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com

CHAPTER 6
DISCUSSION QUESTIONS

Q6-1. The basic objective of process costing is to (h) Process, unless different fabrics are used
determine the costs of the products manufac- for different models, in which case the
tured by the company. Determining the cost of conversion costs may be accounted for
the products manufactured is necessary in using process, but the materials using job
order to properly cost ending inventories for order
external reporting purposes (i.e., reporting to Q6-4. Three product flow formats are: sequential,
creditors and owners of the company, the parallel, and selective.
SEC, and the IRS) and to evaluate the prof- Sequential means that the product flows or is
itability of the manufacturing activity. In order manufactured in an unchanging fixed set of
to cost products, the costs must be deter- operations, going from one department to the
mined for materials, labor, and factory over- next.
head used to process each unit of product Parallel means that certain operational
through each department. phases take place simultaneously in other
Q6-2. The products manufactured within a depart- departments and the partially completed units
ment (or cost center) during the period can be or parts are brought together in subsequent
heterogeneous if job order costing is used, departments.
but must be homogeneous if process costing Selective refers to the fact that a product does
is used. In job order costing, products are not necessarily move through every depart-
accounted for in batches. The cost of each ment. Depending upon the character or shape
unit of product manufactured on a job is deter- of the final product, different departments are
mined by dividing the total cost charged to the engaged in completing the desired product.
job by the number of units produced on the Q6-5. Materials Costs—In job order costing, materi-
job. Since the manufacturing cost of each job als requisitions are used and charges are
is accounted for separately, accurate and made to jobs; in process costing, charges for
useful product cost can be determined even materials issued to production are made to
when the products manufactured on different departments, with infrequent use of materials
jobs are substantially different. By contrast, in requisitions.
process costing, all manufacturing costs are Labor Costs—Time tickets are used in job
charged to the department, and the unit cost order costing to accumulate labor costs for
is determined by dividing the cost charged to each job; in process costing, labor costs are
the department by the number of units pro- charged to departments, and, therefore,
duced. As a consequence, the units of prod- detailed time records are not necessary.
uct manufactured within a department must Factory Overhead—Job order costing
be essentially alike in order for the cost allo- requires the use of predetermined rates for
cated to each unit to be meaningful (i.e., to charging overhead to jobs; in process costing,
reasonably reflect the actual cost of the actual overhead may be used. (However, pre-
resources used to manufacture the product). determined rates are often used in order to
Q6-3. (a) Process smooth overhead that is not incurred at the
(b) Process, unless significantly different same rate as production activity.)
models are manufactured Summarizing Costs—A job order cost sheet is
(c) Process used to accumulate the costs of an order in job
(d) Job order order costing; a cost of production report is
(e) Process used in process costing. In job order costing,
(f) Process costs are summarized on completion of the
(g) Job order job; in process costing, costs charged to the

6-1
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6-2 Chapter 6

department and costs accounted for are sum- products, prepare journal entries to record the
marized in the cost of production report each transfer of costs between departments, and
month (or sometimes each week). control costs.
Q6-6. Predetermined overhead rates can and Q6-8. The sections commonly found in a cost of pro-
should be used if the pattern of overhead cost duction report are: (a) a quantity schedule
incurrence does not follow the pattern of pro- indicating the source and disposition of the
duction activity. Some items of overhead are units of product, (b) a cost charged to the
fixed and not responsive to changes in produc- department section, indicating the cost in total
tion activity. If production volume varies each and per unit for the cost transferred in from
month, then predetermined overhead rates the preceding department, as well as materi-
should be used. Some items of overhead are als, labor and overhead charged to the
incurred only at certain times during the year, department, and (c) a cost accounted for sec-
but benefit production throughout the year tion indicating the amount of cost assigned to
(e.g., payroll taxes, insurance, property taxes, the units transferred out of the department, as
vacation pay, etc.). These items can be well as the cost of ending inventory.
recorded as prepaid expenses and amortized Q6-9. Separate departmental cost of production
uniformly to each month if actual overhead is reports are used to accumulate costs more
charged to production. Alternatively, estimates accurately and to provide more detailed data
of such costs can be included in the predeter- for cost control purposes than a plant-wide
mined overhead rate, and the actual cost cost of production report could provide. In
charged to overhead when incurred. The use some cases (e.g., a manufacturing plant that
of predetermined rates is often simpler than has a selective production flow for its prod-
the allocation of actual costs because a single ucts), a plant-wide cost of production report
predetermined rate requires only one over- cannot be used.
head charge to each department each month. Q6-10. An equivalent unit of production is the amount
In contrast, the capitalization and amortiza- of a resource (e.g., materials, labor, or over-
tion of each item of actual overhead would head) that would be required to complete one
require numerous charges each month. unit of the product with respect to the cost ele-
Q6-7. A cost of production report is an effective ment being considered. The total number of
monthly (or weekly) summary of the cost of equivalent units, with respect to a particular
materials, labor, and overhead consumed by element of cost, represents the number of
each department or cost center, along with a units of the product that could have been
record of the quantity of products manufactured. completed with the resources used during the
It provides information necessary to cost period.
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Chapter 6 6-3

EXERCISES
E6-1
(1) Cost from
Preceding Factory
Department Materials Labor Overhead
Equivalent units transferred out ................. 20,000 20,000 20,000 20,000
Equivalent units in ending inventory:
Cost from preceding department
(100% × 5,000) ................................ 5,000
Materials (100% × 5,000) .................... 5,000
Labor (80% × 5,000) .............................. 4,000
Factory overhead (60% × 5,000) ......... 3,000
Total equivalent units................................... 25,000 25,000 24,000 23,000

(2) Cost from

Preceding Factory
Department Materials Labor Overhead
Cost in beginning inventory........................ 0 0 0 0
Cost added during current period .............. $40,000 $15,000 $ 9,600 $16,330
Total cost to be accounted for .................... $40,000 $15,000 $ 9,600 $16,330
Divided by total equivalent units ................ 25,000 25,000 24,000 23,000
Cost per equivalent unit .............................. $ 1.60 $ .60 $ .40 $ .71

E6-2
Work in Process—Department X ............................................. 50,000
Work in Process—Department Y ............................................. 40,000
Materials ........................................................................ 90,000

Work in Process—Department X ............................................. 80,000

Work in Process—Department Y ............................................. 70,000
Payroll ............................................................................ 150,000

Work in Process—Department X ............................................. 180,000

Work in Process—Department Y ............................................. 70,000
Factory Overhead ........................................................ 250,000

Work in Process—Department Y ............................................. 300,000

Work in Process—Department X ................................ 300,000

Finished Goods Inventory........................................................ 448,000

Work in Process—Department Y................................. 448,000
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6-4 Chapter 6

E6-3 Tyndol Fabricators Inc.

Cutting and Forming Department
Cost of Production Report
For November
Quantity Schedule Materials Labor Overhead Quantity
Beginning inventory................................ 800
Started in process this period ............... 3,200
4,000
Transferred to Assembling Department 3,400
Ending Inventory ..................................... 75% 40% 25% 600
4,000

Cost Charged to Department Total Equivalent Unit

Beginning inventory: Cost Units* Cost**
Materials ..................................................................................... $ 17,923
Labor .......................................................................................... 2,352
Factory overhead....................................................................... 3,800
Total cost in beginning inventory.................................... $ 24,075

Cost added during current period:

Materials ..................................................................................... $ 68,625 3,850 $22.48
Labor........................................................................................... 14,756 3,640 4.70
Factory overhead....................................................................... 29,996 3,550 9.52
Total cost added during current period............................ $113,377
Total cost charged to department .................................................. $137,452 $36.70

%
Cost Accounted for as Follows Units Complete Unit Cost Total Cost
Transferred to Assembling Department 3,400 100% $36.70 $124,780
Work in Process, ending inventory:
Materials ............................................ 600 75% $22.48 $10,116
Labor .................................................. 600 40% 4.70 1,128
Factory overhead .............................. 600 25% 9.52 1,428 12,672
Total cost accounted for ........................ $137,452

*Total number of equivalent units required in the cost accounted for section determined as follows:

Materials Labor Overhead

Equivalent units transferred out ............ 3,400 3,400 3,400
Equivalent units in ending inventory .... 450 240 150
Total equivalent units.............................. 3,850 3,640 3,550

** Total cost (i.e., the cost in beginning inventory plus the cost added during the current period)
divided by the total number of equivalent units required in the cost accounted for section
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Chapter 6 6-5

