcostper
t ransfer dout equivalentunit
1,000,000 $4.8
0
$4,800,000
310,000 $1.30
$403,000
..........................................................
numberof costper
equivalent equivalent
unitsof unitof
directmaterial directmaterial
McGraw-Hill/Irwin
Inc.
4-22
............................................................
Conversion:
numberof costper
equivalent equivalent
unitsof unitof
conversion conversion
148,800 $3.50
520,800
$923,800
$4,800,000
923,800
$5,723,800
Equivalent units:
Percentage
of
Completion
with
McGraw-Hill/Irwin
Inc.
Managerial Accounting, 8/e
Equivalent Units
Physical
Units
40,000
80,000
120,000
Respect to
Conversion
80%
100,000
20,000
120,000
100%
30%
Direct
Material
100,000
20,000
______
120,000
Conversion
100,000
6,000
______
106,000
Conversion
$138,000
120,000
$1,089,680
106,000
$1.15
$10.28
Total
$11.43*
numberofunits toalcostper
t ransfer dout equivalentunit
McGraw-Hill/Irwin
Inc.
4-24
100,000 $11.43
$1,143,000
.......................................................
numberof costper
equivalent equivalent
unitsof unitof
directmaterial directmaterial
20,000 $1.15
$23,000
...........................................................
Conversion:
McGraw-Hill/Irwin
Inc.
Managerial Accounting, 8/e
numberof costper
equivalent equivalent
unitsof unitof
conversion conversion
5.
6,000 $10.28
61,680
................................................................
$84,680
$1,143,000
84,680
$1,227,680
Journal entry:
Finished-Goods Inventory................................................
Work-in-Process Inventory.....................................
McGraw-Hill/Irwin
Inc.
4-26
1,143,000
1,143,000
a. Equivalents units:
Physical
Units
30,000
34,000
64,000
40,000
24,000
64,000
Percentage
of
Completion
with
Respect to
Conversion
35%
100%
75%
Equivalent Units
Direct
Material Conversion
40,000
24,000
_____
64,000
40,000
18,000
_____
58,000
b. Unit costs:
Total costs to account for
Equivalent units
Direct
Material
$348,800
64,000
Conversion
$2,844,900
58,000
Total
$5.45
$49.05
$54.50*
McGraw-Hill/Irwin
Inc.
Managerial Accounting, 8/e
numberofunits toalcostper
t ransfer dout equivalentunit
40,000 $54.50
$2,180,000
number of costper
equivalent equivalent
unitsof unitof
directmaterial directmaterial
24,000 $5.45
$130,800
Conversion:
McGraw-Hill/Irwin
Inc.
4-28
numberof costper
equivalent equivalent
unitsof unitof
conversion conversion
...............................18,000 $49.05
882,900
$1,013,700
Journal entry:
Finished-Goods Inventory...............................................
2,180,000
1,900,500
Work-in-Process Inventory.................................................................
McGraw-Hill/Irwin
Inc.
Managerial Accounting, 8/e
2,180,000
$ 225,000
710,000
455,000
$1,390,000
Goods completed during April cost $2,002,000 (26,000 units x $77) as the following
calculations show:
Physical
Units
Percentage
Of
Completion
Equivalent Units
With
Respect to Direct
Conversion Material Conversion
3,000
27,000
30,000
80%
26,000
4,000
30,000
100%
45%
McGraw-Hill/Irwin
Inc.
4-30
26,000
4,000
26,000
1,800
30,000
27,800
Direct
Material
Conversion
Total
$ 230,000
1,390,000
$1,620,000
30,000
$54a
$ 63,940
575,460
$639,400
27,800
$23b
$ 293,940
1,965,460
$2,259,400
$77c
3.
4.
5.
(a)
No material would be added during May. All material is introduced at the start
of the manufacturing process, and these units were begun in April.
(b)
Since the work-in-process inventory is 45% complete at the end of April, 55%
of the conversion would be done in May.
Given that the ending work-in-process inventory is at the 45% stage of completion,
these units would not have reached the 75% point in April where TH55 is added.
Therefore, there would be zero equivalent units with respect to part TH55 in the
ending work-in-process inventory.
McGraw-Hill/Irwin
Inc.
