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

Using this formula, the missing amounts are:

1.

9,000 pounds

2.

12,500 yards

3.

72,000 liters

PROBLEM 4-25 (45 MINUTES)

1.

2.

Physical
Units

Physical flow of units:

Work in process, June 1...........................................................................

40,000

Units started during June.........................................................................

190,000

Total units to account for..........................................................................

230,000

Units completed and transferred out during June..................................

180,000

Work in process, June 30.........................................................................

50,000

Total units accounted for..........................................................................

230,000

Equivalent units:

Physical
Units

Percentage
of
Completion
with
Respect to
Conversion

Equivalent Units
Direct
Material

Conversion

Work in process, June 1...........

40,000

38%

Units started during June.........

190,000

Total units to account for.........

230,000

Units completed and

transferred
out during June....................

180,000

100%

180,000

180,000

Work in process, June 30.........

50,000

55%

50,000

27,500

Total units accounted for.........

230,000
230,000

207,500

Total equivalent units...............

3.

Costs per equivalent unit:

Direct
Material

4.

Conversion

Total

Work in process, June 1................

$110,500

$ 22,375

$132,875

Costs incurred during June..........

430,000

320,000

750,000

Total costs to account for..............

$540,500

$342,375

$882,875

Equivalent units.............................

230,000

207,500

Costs per equivalent unit..............

$2.35

$1.65

$4.00

Cost of goods completed and transferred out during June:

number of units total cost per

transferred out equivalent unit

180,000 $4.00

$720,000

50,000 $2.35

$117,500

........................
Cost remaining in June 30 work-in-process inventory:
Direct material:
number of

equivalent

units of

cost per

equivalent

direct material

unit of

direct material

..........................

Conversion:
number of

equivalent
units of

cost per

equivalent
unit of

27,500 $1.65

45,375

Total cost of June 30 work in process........................................................

$162,875

Check: Cost of goods completed and transferred out..............................

$720,000

Cost of June 30 work-in-process inventory...................................

162,875

Total costs accounted for................................................................

$882,875

conversion

conversion

......................................

PROBLEM 4-31 (50 MINUTES)

The missing amounts are shown below. A completed production report follows.
Work in process, October 1 (in units)..................................................................

10,000

Units completed and transferred out during October.........................................

75,000

Total equivalent units: conversion.......................................................................

78,500

Work in process, October 1: conversion.............................................................

$30,225

Costs incurred during October: direct material..................................................

600,000

Cost per equivalent unit: conversion...................................................................

11.85

Cost of goods completed and transferred out during October..........................

1,556,250

Cost remaining in ending work-in-process inventory: direct material..............

44,500

PRODUCTION REPORT: FANTASIA FLOUR MILLING COMPANY

Weighted-Average Method
Percentage
of

Completion
with

Equivalent Units

Physical

Respect to

Direct

Units

Conversion

Material

Work in process, October 1..........

10,000

Units started during October........

70,000

Total units to account for..............

80,000

Conversion

15%

Units completed and transferred

out during October..............

75,000

100%

75,000

75,000

Work in process, October 31........

5,000

70%

5,000

3,500

Total units accounted for..............

80,000

_____

_____

80,000

78,500

Total equivalent units....................

Direct
Material

Conversion

Total

Work in process, October 1..........

$112,000

$30,225

$142,225

Costs incurred during October.....

600,000

900,000

1,500,000

Total costs to account for.............

$712,000

$930,225

$1,642,225

Equivalent units.............................

80,000

78,500

Costs per equivalent unit..............

$8.90*

$11.85

$20.75**

*$8.90 = $712,000 80,000

$11.85 = $930,225 78,500

**$20.75 = $8.90 + $11.85
PROBLEM 4-32 (30 MINUTES)
1.

The ending work-in-process inventory consisted of 600 units (300 + 1,000 700).

2.

The cost of goods completed during June totaled $77,000 (700 units x $110):
Percentage
Of
Completion
Equivalent Units
With
__________________
Physical Respect to
Direct
Units
Conversion Material Conversion
________ __________ ______ __________

Work in process, June 1.

Units started during June..
Total units to account for...

300
1,000
1,300

30%

Units completed and transferred

during June..
Work in process, June 30...
Total units accounted for
Total equivalent units..

700
600
1,300

100%
70%

Work in process, June 1

Costs incurred during June.
Total costs to account for.
Equivalent units...
Cost per equivalent unit.

Direct
Material
_______
$24,000
54,000
$78,000
1,300
$60a

700
600

700
420

1,300

1,120

Conversion
__________
$16,000
40,000
$56,000
1,120
$50b

Total
______
$40,000
94,000
$134,000
$110c

$78,000 1,300 = $60

$56,000 1,120 = $50
c
$60 + $50 = $110
b

Finished-Goods Inventory
Work-in-Process Inventory.
3.

77,000
77,000

The cost of the June 30 work-in-process inventory is $57,000:

Direct material (600 x $60)... $36,000
Conversion cost (420 x $50).. 21,000
Total $57,000

4.

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.

PROBLEM 4-35 (45 MINUTES)

1.

PRODUCTION REPORT: MIXING DEPARTMENT

(Weighted-Average Method)
November 20x5
Percentage
of
Completion
with

Equivalent Units

Physical

Respect to

Direct

Units

Conversion

Material

Work in process, November 1.......

6,000

Units started during November....

18,000

Total units to account for..............

24,000

Conversion

80%

Units completed and transferred

out during November..........
Work in process, November 30
Total units accounted for..............

17,000

100%

17,000

17,000

7,000

20%

7,000

1,400

____ _

_ ____

24,000

18,400

24,000

Total equivalent units....................

Direct
Material

Conversion

Total

Work in process, November 1.......

$ 44,000

$ 46,200

$ 90,200

Costs incurred during November.

100,000*

285,000

385,000

Total costs to account for.............

$144,000

$331,200

$475,200

Equivalent units.............................

24,000

18,400

Costs per equivalent unit..............

$6.00

$18.00

*$100,000 = $21,000 + $49,000 + (6,000 14,000)($70,000)

$285,000 = $80,000 + (2.00)($80,000) + $45,000

Cost of goods completed and transferred out during November:

$24.00

 number of units
total cost per

transferre
d
out
equivalent
unit

..............................17,000 $24.00

$408,000

Cost remaining in November 30 work-in-process inventory

Direct material:
number of

cost per

equivalent
equivalent
units of
unit of

direct
material
direct
material

................................. 7,000 $6.00

$42,000

........................................... 1,400 $18.00

25,200

Conversion
number of
cost per

equivalent
equivalent
units of
unit of

conversion
conversion

Total cost of November 30 work in process.....................................................

2.

Check: Cost of goods completed and transferred out.........

$408,000

Cost of November 30 work-in-process inventory. . .

67,200

Total costs accounted for.........................................

$475,200

a. Work-in-Process Inventory: Mixing Department.............

100,000

Raw-Material Inventory............................................
b. Work-in-Process Inventory: Mixing Department.............
Wages Payable.........................................................

$67,200

100,000
80,000
80,000

c. Work-in-Process Inventory: Mixing Department.............

205,000*

Manufacturing Overhead.........................................

205,000

*$205,000 = (2.00)($80,000) + ($45,000)

d. Work-in-Process Inventory: Finishing Department........
Work-in-Process Inventory: Mixing Department...

408,000
408,000