E6-4 Tokyo Manufacturing Company

Molding Department
Cost of Production Report
For August
Quantity Schedule Materials Labor Overhead Quantity
Beginning inventory................................ 1,000
Started in process this period ............... 9,000
10,000
Transferred to Finishing Department .... 9,200
Ending inventory ..................................... 75% 25% 25% 800
10,000

Cost Charged to Department Total Equivalent Unit

Beginning inventory: Cost Units* Cost**
Materials ..................................................................................... $ 4,120
Labor........................................................................................... 522
Factory overhead....................................................................... 961
Total cost in beginning inventory.................................... $ 5,603

Cost added during current period:

Materials ..................................................................................... $39,980 9,800 $4.50
Labor........................................................................................... 12,638 9,400 1.40
Factory overhead....................................................................... 18,779 9,400 2.10
Total cost added during current period............................ $71,397
Total cost charged to department .................................................. $77,000 $8.00

%
Cost Accounted for as Follows Units Complete Unit Cost Total Cost
Transferred to Finishing Department .... 9,200 100% $8.00 $73,600
Work in Process, ending inventory:
Materials .............................................. 800 75% $4.50 $2,700
Labor .................................................... 800 25% 1.40 280
Factory overhead ................................ 800 25% 2.10 420 3,400
Total cost accounted for ........................ $77,000

*Total number of equivalent units required in the cost accounted for section determined as follows:

Materials Labor Overhead

Equivalent units transferred out ....... 9,200 9,200 9,200
Equivalent units in ending inventory 600 200 200
Total equivalent units ........................ 9,800 9,400 9,400

** Total cost (i.e., the cost in beginning inventory plus the cost added during the current period)
divided by the total number of equivalent units required in the cost accounted for section
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6-6 Chapter 6

E6-5 Stanislov Corporation

Forming Department
Cost of Production Report
For September
Quantity Schedule Materials Labor Overhead Quantity
Beginning inventory................................ 1,400
Received from Cutting Department....... 4,600
6,000
Transferred to Painting Department ...... 5,000
Ending inventory ..................................... 60% 30% 30% 1,000
6,000

Cost Charged to Department Total Equivalent Unit

Beginning inventory: Cost Units* Cost**
Cost from preceding department............................................. $ 21,120
Materials .................................................................................... 5,880
Labor........................................................................................... 2,614
Factory overhead....................................................................... 5,228
Total cost in beginning inventory...................................... $ 34,842

Cost added during current period:

Cost from preceding department............................................. $ 68,280 6,000 $14.90
Materials ..................................................................................... 20,440 5,600 4.70
Labor........................................................................................... 17,526 5,300 3.80
Factory overhead ...................................................................... 35,052 5,300 7.60
Total cost added during current period............................ $141,298
Total cost charged to department ................................................. $176,140 $31.00

%
Cost Accounted for as Follows Units Complete Unit Cost Total Cost
Transferred to Painting Department ...... 5,000 100% $31.00 $155,000
Work in Process, ending inventory:
Cost from preceding department .... 1,000 100% $14.90 $14,900
Materials ............................................ 1,000 60% 4.70 2,820
Labor .................................................. 1,000 30% 3.80 1,140
Factory overhead .............................. 1,000 30% 7.60 2,280 21,140
Total cost accounted for......................... $176,140

*Total number of equivalent units required in the cost accounted for section determined as follows:

Prior Dept.
Cost Materials Labor Overhead
Equivalent units transferred out ............ 5,000 5,000 5,000 5,000
Equivalent units in ending inventory .... 1,000 600 300 300
Total equivalent units.............................. 6,000 5,600 5,300 5,300

** Total cost (i.e., the cost in beginning inventory plus the cost added during the current period)
divided by the total number of equivalent units required in the cost accounted for section
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Chapter 6 6-7

E6-6 Sonneli Corporation

Assembly Department
Cost of Production Report
For February
Quantity Schedule Materials Labor Overhead Quantity
Beginning inventory................................ 400
Received from Cutting Department....... 2,100
2,500
Transferred to Finished Goods .............. 2,000
Ending inventory .................................... 80% 60% 60% 500
2,500

Cost Charged to Department Total Equivalent Unit

Beginning inventory: Cost Units* Cost**
Cost from preceding department............................................. $11,800
Materials ..................................................................................... 4,000
Labor .......................................................................................... 1,200
Factory overhead....................................................................... 2,400
Total cost in beginning inventory...................................... $19,400

Cost added during current period:

Cost from preceding department............................................. $63,200 2,500 $30.00
Materials ..................................................................................... 21,200 2,400 10.50
Labor .......................................................................................... 17,660 2,300 8.20
Factory overhead ...................................................................... 35,320 2,300 16.40
Total cost added during current period .......................... $137,380
Total cost charged to department .................................................. $156,780 $65.10

%
Cost Accounted for as Follows Units Complete Unit Cost Total Cost
Transferred to Finished Goods .............. 2,000 100% $65.10 $130,200
Work in Process, ending inventory:
Cost from preceding department .... 500 100% $30.00 $15,000
Materials ............................................ 500 80% 10.50 4,200
Labor .................................................. 500 60% 8.20 2,460
Factory overhead .............................. 500 60% 16.40 4,920 26,580
Total cost accounted for......................... $156,780

*Total number of equivalent units required in the cost accounted for section determined as follows:

Prior Dept.
Cost Materials Labor Overhead
Equivalent units transferred out ............ 2,000 2,000 2,000 2,000
Equivalent units in ending inventory .... 500 400 300 300
Total equivalent units.............................. 2,500 2,400 2,300 2,300

** Total cost (i.e., the cost in beginning inventory plus the cost added during the current period)
divided by the total number of equivalent units required in the cost accounted for section
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6-8 Chapter 6

E6-7 Saleri Manufacturing Corporation

Forming Department
Cost of Production Report
For June
Quantity Schedule Material A Material B Labor Overhead Quantity
Beginning inventory................................ 600
Received from Cutting Department....... 3,900
4,500
Transferred to Finishing Department .... 4,100
Ending inventory ..................................... 100% 0% 30% 30% 400
4,500

Cost Charged to Department Total Equivalent Unit

Beginning inventory: Cost Units* Cost**
Cost from preceding department............................................. $ 4,422
Material A ................................................................................... 2,805
Material B ................................................................................... 0
Labor........................................................................................... 1,250
Factory overhead....................................................................... 1,875
Total cost in beginning inventory .................................... 10,352
Cost added during current period:
Cost from preceding department............................................. $ 29,328 4,500 $ 7.50
Material A ................................................................................... 19,695 4,500 5.00
Material B ................................................................................... 10,250 4,100 2.50
Labor........................................................................................... 15,630 4,220 4.00
Factory overhead ...................................................................... 23,445 4,220 6.00
Total cost added during current period............................ $ 98,348
Total cost charged to department .................................................. $108,700 $25.00

%
Cost Accounted for as Follows Units Complete Unit Cost Total Cost
Transferred to Finishing Department .... 4,100 100% $25.00 $102,500
Work in Process, ending inventory:
Cost from preceding department .... 400 100% $7.50 $3,000
Material A .......................................... 400 100% 5.00 2,000
Material B .......................................... 400 0% 2.50 0
Labor .................................................. 400 30% 4.00 480
Factory overhead ............................. 400 30% 6.00 720 6,200
Total cost accounted for ........................ $108,700

*Total number of equivalent units required in the cost accounted for section determined as follows:
Prior Dept.
Cost Material A Material B Labor Overhead
Equivalent units transferred out ............ 4,100 4,100 4,100 4,100 4,100
Equivalent units in ending inventory .... 400 400 0 120 120
Total equivalent units.............................. 4,500 4,500 4,100 4,220 4,220

** Total cost (i.e., the cost in beginning inventory plus the cost added during the current period)
divided by the total number of equivalent units required in the cost accounted for section
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Chapter 6 6-9

E6-8 Canoli Cola Company

Carbonation Department
Cost of Production Report
For October
Quantity Schedule Materials Labor Overhead Quantity
Beginning inventory ................................................ 1,000
Received from Syrup Department .......................... 2,000
Added to process in Carbonation Department ..... 6,000
9,000
Transferred to Bottling Department ....................... 7,800
Ending inventory ...................................................... 100% 25% 25% 1,200
9,000