Managerial Accounting, 8/e
10,000
75,000
78,500
$30,225
600,000
11.85
1,556,250
44,500
McGraw-Hill/Irwin
Inc.
4-32
75,000
5,000
80,000
100%
70%
75,000
5,000
_____
80,000
75,000
3,500
_____
78,500
Direct
Material
$112,000
600,000
$712,000
80,000
$8.90*
Conversion
$30,225
900,000
$930,225
78,500
$11.85
Total
$142,225
1,500,000
$1,642,225
$20.75**
McGraw-Hill/Irwin
Inc.
Managerial Accounting, 8/e
numberofunits toalcostper
t ransfer dout equivalentunit
$1,556,250
numberof costper
equivalent equivalent
unitsof unitof
directmaterial directmaterial
....................................................................
5,000 $8.90
$44,500
Conversion:
McGraw-Hill/Irwin
Inc.
4-34
numberof costper
equivalent equivalent
unitsof unitof
conversion conversion
3,500 $11.85
41,475
$85,975
..........................................................................
McGraw-Hill/Irwin
Inc.
Managerial Accounting, 8/e
$1,556,250
85,975
$1,642,225
The ending work-in-process inventory consisted of 400 units (200 + 800 600).
2.
The cost of goods completed during June totaled $57,000 (600 units x $95):
Percentage
Of
Completion
Equivalent Units
With
__________________
Physical Respect to
Direct
Units
Conversion Material Conversion
________ __________ ______ __________
Work in process, June 1.
200
25%
Units started during June..
800
Total units to account for...
1,000
Units completed and transferred
during June..
Work in process, June 30...
Total units accounted for
Total equivalent units..
600
400
1,000
100%
75%
Direct
Material Conversion
_______ __________
Work in process, June 1 $12,000
$ 6,000
Costs incurred during June.
43,000
30,000
Total costs to account for. $55,000
$36,000
Equivalent units...
1,000
900
a
Cost per equivalent unit.
$55
$40b
600
400
600
300
1,000
900
Total
______
$18,000
73,000
$91,000
$95c
Finished-Goods Inventory
57,000
Work-in-Process Inventory.
3.
57,000
McGraw-Hill/Irwin
Inc.
4-36
Equivalent units measure the amount of manufacturing activity (i.e., for direct
material or conversion) that has been applied to a batch of physical units. If, for
example, a company has 1,000 physical units in process that are 30% complete as to
conversion, the firm has done the equivalent amount of conversion activity as would
be required to do all of the conversion work for 300 units (1,000 x 30%).
Equivalent units are needed to state manufacturing activity on a common
measurement scale. One cannot add completed units to units in process. Such a
combination is like adding apples and oranges, as some units are complete and
some are incomplete. Instead, these units are first converted to equivalent units,
and the latter are then used in unit-cost calculations.
McGraw-Hill/Irwin
Inc.
Managerial Accounting, 8/e
a. Equivalent units:
Tax
Returns
(physical
units)
Returns in process, February 1. .
300
Returns started in February........ 900
Total returns to account for........ 1,200
Returns completed
during February.....................
Returns in process, February 28
Total returns accounted for........
Total equivalent units of activity
800
400
1,200
Percentage
of
Completion
with Respect
to
Conversion
(labor and
overhead)
20%
100%
75%
Equivalent Units
Labor
Overhead
800
300
____
1,100
800
300
____
1,100
Overhead
4,000
51,000
55,000
1,100
50.00
Total
7,500
141,000
148,500
Labor
3,500
90,000
93,500
1,100
85.00
135.00
McGraw-Hill/Irwin
Inc.
4-38
25,500
15,000
40,500
55,000
60,000
66,000
$ 110,600
400,000
14.10
1,320,000
158,000
McGraw-Hill/Irwin
Inc.
Managerial Accounting, 8/e
60,000
20,000
80,000
100%
30%
60,000
20,000
_____
80,000
60,000
6,000
_____
66,000
Direct
Material
$232,000
400,000
$632,000
80,000
$7.90
Conversion
$110,600
820,000
$930,600
66,000
$14.10
Total
$ 342,600
1,220,000
$1,562,600
$22.00
numberofunits toalcostper
t ransfer dout equivalentunit
60,000 $22.00
$1,320,000
..............................................................
McGraw-Hill/Irwin
Inc.
4-40
numberof costper
equivalent equivalent
unitsof unitof
directmaterial directmaterial
20,000 $7.90
$158,000
6,000 $14.10
84,600
................................................................
Conversion:
numberof costper
equivalent equivalent
unitsof unitof
conversion conversion
......................................................................
McGraw-Hill/Irwin
Inc.
Managerial Accounting, 8/e
$242,600
$1,320,000
2009 The McGraw-Hill Companies,
4- 41
242,600
$1,562,600
16,000
6,000
22,000
100%
30%
Direct
Material
$ 31,600
85,000*
$116,600
22,000
$5.30
16,000
6,000
____ _
22,000
Conversion
$ 55,220
210,000
$265,220
17,800
$14.90
16,000
1,800
_ ____
17,800
Total
$ 86,820
295,000
$381,820
$20.20
McGraw-Hill/Irwin
Inc.
4-42
numberofunits toalcostper
t ransfer dout equivalentunit
..................................................................16,000 $20.20
$323,200
numberof costper
equivalent equivalent
unitsof unitof
directmaterial directmaterial
$31,800
Conversion
McGraw-Hill/Irwin
Inc.
Managerial Accounting, 8/e
numberof costper
equivalent equivalent
unitsof unitof
conversion conversion
26,820
2.
$323,200
58,620
$381,820
85,000
70,000
140,000*
$58,620
85,000
70,000
140,000
McGraw-Hill/Irwin
Inc.
4-44
323,200
323,200
$76,000 + $460,000
5,500 + 2,000 + 2,500
*Note that all of the products sold after processing in departments I, II, or III were
produced orginally in department I.
2.
$44,000 + $136,000
2,000 + 2,500
*Note that all of the products sold after processing in departments II and III were
colored in department II.
3.
$900,000
+ $53.60
10,000
McGraw-Hill/Irwin
Inc.
Managerial Accounting, 8/e
= $143.60 +
direct material
conversion cost per
+ per unit in department II + unit in department II
$144,000
+ $40.00
4,500
5.
$76,000 + $147,500
2,500
The unit costs and total costs for each of the products manufactured by Plattsburg
Plastics Corporation during the month of March are calculated as follows:
Units produced.....................
Material costs.......................
Unit material cost..........
Conversion costs*................
Unit conversion cost.....
Extrusion
32,000
$288,000
9.00
588,000
18.375
Form
22,000
$ 66,000
3.00
198,000
9.00
Trim
10,000
$22,500
2.25
103,500
10.35
Finish
4,000
$18,000
4.50
63,000
15.75
McGraw-Hill/Irwin
Inc.
4-46
Plastic
Sheets
Standard
Model
Deluxe
Model
Executive
Model
$9.00
$9.00
3.00
$9.00
3.00
2.25
$9.00
3.00
2.25
4.50
18.375
18.375
9.00
_
$27.375
10,000
$273,750
_
$39.375
12,000
$472,500
18.375
9.00
10.35
_
$51.975
6,000
$311,850
18.375
9.00
10.35
15.75
$72.225
4,000
$288,900
Total
Product Costs
$ 273,750
472,500
311,850
288,900
$1,347,000
Journal entries:
Work-in-Process Inventory: Extrusion..............................
Raw-Material Inventory............................................
Applied Conversion Costs.......................................
876,000
Finished-Goods Inventory.................................................
Work-in-Process Inventory: Extrusion...................
273,750
866,250
McGraw-Hill/Irwin
Inc.
Managerial Accounting, 8/e
288,000
588,000
273,750
602,250
66,000
198,000
472,500
519,750
Finished-Goods Inventory.................................................
Work-in-Process Inventory: Trimming....................
311,850
288,900
Finished-Goods Inventory.................................................
Work-in-Process Inventory: Finishing....................
288,900
McGraw-Hill/Irwin
Inc.
4-48
472,500
393,750
22,500
103,500
311,850
207,900
18,000
63,000
288,900
Conversion costs:
Direct labor...................................
Manufacturing overhead.............
Total conversion cost..................
Total units produced:
Rolling only...........................
Rolling, molding, punching
Rolling, molding, punching,
and dipping
Conversion cost per unit.............
McGraw-Hill/Irwin
Inc.