Cost Charged to Department Total Equivalent Unit

Beginning inventory: Cost Units* Cost**
Cost from preceding department ........................................... $ 1,120
Materials ..................................................................................... 140
Labor .......................................................................................... 65
Factory overhead....................................................................... 120
Total cost in beginning inventory .................................... $ 1,445
Cost added during current period:
Cost from preceding department............................................. $ 9,680 9,000 $1.20
Materials ..................................................................................... 1,210 9,000 .15
Labor........................................................................................... 1,960 8,100 .25
Factory overhead....................................................................... 3,120 8,100 .40
Total cost added during current period............................ $15,970
Total cost charged to department .................................................. $17,415 $2.00

%
Cost Accounted for as Follows Units Complete Unit Cost Total Cost
Transferred to Bottling Department ...... 7,800 100% $2.00 $15,600
Work in Process, ending inventory:
Cost from preceding department .... 1,200 100% $1.20 $1,440
Materials ........................................... 1,200 100% .15 180
Labor .................................................. 1,200 25% .25 75
Factory overhead ............................. 1,200 25% .40 120 1,815
Total cost accounted for ........................ $17,415

*Total number of equivalent units required in the cost accounted for section determined as follows:

Prior Dept.
Cost Materials Labor Overhead
Equivalent units transferred out ............ 7,800 7,800 7,800 7,800
Equivalent units in ending inventory .... 1,200 1,200 300 300
Total equivalent units.............................. 9,000 9,000 8,100 8,100

** Total cost (i.e., the cost in beginning inventory plus the cost added during the current period)
divided by the total number of equivalent units required in the cost accounted for section
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6-10 Chapter 6

E6-9 Menezes Chemical Company

Blending Department
Cost of Production Report
For March
Quantity Schedule Materials Labor Overhead Quantity
Beginning inventory ................................................. 5,000
Received from Refining Department ...................... 20,000
Added to process in Blending Department ........... 5,000
30,000
Transferred to Finishing Department ..................... 26,000
Ending inventory ...................................................... 100% 80% 90% 4,000
30,000

Cost Charged to Department Total Equivalent Unit

Beginning inventory: Cost Units* Cost**
Cost from preceding department............................................. $4,750
Materials ..................................................................................... 2,415
Labor........................................................................................... 180
Factory overhead....................................................................... 787
Total cost in beginning inventory .................................... $8,112
Cost added during current period:
Cost from preceding department............................................. $25,250 30,000 $1.00
Materials ..................................................................................... 12,885 30,000 .51
Labor .......................................................................................... 2,740 29,200 .10
Factory overhead....................................................................... 8,113 29,600 .30
Total cost added during current period............................ $48,988
Total cost charged to department .................................................. $57,100 $1.91

%
Cost Accounted for as Follows Units Complete Unit Cost Total Cost
Transferred to Finishing Department .... 26,000 100% $1.91 $49,660
Work in Process, ending inventory:
Cost from preceding department .... 4,000 100% $1.00 $4,000
Materials ............................................ 4,000 100% .51 2,040
Labor .................................................. 4,000 80% .10 320
Factory overhead .............................. 4,000 90% .30 1,080 7,440
Total cost accounted for......................... $57,100

*Total number of equivalent units required in the cost accounted for section determined as follows:

Prior Dept.
Cost Materials Labor Overhead
Equivalent units transferred out ............ 26,000 26,000 26,000 26,000
Equivalent units in ending inventory .... 4,000 4,000 3,200 3,600
Total equivalent units.............................. 30,000 30,000 29,200 29,600

** Total cost (i.e., the cost in beginning inventory plus the cost added during the current period)
divided by the total number of equivalent units required in the cost accounted for section
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Chapter 6 6-11

E6-10 APPENDIX
Shankar Manufacturing Company
Cutting Department
Cost of Production Report
For July
Quantity Schedule Materials Labor Overhead Quantity
Beginning inventory................................ 60% 20% 20% 100
Started in process this period ............... 900
1,000
Transferred to Assembly Department ... 850
Ending inventory ..................................... 100% 60% 50% 150
1,000

Cost Charged to Department Total Equivalent Unit

Beginning inventory: Cost Units* Cost**
Materials ..................................................................................... $2,940
Labor........................................................................................... 390
Factory overhead ...................................................................... 585
Total cost in beginning inventory...................................... $3,915
Cost added during current period:
Materials ..................................................................................... $46,530 940 $49.50
Labor........................................................................................... 18,860 920 20.50
Factory overhead....................................................................... 27,150 905 30.00
Total cost added during current period............................ $92,540
Total cost charged to department .................................................. $96,455 $100.00

Cost Accounted for as Follows Units Current % Unit Cost Total Cost
Transferred to Assembly Department:
Beginning inventory ........................ $3,915
Cost to complete:
Materials ............................... 100 40% $49.50 1,980
Labor ..................................... 100 80% 20.50 1,640
Factory overhead ................. 100 80% 30.00 2,400 $ 9,935
Started and completed this period . 750 100% 100.00 75,000
Total cost transferred to Assembly
Department ................................ $84,935
Work in Process, ending inventory:
Materials ............................................ 150 100% $49.50 $7,425
Labor .................................................. 150 60% 20.50 1,845
Factory overhead ............................. 150 50% 30.00 2,250 11,520
Total cost accounted for ........................ $96,455

*Number of equivalent units of cost added during the current period determined as follows:
Materials Labor Overhead
To complete beginning inventory .......... 40 80 80
Started and completed this period........ 750 750 750
Ending inventory ..................................... 150 90 75
Total equivalent units.............................. 940 920 905

** Cost added during the current period divided by the number of equivalent units of cost added dur-
ing the current period
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6-12 Chapter 6

E6-11 APPENDIX
Cantach Tool Company
Assembly Department
Cost of Production Report
For November
Quantity Schedule Materials Labor Overhead Quantity
Beginning inventory................................ 50% 40% 40% 1,200
Received from Cutting Department....... 2,800
4,000
Transferred to Finished Goods .............. 3,000
Ending inventory ..................................... 90% 80% 80% 1,000
4,000

Cost Charged to Department Total Equivalent Unit

Beginning inventory: Cost Units* Cost**
Cost from preceding department........................................... $ 17,280
Materials ..................................................................................... 5,550
Labor........................................................................................... 2,400
Factory overhead....................................................................... 3,600
Total cost in beginning inventory.................................... $ 28,830
Cost added during current period:
Cost from preceding department............................................. $ 40,600 2,800 $14.50
Materials ..................................................................................... 29,700 3,300 9.00
Labor........................................................................................... 16,932 3,320 5.10
Factory overhead....................................................................... 25,398 3,320 7.65
Total cost added during current period............................ $112,630
Total cost charged to department .................................................. $141,460 $36.25
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Chapter 6 6-13

E6-11 APPENDIX (Concluded)

Cost Accounted for as Follows Units Current % Unit Cost Total Cost
Transferred to Finished Goods:
Beginning inventory ......................... $28,830
Cost to complete:
Materials ............................... 1,200 50% $9.00 5,400
Labor ..................................... 1,200 60% 5.10 3,672
Factory overhead ................. 1,200 60% 7.65 5,508 $ 43,410
Started and completed this period 1,800 100% 36.25 65,250
Total cost transferred to Finished Goods $108,660
Work in Process, ending inventory:
Cost from preceding department .... 1,000 100% $14.50 $14,500
Materials ............................................ 1,000 90% 9.00 8,100
Labor ................................................. 1,000 80% 5.10 4,080
Factory overhead .............................. 1,000 80% 7.65 6,120 32,800
Total cost accounted for ........................ $141,460

*Number of equivalent units of cost added during the current period determined as follows:

Prior Dept.
Cost Materials Labor Overhead
To complete beginning inventory .......... 0 600 720 720
Started and completed this period........ 1,800 1,800 1,800 1,800
Ending inventory ..................................... 1,000 900 800 800
Total equivalent units.............................. 2,800 3,300 3,320 3,320

** Cost added during the current period divided by the number of equivalent units of cost added dur-
ing the current period
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6-14 Chapter 6

E6-12 APPENDIX
Southwell Chemical Corporation
Blending Department
Cost of Production Report
For May
Quantity Schedule Materials Labor Overhead Quantity
Beginning inventory................................ 100% 20% 40% 2,000
Received from Refining Department ..... 5,000
Added to process in Blending Department 5,000
12,000
Transferred to Finished Goods ............. 10,500
Ending inventory ..................................... 100% 60% 80% 1,500
12,000

Cost Charged to Department Total Equivalent Unit

Beginning inventory: Cost Units* Cost**
Cost from preceding department............................................. $2,460
Materials ..................................................................................... 500
Labor........................................................................................... 150
Factory overhead....................................................................... 600
Total cost in beginning inventory...................................... $3,710
Cost added during current period:
Cost from preceding department............................................. $12,500 10,000 $1.25
Materials ..................................................................................... 2,500 10,000 .25
Labor........................................................................................... 3,300 11,000 .30
Factory overhead....................................................................... 7,630 10,900 .70
Total cost added during current period............................ $25,930
Total cost charged to department .................................................. $29,640 $2.50
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Chapter 6 6-15

E6-12 APPENDIX (Concluded)

Cost Accounted for as Follows Units Current % Unit Cost Total Cost
Transferred to Finished Goods:
Beginning inventory ......................... $3,710
Cost to complete:
Materials ............................... 2,000 0% $ .25 0
Labor .................................... 2,000 80% .30 480
Factory overhead ................. 2,000 60% .70 840 $ 5,030
Started and completed this period 8,500 100% 2.50 21,250
Total cost transferred to Finished
Goods .......................................... $26,280
Work in Process, ending inventory:
Cost from preceding department .... 1,500 100% $1.25 $1,875
Materials ............................................ 1,500 100% .25 375
Labor .................................................. 1,500 60% .30 270
Factory overhead .............................. 1,500 80% .70 840 3,360
Total cost accounted for ........................ $29,640

*Number of equivalent units of cost added during the current period determined as follows:

Prior Dept.
Cost Materials Labor Overhead
To complete beginning inventory .......... 0 0 1,600 1,200
Started and completed this period........ 8,500 8,500 8,500 8,500
Ending inventory ..................................... 1,500 1,500 900 1,200
Total equivalent units.............................. 10,000 10,000 11,000 10,900

** Cost added during the current period divided by the number of equivalent units of cost added dur-
ing the current period
 To download more slides, ebook, solutions and test bank, visit http://downloadslide.blogspot.com

6-16 Chapter 6

PROBLEMS
P6-1
(1) Meninquez Cabinet Company
Cutting Department
Cost of Production Report
For August
Quantity Schedule Materials Labor Overhead Quantity
Beginning inventory................................ 200
Started in process this period .............. 600
800
Transferred to Assembly Department ... 650
Ending inventory ..................................... 90%. 60% 60% 150
800

Cost Charged to Department Total Equivalent Unit

Beginning inventory: Cost Units* Cost**
Materials ..................................................................................... $ 5,365
Labor........................................................................................... 530
Factory overhead....................................................................... 795
Total cost in beginning inventor........................................ $6,690
Cost added during current period:
Materials ..................................................................................... $26,035 785 $ 40.00
Labor........................................................................................... 8,350 740 12.00
Factory overhead....................................................................... 12,525 740 18.00
Total cost added during current period............................ $46,910
Total cost charged to department .................................................. $53,600 $ 70.00

%
Cost Accounted for as Follows Units Complete Unit Cost Total Cost
Transferred to Assembly Department ... 650 100% $70.00 $45,500
Work in Process, ending inventory:
Materials ............................................ 150 90% $40.00 $5,400
Labor .................................................. 150 60% 12.00 1,080
Factory overhead .............................. 150 60% 18.00 1,620 8,100
Total cost accounted for......................... $53,600

*Total number of equivalent units required in the cost accounted for section determined as follows:

Materials Labor Overhead

Equivalent units transferred out ..... 650 650 650
Equivalent units in ending inventory 135 90 90
Total equivalent units ....................... 785 740 740

** Total cost (i.e., the cost in beginning inventory plus the cost added during the current period)
divided by the total number of equivalent units required in the cost accounted for section
 To download more slides, ebook, solutions and test bank, visit http://downloadslide.blogspot.com

Chapter 6 6-17

P6-1 (Continued)
Meninquez Cabinet Company
Assembly Department
Cost of Production Report
For August
Quantity Schedule Materials Labor Overhead Quantity
Beginning inventory................................ 250
Received from Cutting Department....... 650
900
Transferred to Finished Goods .............. 800
Ending inventory ..................................... 40% 20% 20% 100
900

Cost Charged to Department Total Equivalent Unit

Beginning inventory: Cost Units* Cost**
Cost from preceding department ........................................... $ 17,410
Materials .................................................................................... 3,451
Labor........................................................................................... 3,611
Factory overhead....................................................................... 3,611
Total cost in beginning inventory .................................... $ 28,083
Cost added during current period:
Cost from preceding department............................................. $ 45,500 900 $ 69.90
Materials .................................................................................... 14,273 840 21.10
Labor........................................................................................... 20,989 820 30.00
Factory overhead....................................................................... 20,989 820 30.00
Total cost added during current period ......................... $101,751
Total cost charged to department .................................................. $129,834 $151.00
 To download more slides, ebook, solutions and test bank, visit http://downloadslide.blogspot.com

6-18 Chapter 6

P6-1 (Concluded)

%
Cost Accounted for as Follows Units Complete Unit Cost Total Cost
Transferred to Finished Goods .............. 800 100% $151.00 $120,800
Work in Process, ending inventory:
Cost from preceding department .... 100 100% $69.90 $6,990
Materials ............................................ 100 40% 21.10 844
Labor .................................................. 100 20% 30.00 600
Factory overhead .............................. 100 20% 30.00 600 9,034
Total cost accounted for ........................ $129,834

*Total number of equivalent units required in the cost accounted for section determined as follows:

Prior Dept.
Cost Materials Labor Overhead
Equivalent units transferred out ..... 800 800 800 800
Equivalent units in ending inventory 100 40 20 20
Total equivalent units ....................... 900 840 820 820

** Total cost (i.e., the cost in beginning inventory plus the cost added during the current period)
divided by the total number of equivalent units required in the cost accounted for section

(2) Work in Process—Cutting Department ...................... 26,035

Work in Process—Assembly Department .................. 14,273
Materials .............................................................. 40,308

Work in Process—Cutting Department ...................... 8,350

Work in Process—Assembly Department .................. 20,989
Payroll .................................................................. 29,339

Work in Process—Cutting Department ...................... 12,525

Work in Process—Assembly Department .................. 20,989
Applied Factory Overhead.................................. 33,514

Work in Process—Assembly Department .................. 45,500

Work in Process—Cutting Department ............. 45,500

Finished Goods Inventory ........................................... 120,800

Work in Process—Assembly Department ........ 120,800
 To download more slides, ebook, solutions and test bank, visit http://downloadslide.blogspot.com

Chapter 6 6-19

P6-2
(1) Rimirez Tool Corporation
Casting Department
Cost of Production Report
For December
Quantity Schedule Materials Labor Overhead Quantity
Beginning inventory................................ 1,000
Started in process this period .............. 8,000
9,000
Transferred to Finishing Department .... 7,500
Ending inventory ..................................... 100% 80% 80% 1,500
9,000

Cost Charged to Department Total Equivalent Unit

Beginning inventory: Cost Units* Cost**
Materials ..................................................................................... $915
Labor........................................................................................... 60
Factory overhead....................................................................... 90
Total cost in beginning inventory...................................... $ 1,085
Cost added during current period:
Materials ..................................................................................... $17,085 9,000 $2.00
Labor........................................................................................... 4,290 8,700 .50
Factory overhead....................................................................... 6,435 8,700 .75
Total cost added during current period............................ $27,810
Total cost charged to department .................................................. $28,875 $3.25

%
Cost Accounted for as Follows Units Complete Unit Cost Total Cost
Transferred to Finishing Department .... 7,500 100% $3.25 $24,375
Work in Process, ending inventory:
Materials ............................................ 1,500 100% $2.00 $3,000
Labor .................................................. 1,500 80% .50 600
Factory overhead .............................. 1,500 80% .75 900 4,500
Total cost accounted for ........................ $28,875

*Total number of equivalent units required in the cost accounted for section determined as follows:

Materials Labor Overhead

Equivalent units transferred out ............................. 7,500 7,500 7,500
Equivalent units in ending inventory...................... 1,500 1,200 1,200
Total equivalent units ............................................... 9,000 8,700 8,700

** Total cost (i.e., the cost in beginning inventory plus the cost added during the current period)
divided by the total number of equivalent units required in the cost accounted for section
 To download more slides, ebook, solutions and test bank, visit http://downloadslide.blogspot.com

6-20 Chapter 6

P6-2 (Continued)
Rimirez Tool Corporation
Finishing Department
Cost of Production Report
For December
Quantity Schedule Labor Overhead Quantity
Beginning inventory 1,500
Received from Casting Department ......................... 7,500
9,000
Transferred to Finished Goods ................................ 7,000
Ending inventory ........................................................ 40% 50% 2,000
9,000