Managerial Accounting, 8/e
Rolling
$ 600,000
900,000
$1,500,000
Molding
$224,000
336,000
$560,000
Punching
Dipping
$256,000 $ 90,000
384,000
135,000
$640,000 $225,000
10,000
4,000
4,000
1,500
$150
$140
$160
$150
Product costs:
Ceralam
Sheets
Sold
after
Rolling
Direct material:
Ceralam sheets...............
Non
reflective
Ceralam
Housings
$ 960,000
400,000
Units manufactured...............
Unit cost.................................
Number of units
Number of units
c
Number of units
d
Number of units
a
3.
Total
Costs
$1,600,000
240,000
60,000
60,000
375,000a
350,000b
400,000c
_______ ________
$1,860,000 $1,525,000
225,000a
210,000b
240,000c
225,000d
$1,200,000
1,500,000
560,000
640,000
225,000
$4,585,000
Chemical dip...................
Conversion costs:
Rolling.............................
Molding...........................
Punching.........................
Dipping............................
Total cost...............................
Relective
Ceralam
Housings
900,000a
6,000
$310
2,500
$610
1,500
$800
Journal entries:
Work-in-Process Inventory: Rolling..................................
Raw-Material Inventory............................................
Applied Conversion Costs.......................................
3,100,000
1,600,000*
1,500,000
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Finished-Goods Inventory.................................................
Work-in-Process Inventory: Rolling........................
1,860,000*
1,860,000
1,860,000*
1,860,000
1,240,000*
1,240,000
560,000*
560,000
1,800,000*
1,800,000
640,000*
640,000
McGraw-Hill/Irwin
Inc.
Managerial Accounting, 8/e
1,525,000*
1,525,000
1,525,000*
1,525,000
915,000*
915,000
285,000
60,000*
225,000
1,200,000*
1,200,000
1,200,000
1,200,000
McGraw-Hill/Irwin
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SOLUTION TO CASE
CASE 4-39 (45 MINUTES)
1.
8,500
8,260
2.
$6.00
$7.00
3.
$3,520
$105,300
4.
$13.00
These answers are supported by the following process-costing schedules. The firm's cost
per belt used for planning and control, $11.50, is substantially lower than the actual cost per
belt incurred in October, $13.00. Management should investigate this situation to determine
whether production costs can be reduced. If not, then the cost used for planning and
control purposes should be changed to reflect the firm's actual experience.
CALCULATION OF EQUIVALENT UNITS: LYCOMING LEATHER CO. - HARRISBURG PLANT
Weighted-Average Method
Percentage
of
Completion
with
Equivalent Units
Physical
Respect to
Direct
Units
Conversion
Material Conversion
Work in process, October 1.............
500
30%
Units started during October...........
8,000
Total units to account for.................
8,500
Units completed and transferred
out during October.........................
Work in process, October 31...........
Total units accounted for.................
Total equivalent units.......................
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Managerial Accounting, 8/e
8,100
400
8,500
100%
40%
8,100
400
8,100
160
8,500
8,260
numberofunits toalcostper
t ransfer dout equivalentunit
8,100 $13.00
$105,300
............................................................
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numberof costper
equivalent equivalent
unitsof unitof
directmaterial directmaterial
400 $6.00
$2,400
160 $7.00
1,120
................................................................
Conversion:
numberof costper
equivalent equivalent
unitsof unitof
conversion conversion
......................................................................
McGraw-Hill/Irwin
Inc.
Managerial Accounting, 8/e
$3,520
$105,300
3,520
$108,820
If the units were 50 percent complete as of October 31, there would be 8,300
equivalent units with respect to conversion. (To see this, just change the 160 in the
right-hand column of the equivalent-units part of the table in the solution to
requirement (4) to 200. This changes the last number in the right-hand column
from 8,260 to 8,300.)
Now the unit cost of conversion drops from $7.00, as currently computed,
to $6.97 (rounded, $57,820 8,300). Thus, the unit cost drops from $13.00 to $12.97
(rounded).
As controller, Jeff Daley has an ethical obligation to refuse his friend's
request to alter the estimate of the percentage of completion. What Daley can do is
to help Murray think of some legitimate ways to bring about real cost reductions.
Several ethical standards for management accountants (listed in Chapter 1) apply
in this situation. Among the relevant standards are the following:
Competence:
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