Cost Charged to Department Total Equivalent Unit

Beginning inventory: Cost Units* Cost**
Cost from preceding department............................................. $ 4,785
Labor........................................................................................... 201
Factory overhead ...................................................................... 555
Total cost in beginning inventory...................................... $ 5,541
Cost added during current period:
Cost from preceding department............................................. $24,375 9,000 $3.24
Labor........................................................................................... 2,919 7,800 .40
Factory overhead....................................................................... 3,125 8,000 .46
Total cost added during current period............................ $30,419
Total cost charged to department .................................................. $35,960 $4.10
 To download more slides, ebook, solutions and test bank, visit http://downloadslide.blogspot.com

Chapter 6 6-21

P6-2 (Concluded)

%
Cost Accounted for as Follows Units Complete Unit Cost Total Cost
Transferred to Finished Goods .............. 7,000 100% $4.10 $28,700
Work in Process, ending inventory:
Cost from preceding department .... 2,000 100% $3.24 $6,480
Labor .................................................. 2,000 40% .40 320
Factory overhead .............................. 2,000 50% .46 460 7,260
Total cost accounted for......................... $35,960

*Total number of equivalent units required in the cost accounted for section determined as follows:

Prior Dept.
Cost Labor Overhead
Equivalent units transferred out......................... 7,000 7,000 7,000
Equivalent units in ending inventory ................. 2,000 800 1,000
Total equivalent units ......................................... 9,000 7,800 8,000

** Total cost (i.e., the cost in beginning inventory plus the cost added during the current period)
divided by the total number of equivalent units required in the cost accounted for section

(2) Work in Process—Casting Department...................... 17,085

Materials .............................................................. 17,085

Work in Process—Casting Department...................... 4,290

Work in Process—Finishing Department................... 2,919
Payroll .................................................................. 7,209

Work in Process—Casting Department...................... 6,435

Work in Process—Finishing Department................... 3,125
Applied Factory Overhead.................................. 9,560

Work in Process—Finishing Department................... 24,375

Work in Process—Casting Department ............ 24,375

Finished Goods Inventory ........................................... 28,700

Work in Process—Finishing Department.......... 28,700
 To download more slides, ebook, solutions and test bank, visit http://downloadslide.blogspot.com

6-22 Chapter 6

P6-3
(1) Jetter Engine Corporation
Casting Department
Cost of Production Report
For February
Quantity Schedule Materials Labor Overhead Quantity
Beginning inventory................................ 500
Started in process this period ............... 3,000
3,500
Transferred to Assembly Department ... 2,700
Ending inventory ..................................... 100% 80% 90% 800
3,500

Cost Charged to Department Total Equivalent Unit

Beginning inventory: Cost Units* Cost**
Materials ..................................................................................... $ 10,925
Labor........................................................................................... 338
Factory overhead ...................................................................... 2,839
Total cost in beginning inventory...................................... $ 14,102
Cost added during current period:
Materials ..................................................................................... $146,575 3,500 $ 45.00
Labor........................................................................................... 16,362 3,340 5.00
Factory overhead....................................................................... 48,461 3,420 15.00
Total cost added during current period............................ $211,398
Total cost charged to department .................................................. $225,500 $ 65.00

%
Cost Accounted for as Follows Units Complete Unit Cost Total Cost
Transferred to Assembly Department ... 2,700 100% $65.00 $175,500
Work in Process, ending inventory:
Materials ........................................... 800 100% $45.00 $36,000
Labor .................................................. 800 80% 5.00 3,200
Factory overhead .............................. 800 90% 15.00 10,800 50,000
Total cost accounted for......................... $225,500

*Total number of equivalent units required in the cost accounted for section determined as follows:

Materials Labor Overhead

Equivalent units transferred out ............................... 2,700 2,700 2,700
Equivalent units in ending inventory........................ 800 640 720
Total equivalent units ................................................ 3,500 3,340 3,420

** Total cost (i.e., the cost in beginning inventory plus the cost added during the current period)
divided by the total number of equivalent units required in the cost accounted for section
 To download more slides, ebook, solutions and test bank, visit http://downloadslide.blogspot.com

Chapter 6 6-23

P6-3 (Continued)
Jetter Engine Corporation
Assembly Department
Cost of Production Report
For February
Quantity Schedule Materials Labor Overhead Quantity
Beginning inventory................................ 1,000
Received from Casting Department ..... 2,700
3,700
Transferred to Finishing Department .... 2,900
Ending inventory ..................................... 70% 30% 30% 800
3,700

Cost Charged to Department Total Equivalent Unit

Beginning inventory: Cost Units* Cost**
Cost from preceding department ........................................... $ 63,150
Materials ..................................................................................... 40,258
Labor .......................................................................................... 12,426
Factory overhead ...................................................................... 12,426
Total cost in beginning inventory.................................... $128,260
Cost added during current period:
Cost from preceding department............................................. $175,500 3,700 $64.50
Materials ..................................................................................... 116,480 3,460 45.30
Labor........................................................................................... 44,408 3,140 18.10
Factory overhead....................................................................... 44,408 3,140 18.10
Total cost added during current period............................ $380,796
Total cost charged to department ................................................. $509,056 $146.00

%
Cost Accounted for as Follows Units Complete Unit Cost Total Cost
Transferred to Finishing Department .... 2,900 100% $146.00 $423,400
Work in Process, ending inventory
Cost from preceding department .... 800 100% $ 64.50 $51,600
Materials ............................................ 800 70% 45.30 25,368
Labor .................................................. 800 30% 18.10 4,344
Factory overhead .............................. 800 30% 18.10 4,344 85,656
Total cost accounted for......................... $509,056

*Total number of equivalent units required in the cost accounted for section determined as follows:

Prior Dept.
Cost Materials Labor Overhead
Equivalent units transferred out ............ 2,900 2,900 2,900 2,900
Equivalent units in ending inventory .... 800 560 240 240
Total equivalent units.............................. 3,700 3,460 3,140 3,140

** Total cost (i.e., the cost in beginning inventory plus the cost added during the current period)
divided by the total number of equivalent units required in the cost accounted for section
 To download more slides, ebook, solutions and test bank, visit http://downloadslide.blogspot.com

6-24 Chapter 6

P6-3 (Continued)
Jetter Engine Corporation
Finishing Department
Cost of Production Report
For February
Quantity Schedule Labor Overhead Quantity
Beginning inventory ................................................... 300
Received from Assembly Department ...................... 2,900
3,200
Transferred to Finished Goods ................................ 2,800
Ending inventory......................................................... 50% 50% 400
3,200

Cost Charged to Department Total Equivalent Unit

Beginning inventory: Cost Units* Cost**
Cost from preceding department............................................. $ 42,840
Labor........................................................................................... 2,760
Factory overhead....................................................................... 4,140
Total cost in beginning inventory ................................... $ 49,740
Cost added during current period:
Cost from preceding department............................................. $423,400 3,200 $ 145.70
Labor........................................................................................... 12,240 3,000 5.00
Factory overhead....................................................................... 18,360 3,000 7.50
Total cost added during current period............................ $454,000
Total cost charged to department ................................................. $503,740 $ 158.20

%
Cost Accounted for as Follows Units Complete Unit Cost Total Cost
Transferred to Finished Goods .............. 2,800 100% $ 158.20 $442,960
Work in Process, ending inventory:
Cost from preceding department .... 400 100% $ 145.70 $58,280
Labor .................................................. 400 50% 5.00 1,000
Factory overhead .............................. 400 50% 7.50 1,500 60,780
Total cost accounted for......................... $503,740

*Total number of equivalent units required in the cost accounted for section determined as follows:

Prior Dept.
Cost Labor Overhead
Equivalent units transferred out ............................... 2,800 2,800 2,800
Equivalent units in ending inventory........................ 400 200 200
Total equivalent units ................................................. 3,200 3,000 3,000

** Total cost (i.e., the cost in beginning inventory plus the cost added during the current period)
divided by the total number of equivalent units required in the cost accounted for section
 To download more slides, ebook, solutions and test bank, visit http://downloadslide.blogspot.com

Chapter 6 6-25

P6-3 (Concluded)

(2) Work in Process—Casting Department...................... 146,575

Work in Process—Assembly Department .................. 116,480
Materials ............................................................... 263,055

Work in Process—Casting Department...................... 16,362

Work in Process—Assembly Department .................. 44,408
Work in Process—Finishing Department................... 12,240
Payroll .................................................................. 73,010

Work in Process—Casting Department...................... 48,461

Work in Process—Assembly Department .................. 44,408
Work in Process—Finishing Department................... 18,360
Applied Factory Overhead.................................. 111,229

Work in Process—Assembly Department .................. 175,500

Work in Process—Casting Department............. 175,500

Work in Process—Finishing Department................... 423,400

Work in Process—Assembly Department ......... 423,400

Finished Goods inventory ........................................... 442,960

Work in Process—Finishing Department.......... 442,960
 To download more slides, ebook, solutions and test bank, visit http://downloadslide.blogspot.com

6-26 Chapter 6

P6-4
(1) Peneli Cologne Company
Blending Department
Cost of Production Report
For June
Quantity Schedule Materials Labor Overhead Quantity
Beginning inventory................................ 1,000
Started in process this period ............... 6,000
7,000
Transferred to Finishing Department .... 6,400
Ending inventory ..................................... 60% 20% 25% 600
7,000

Cost Charged to Department Total Equivalent Unit

Beginning inventory: Cost Units* Cost**
Materials ..................................................................................... $ 19,620
Labor........................................................................................... 944
Factory overhead....................................................................... 2,375
Total cost in beginning inventory...................................... $ 22,939
Cost added during current period:
Materials ..................................................................................... $129,100 6,760 $22.00
Labor........................................................................................... 6,880 6,520 1.20
Factory overhead....................................................................... 29,065 6,550 4.80
Total cost added during current period ........................... $165,045
Total cost charged to department ................................................. $187,984 $28.00

%
Cost Accounted for as Follows Units Complete Unit Cost Total Cost
Transferred to Finishing Department .... 6,400 100% $28.00 $179,200
Work in Process, ending inventory:
Materials ............................................ 600 60% $22.00 $7,920
Labor .................................................. 600 20% 1.20 144
Factory overhead .............................. 600 25% 4.80 720 8,784
Total cost accounted for......................... $187,984

*Total number of equivalent units required in the cost accounted for section determined as follows:

Materials Labor Overhead

Equivalent units transferred out......................... 6,400 6,400 6,400
Equivalent units in ending inventory ................. 360 120 150
Total equivalent units........................................... 6,760 6,520 6,550

** Total cost (i.e., the cost in beginning inventory plus the cost added during the current period)
divided by the total number of equivalent units required in the cost accounted for section
 To download more slides, ebook, solutions and test bank, visit http://downloadslide.blogspot.com

Chapter 6 6-27

P6-4 (Continued)
Peneli Cologne Company
Finishing Department
Cost of Production Report
For June
Quantity Schedule Materials Labor Overhead Quantity
Beginning inventory ................................................... 1,400
Received from Blending Department ...................... 6,400
Added to process in Finishing Department............. 19,200
27,000
Transferred to Finished Goods ................................. 26,000
Ending inventory ....................................................... 100% 70% 70% 1,000
27,000

Cost Charged to Department Total Equivalent Unit

Beginning inventory: Cost Units* Cost**
Cost from preceding department ........................................... $ 8,450
Materials ..................................................................................... 1,395
Labor........................................................................................... 106
Factory overhead....................................................................... 659
Total cost in beginning inventory...................................... $ 10,610
Cost added during current period:
Cost from preceding department............................................. $179,200 27,000 $ 6.95
Materials ..................................................................................... 28,305 27,000 1.10
Labor........................................................................................... 19,919 26,700 .75
Factory overhead....................................................................... 60,751 26,700 2.30
Total cost added during current period............................ $288,175
Total cost charged to department .................................................. $298,785 $11.10
 To download more slides, ebook, solutions and test bank, visit http://downloadslide.blogspot.com

6-28 Chapter 6

P6-4 (Concluded)

%
Cost Accounted for as Follows Units Complete Unit Cost Total Cost
Transferred to Finished Goods .............. 26,000 100% $11.10 $288,600
Work in Process, ending inventory:
Cost from preceding department .... 1,000 100% $ 6.95 $6,950
Materials ............................................ 1,000 100% 1.10 1,100
Labor .................................................. 1,000 70% .75 525
Factory overhead .............................. 1,000 70% 2.30 1,610 10,185
Total cost accounted for ........................ $298,785

*Total number of equivalent units required in the cost accounted for section determined as follows:

Prior Dept.
Cost Materials Labor Overhead
Equivalent units transferred out ............ 26,000 26,000 26,000 26,000
Equivalent units in ending inventory .... 1,000 1,000 700 700
Total equivalent units.............................. 27,000 27,000 26,700 26,700

** Total cost (i.e., the cost in beginning inventory plus the cost added during the current period)
divided by the total number of equivalent units required in the cost accounted for section

(2) Work in Process—Blending Department ................... 129,100

Work in Process—Finishing Department................... 28,305
Materials .............................................................. 157,405

Work in Process—Blending Department ................... 6,880

Work in Process—Finishing Department................... 19,919
Payroll ................................................................... 26,799

Work in Process—Blending Department ................... 29,065

Work in Process—Finishing Department................... 60,751
Applied Factory Overhead ................................. 89,816

Work in Process—Finishing Department................... 179,200

Work in Process—Blending Department .......... 179,200

Finished Goods inventory ........................................... 288,600

Work in Process—Finishing Department.......... 288,600
 To download more slides, ebook, solutions and test bank, visit http://downloadslide.blogspot.com

Chapter 6 6-29

P6-5

(1) Hi-tech Chemical Corporation

Refining Department
Cost of Production Report
For March
Quantity Schedule Materials Labor Overhead Quantity
Beginning inventory .................................................. 800
Started in process this period................................... 7,200
8,000
Transferred to Blending Department ........................ 7,000
Ending inventory......................................................... 100% 75% 50% 1,000
8,000

Cost Charged to Department Total Equivalent Unit

Beginning inventory: Cost Units* Cost**
Materials ..................................................................................... $728
Labor........................................................................................... 30
Factory overhead....................................................................... 60
Total cost in beginning inventory .................................... $818
Cost added during current period:
Materials .................................................................................... $7,272 8,000 $ 1.00
Labor .......................................................................................... 1,520 7,750 .20
Factory overhead....................................................................... 2,940 7,500 .40
Total cost added during current period............................ $11,732
Total cost charged to department ................................................. $12,550 $ 1.60

%
Cost Accounted for as Follows Units Complete Unit Cost Total Cost
Transferred to Blending Department..... 7,000 100% $1.60 11,200
Work in Process, ending inventory:
Materials ............................................ 1,000 100% $1.00 $1,000
Labor ................................................. 1,000 75% .20 150
Factory overhead .............................. 1,000 50% .40 200 1,350
Total cost accounted for......................... $12,550

*Total number of equivalent units required in the cost accounted for section determined as follows:

Materials Labor Overhead

Equivalent units transferred out ............ 7,000 7,000 7,000
Equivalent units in ending inventory .... 1,000 750 500
Total equivalent units.............................. 8,000 7,750 7,500

** Total cost (i.e., the cost in beginning inventory plus the cost added during the current period)
divided by the total number of equivalent units required in the cost accounted for section
 To download more slides, ebook, solutions and test bank, visit http://downloadslide.blogspot.com

6-30 Chapter 6

P6-5 (Continued)
Hi-tech Chemical Corporation
Blending Department
Cost of Production Report
For March
Quantity Schedule Materials Labor Overhead Quantity
Beginning inventory................................ 1,400
Received from Refining Department .... 7,000
Added to process in Blending Department 1,800
10,200
Transferred to Finished Goods ............. 9,200
Ending inventory ..................................... 80% 40% 40% 1,000
10,200

Cost Charged to Department Total Equivalent Unit

Beginning inventory: Cost Units* Cost**
Cost from preceding department............................................. $ 1,754
Materials ..................................................................................... 620
Labor........................................................................................... 68
Factory overhead ...................................................................... 160
Total cost in beginning inventory...................................... $ 2,602
Cost added during current period:
Cost from preceding department............................................. $11,200 10,200 $1.27
Materials .................................................................................... 4,380 10,000 .50
Labor........................................................................................... 3,100 9,600 .33
Factory overhead....................................................................... 5,600 9,600 .60
Total cost added during current period ........................... $24,280
Total cost charged to department .................................................. $26,882 $2.70
 To download more slides, ebook, solutions and test bank, visit http://downloadslide.blogspot.com

Chapter 6 6-31

P6-5 (Concluded)

%
Cost Accounted for as Follows Units Complete Unit Cost Total Cost
Transferred to Finished Goods .............. 9,200 100% $2.70 $24,840
Work in Process, ending inventory:
Cost from preceding department .... 1,000 100% $1.27 $1,270
Materials ............................................ 1,000 80% .50 400
Labor ................................................. 1,000 40% .33 132
Factory overhead .............................. 1,000 40% .60 240 2,042
Total cost accounted for......................... $26,882

*Total number of equivalent units required in the cost accounted for section determined as follows:

Prior Dept.
Cost Materials Labor Overhead
Equivalent units transferred out ..... 9,200 9,200 9,200 9,200
Equivalent units in ending inventory 1,000 800 400 400
Total equivalent units ....................... 10,200 10,000 9,600 9,600

** Total cost (i.e., the cost in beginning inventory plus the cost added during the current period)
divided by the total number of equivalent units required in the cost accounted for section

(2)

Work in Process—Refining Department .................... 7,272

Work in Process—Blending Department ................... 4,380
Materials ............................................................... 11,652

Work in Process—Refining Department .................... 1,520

Work in Process—Blending Department ................... 3,100
Payroll ................................................................... 4,620

Work in Process—Refining Department .................... 2,940

Work in Process—Blending Department ................... 5,600
Applied Factory Overhead ................................. 8,540

Work in Process—Blending Department ................... 11,200

Work in Process—Refining Department .......... 11,200

Finished Goods Inventory ........................................... 24,840

Work in Process—Blending Department ......... 24,840
 To download more slides, ebook, solutions and test bank, visit http://downloadslide.blogspot.com

6-32 Chapter 6

P6-6 APPENDIX

(1) Upton Manufacturing Company

Cutting Department
Cost of Production Report
For October
Quantity Schedule Materials Labor Overhead Quantity
Beginning inventory................................ 90% 40% 20% 1,000
Started in process this period ............... 9,000
10,000
Transferred to Assembly Department ... 8,500
Ending inventory ..................................... 100% 80% 100% 1,500
10,000

Cost Charged to Department Total Equivalent Unit

Beginning inventory: Cost Units* Cost**
Materials ..................................................................................... $8,010
Labor........................................................................................... 1,750
Factory overhead....................................................................... 790
Total cost in beginning inventory...................................... $ 10,550
Cost added during current period:
Materials ..................................................................................... $ 81,900 9,100 $ 9.00
Labor........................................................................................... 18,600 9,300 2.00
Factory overhead ...................................................................... 39,200 9,800 4.00
Total cost added during current period............................ $139,700
Total cost charged to department .................................................. $150,250 $15.00

Cost Accounted for as Follows Units Current % Unit Cost Total Cost
Transferred to Assembly Department:
Beginning inventory ......................... $10,550
Cost to complete:
Materials ............................... 1,000 10% $ 9.00 900
Labor ..................................... 1,000 60% 2.00 1,200
Factory overhead ................. 1,000 80% 4.00 3,200 $ 15,850
Started and completed this period . 7,500 100% 15.00 112,500
Total cost transferred to Assembly
Department ................................. $128,350
Work in Process, ending inventory:
Materials ............................................ 1,500 100% $ 9.00 $13,500
Labor .................................................. 1,500 80% 2.00 2,400
Factory overhead .............................. 1,500 100% 4.00 6,000 21,900
Total cost accounted for......................... $150,250
 To download more slides, ebook, solutions and test bank, visit http://downloadslide.blogspot.com

Chapter 6 6-33

P6-6 APPENDIX (Continued)

* Number of equivalent units of cost added during the current period determined as follows:

Materials Labor Overhead

To complete beginning inventory ... 100 600 800
Started and completed this period 7,500 7,500 7,500
Ending inventory............................... 1,500 1,200 1,500
Total equivalent units ....................... 9,100 9,300 9,800

** Cost added during the current period divided by the number of equivalent units of cost added dur-
ing the current period
 To download more slides, ebook, solutions and test bank, visit http://downloadslide.blogspot.com

6-34 Chapter 6

P6-6 APPENDIX (Continued)

Upton Manufacturing Company

Assembly Department
Cost of Production Report
For October
Quantity Schedule Materials Labor Overhead Quantity
Beginning inventory................................ 75% 60% 60% 2,000
Received from Cutting Department....... 8,500
10,500
Transferred to Finished Goods Inventory 9,500
Ending inventory ..................................... 60% 40% 40% 1,000
10,500

Cost Charged to Department Total Equivalent Unit

Beginning inventory: Cost Units* Cost**
Cost from preceding department............................................. $ 4,000
Materials ..................................................................................... 400
Labor........................................................................................... 800
Factory overhead....................................................................... 1,600
Total cost in beginning inventory...................................... $ 6,800
Cost added during current period:
Cost from preceding department............................................. $128,350 8,500 $15.10
Materials ..................................................................................... 30,100 8,600 3.50
Labor........................................................................................... 21,315 8,700 2.45
Factory overhead ...................................................................... 30,015 8,700 3.45
Total cost added during current period............................ $209,780
Total cost charged to department .................................................. $216,580 $24.50

Cost Accounted for as Follows Units Current % Unit Cost Total Cost
Transferred to Finished Goods:
Beginning inventory ........................ $ 6,800
Cost to complete:
Materials ............................... 2,000 25% $ 3.50 1,750
Labor ..................................... 2,000 40% 2.45 1,960
Factory overhead ................. 2,000 40% 3.45 2,760 $ 13,270
Started and completed this period . 7,500 100% 24.50 183,750
Total cost transferred to Finished
Goods .......................................... $197,020
Work in Process, ending inventory:
Cost from preceding department .... 1,000 100% $15.10 $15,100
Materials ............................................ 1,000 60% 3.50 2,100
Labor .................................................. 1,000 40% 2.45 980
Factory overhead .............................. 1,000 40% 3.45 1,380 19,560
Total cost accounted for......................... $216,580
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Chapter 6 6-35

P6-6 APPENDIX (Concluded)

*Number of equivalent units of cost added during the current period determined as follows:

Prior Dept.
Cost Materials Labor Overhead
To complete beginning inventory ... 0 500 800 800
Started and completed this period 7,500 7,500 7,500 7,500
Ending inventory............................... 1,000 600 400 400
Total equivalent units ...................... 8,500 8,600 8,700 8,700

** Cost added during the current period divided by the number of equivalent units of cost added dur-
ing the current period

(2) Work in Process—Cutting Department ...................... 81,900

Work in Process—Assembly Department .................. 30,100
Materials .............................................................. 112,000

Work in Process—Cutting Department ...................... 18,600

Work in Process—Assembly Department .................. 21,315
Payroll .................................................................. 39,915

Work in Process—Cutting Department ...................... 39,200

Work in Process—Assembly Department .................. 30,015
Applied Factory Overhead.................................. 69,215

Work in Process—Assembly Department .................. 128,350

Work in Process—Cutting Department ............. 128,350

Finished Goods Inventory ........................................... 197,020

Work in Process—Assembly Department ........ 197,020
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6-36 Chapter 6

P6-7 APPENDIX
(1) Felicia Manufacturing Company
Fabricating Department
Cost of Production Report
For August
Quantity Schedule Materials Labor Overhead Quantity
Beginning inventory................................ 100% 40% 80% 400
Started in process this period .............. 1,200
1,600
Transferred to Finishing Department .... 1,100
Ending inventory ..................................... 100% 80% 90% 500
1,600

Cost Charged to Department Total Equivalent Unit

Beginning inventory: Cost Units* Cost**
Materials ..................................................................................... $ 29,280
Labor........................................................................................... 1,900
Factory overhead....................................................................... 11,800
Total cost in beginning inventory...................................... $ 42,980
Cost added during current period:
Materials .................................................................................... $90,000 1,200 $ 75.00
Labor........................................................................................... 16,080 1,340 12.00
Factory overhead....................................................................... 46,740 1,230 38.00
Total cost added during current period............................ $152,820
Total cost charged to department .................................................. $195,800 $125.00
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Chapter 6 6-37

P6-7 APPENDIX (Continued)

Cost Accounted for as Follows Units Current % Unit Cost Total Cost
Transferred to Finishing Department:
Beginning inventory ......................... $42,980
Cost to complete:
Materials ............................... 400 0% $ 75.00 0
Labor ..................................... 400 60% 12.00 2,880
Factory overhead ................. 400 20% 38.00 3,040 $ 48,900
Started and completed this period 700 100% 125.00 87,500
Total cost transferred to Finishing
Department ................................. $136,400
Work in Process, ending inventory:
Materials ............................................ 500 100% $ 75.00 $37,500
Labor .................................................. 500 80% 12.00 4,800
Factory overhead .............................. 500 90% 38.00 17,100 59,400
Total cost accounted for ........................ $195,800

*Number of equivalent units of cost added during the current period determined as follows:

Materials Labor Overhead

To complete beginning inventory ....................... 0 240 80
Started and completed this period..................... 700 700 700
Ending inventory .................................................. 500 400 450
Total equivalent units........................................... 1,200 1,340 1,230

** Cost added during the current period divided by the number of equivalent units of cost added dur-
ing the current period
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6-38 Chapter 6

P6-7 APPENDIX (Continued)

Felicia Manufacturing Company
Finishing Department
Cost of Production Report
For August
Quantity Schedule Materials Labor Overhead Quantity
Beginning inventory................................ 40% 20% 20% 600
Received from Fabricating Department 1,100
1,700
Transferred to Finished Goods Inventory 1,300
Ending inventory ..................................... 100% 60% 60% 400
1,700

Cost Charged to Department Total Equivalent Unit

Beginning inventory: Cost Units* Cost**
Cost from preceding department............................................. $ 74,000
Materials .................................................................................... 230
Labor........................................................................................... 1,600
Factory overhead ...................................................................... 2,520
Total cost in beginning inventory ................................... $ 78,350
Cost added during current period:
Cost from preceding department............................................. $136,400 1,100 $ 124.00
Materials ..................................................................................... 2,920 1,460 2.00
Labor........................................................................................... 19,880 1,420 14.00
Factory overhead ...................................................................... 28,400 1,420 20.00
Total cost added during current period............................ $187,600
Total cost charged to department .................................................. $265,950 $ 160.00

Cost Accounted for as Follows Units Current % Unit Cost Total Cost
Transferred to Finished Goods:
Beginning inventory ......................... $78,350
Cost to complete:
Materials ............................... 600 60% $ 2.00 720
Labor ..................................... 600 80% 14.00 6,720
Factory overhead ................ 600 80% 20.00 9,600 $ 95,390
Started and completed this period . 700 100% 160.00 112,000
Total cost transferred to Finished
Goods .......................................... $207,390
Work in Process, ending inventory:
Cost from preceding department .... 400 100% $124.00 $49,600
Materials ............................................ 400 100% 2.00 800
Labor .................................................. 400 60% 14.00 3,360
Factory overhead ............................. 400 60% 20.00 4,800 58,560
Total cost accounted for ........................ $265,950
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Chapter 6 6-39

6-7 APPENDIX (Concluded)

*Number of equivalent units of cost added during the current period determined as follows:

Prior Dept.
Cost Materials Labor Overhead
To complete beginning inventory ... 0 360 480 480
Started and completed this period 700 700 700 700
Ending inventory............................... 400 400 240 240
Total equivalent units ....................... 1,100 1,460 1,420 1,420

** Cost added during the current period divided by the number of equivalent units of cost added dur-
ing the current period

(2) Work in Process—Fabricating Department ............... 90,000

Work in Process—Finishing Department................... 2,920
Materials .............................................................. 92,920

Work in Process—Fabricating Department ............... 16,080

Work in Process—Finishing Department................... 19,880
Payroll .................................................................. 35,960

Work in Process—Fabricating Department ............... 46,740

Work in Process—Finishing Department................... 28,400
Applied Factory Overhead.................................. 75,140

Work in Process—Finishing Department................... 136,400

Work in Process—Fabricating Department ...... 136,400

Finished Goods Inventory ........................................... 207,390

Work in Process-Finishing Department ............ 207,390
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6-40 Chapter 6

P6-8 APPENDIX
(1) Tatanach Beverage Company
Mashing Department
Cost of Production Report
For September
Quantity Schedule Materials Labor Overhead Quantity
Beginning inventory................................ 90% 60% 30% 600
Started in process this period ............... 3,000
3,600
Transferred to Blending Department..... 3,100
Ending inventory ..................................... 60% 40% 20% 500
3,600

Cost Charged to Department Total Equivalent Unit

Beginning inventory: Cost Units* Cost**
Materials ..................................................................................... $ 1,088
Labor........................................................................................... 172
Factory overhead....................................................................... 172
Total cost in beginning inventory...................................... $ 1,432
Cost added during current period:
Materials ..................................................................................... $ 6,006 2,860 $2.10
Labor........................................................................................... 1,470 2,940 .50
Factory overhead....................................................................... 3,020 3,020 1.00
Total cost added during current period............................ $10,496
Total cost charged to department .................................................. $11,928 $3.60
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Chapter 6 6-41

P6-8 APPENDIX (Continued)

Cost Accounted for as Follows Units Current % Unit Cost Total Cost
Transferred to Blending Department:
Beginning inventory ......................... $1,432
Cost to complete:
Materials ............................... 600 10% $2.10 126
Labor ..................................... 600 40% .50 120
Factory overhead ................. 600 70% 1.00 420 $ 2,098
Started and completed this period 2,500 100% 3.60 9,000
Total cost transferred to Blending
Department ................................. $11,098
Work in Process, ending inventory:
Materials ............................................ 500 60% $2.10 $ 630
Labor .................................................. 500 40% .50 100
Factory overhead .............................. 500 20% 1.00 100 830
Total cost accounted for......................... $11,928

*Number of equivalent units of cost added during the current period determined as follows:

Materials Labor Overhead

To complete beginning inventory ... 60 240 420
Started and completed this period . 2,500 2,500 2,500
Ending inventory............................... 300 200 100
Total equivalent units ....................... 2,860 2,940 3,020

** Cost added during the current period divided by the number of equivalent units of cost added dur-
ing the current period
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6-42 Chapter 6

P6-8 APPENDIX (Continued)

Tatanach Beverage Company

Blending Department
Cost of Production Report
For September
Quantity Schedule Materials Labor Overhead Quantity
Beginning inventory ................................................... 50% 20% 20% 1,000
Received from Mashing Department ........................ 3,100
Added to process in Blending Department ............. 3,100
7,200
Transferred to Finished Goods Inventory ............... 6,400
Ending inventory......................................................... 100% 60% 60% 800
7,200

Cost Charged to Department Total Equivalent Unit

Beginning inventory: Cost Units* Cost**
Cost from preceding department............................................. $ 1,770
Materials ..................................................................................... 100
Labor........................................................................................... 55
Factory overhead....................................................................... 74
Total cost in beginning inventory...................................... $ 1,999
Cost added during current period:
Cost from preceding department............................................. $11,098 6,200 $1.79
Materials ..................................................................................... 1,407 6,700 .21
Labor........................................................................................... 2,004 6,680 .30
Factory overhead....................................................................... 2,672 6,680 .40
Total cost added during current period............................ $17,181
Total cost charged to department .................................................. $19,180 $2.70

Cost Accounted for as Follows Units Current % Unit Cost Total Cost
Transferred to Finished Goods:
Beginning inventory ......................... $1,999
Cost to complete:
Materials ............................... 1,000 50% $ .21 105
Labor ..................................... 1,000 80% .30 240
Factory overhead ................. 1,000 80% .40 320 $ 2,664
Started and completed this period 5,400 100% 2.70 14,580
Total cost transferred to Finished
Goods .......................................... $17,244
Work in Process, ending inventory:
Cost from preceding department .... 800 100% $1.79 $1,432
Materials ............................................ 800 100% .21 168
Labor .................................................. 800 60% .30 144
Factory overhead .............................. 800 60% .40 192 1,936
Total cost accounted for ........................ $19,180
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Chapter 6 6-43

P6-8 APPENDIX (Concluded)

*Number of equivalent units of cost added during the current period determined as follows:

Prior Dept.
Cost Materials Labor Overhead
To complete beginning inventory ... 0 500 800 800
Started and completed this period 5,400 5,400 5,400 5,400
Ending inventory............................... 800 800 480 480
Total equivalent units ....................... 6,200 6,700 6,680 6,680

** Cost added during the current period divided by the number of equivalent units of cost added dur-
ing the current period

(2) Work in Process—Mashing Department .................... 6,006

Work in Process—Blending Department ................... 1,407
Materials .............................................................. 7,413

Work in Process—Mashing Department .................... 1,470

Work in Process—Blending Department ................... 2,004
Payroll .................................................................. 3,474

Work in Process—Mashing Department .................... 3,020

Work in Process—Blending Department ................... 2,672
Applied Factory Overhead.................................. 5,692

Work in Process—Blending Department ................... 11,098

Work in Process—Mashing Department ........... 11,098

Finished Goods Inventory ........................................... 17,244

Work in Process—Blending Department .......... 17,244