Chapter 4

Process Costing

Exercise 4-2 (10 minutes)

Weighted-Average Method

Equivalent Units
Material Conversio
s n
Units transferred out 190,000 190,000
Work in process, ending:
15,000 units × 80% 12,000
15,000 units × 40% 6,000
Equivalent units of production 202,000 196,000
Exercise 4-3 (10 minutes)

Weighted-Average Method

1.
Materials Labor Overhead
Cost of beginning work in
process inventory $ 18,000 $ 5,500 $ 27,500
Cost added during the period 238,900 80,300 401,500
Total cost (a) $256,900 $85,800 $429,000

Equivalent units of production 35,000 33,000 33,000

 (b)
Cost per equivalent unit (a) ÷
(b) $7.34 $2.60 $13.00

2.
Cost per equivalent unit for
materials $ 7.34
Cost per equivalent unit for labor 2.60
Cost per equivalent unit for
overhead 13.00
Total cost per equivalent unit $22.94

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2 Managerial Accounting, 15th Edition

Exercise 4-4 (10 minutes)

Material Conversi Total

s on
Ending work in process
inventory:
Equivalent units of production 2,000 800
Cost per equivalent unit $13.86 $4.43
Cost of ending work in process $27,72 $31,26
inventory 0 $3,544 4

Units completed and transferred out:

Units transferred to the next
department 20,100 20,100
Cost per equivalent unit $13.86 $4.43
Cost of units transferred out $278,5 $367,6
86 $89,043 29

Exercise 4-5 (10 minutes)

Baking Department
Cost Reconciliation

Costs to be accounted for:

Cost of beginning work in process
inventory $ 3,570
Costs added to production during the
period 43,120
Total cost to be accounted for $46,690

Costs accounted for as follows:

Cost of ending work in process
inventory $ 2,860
Cost of units completed and transferred 43,830 *
 out
Total cost accounted for $46,690

*The cost of units completed and transferred out can be deduced

as follows:

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4 Managerial Accounting, 15th Edition

Exercise 4-6 (10 minutes)

Weighted-Average Method

Tons of
1. Pulp
Work in process, June 1 20,000
Started into production during the month 190,000
Total tons in process 210,000
Deduct work in process, June 30 30,000
Completed and transferred out during the
month 180,000

2. Equivalent Units
Material Labor and
s Overhead
Units transferred out 180,000 180,000
Work in process, ending:
Materials: 30,000 tons × 60%
complete 18,000
Labor and overhead:
30,000 tons × 40% complete 12,000
Equivalent units of production 198,000 192,000
Exercise 4-8 (30 minutes)

Weighted-Average Method

Materia Conversi
1. ls on
Units transferred to the next production
department 175,000 175,000
Ending work in process:
Materials: 10,000 units × 100%
complete 10,000
Conversion: 10,000 units × 30%
complete 3,000
Equivalent units of production 185,000 178,000

2. Materia Conversi
ls on
Cost of beginning work in process $ 1,500 $ 4,000
Cost added during the period 54,000 352,000
Total cost (a) $55,500 $356,000
Equivalent units of production (b) 185,000 178,000
Cost per equivalent unit (a) ÷ (b) $0.30 $2.00

3 Material Conversi Total

. s on
Ending work in process inventory:
Equivalent units of
production (see above) 10,000 3,000
Cost per equivalent unit $0.30 $2.00
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6 Managerial Accounting, 15th Edition

 (see above)
Cost of ending work in
process
inventory $3,000 $6,000 $9,000

Units completed and transferred out:

Units transferred to the
next department 175,000 175,000
Cost per equivalent unit
(see above) $0.30 $2.00
Cost of units completed $402,50
and transferred out $52,500 $350,000 0
Exercise 4-9 (15 minutes)

Weighted-Average Method

1. Materials Labor Overhea

d
Units transferred to the next
department 42,000 42,000 42,000
Work in process, ending:
Materials:
8,000 units × 75% complete 6,000
Labor and overhead:
8,000 units × 50% complete 4,000 4,000
Equivalent units of production 48,000 46,000 46,000

2. Overhea
Materials Labor d
Cost of beginning work in
process $ 4,320 $ 1,040 $ 1,790
Cost added during the period 52,800 21,500 32,250
Total cost (a) $57,120 $22,540 $34,040

Equivalent units of production

(b) 48,000 46,000 46,000
Cost per equivalent unit (a) ÷
(b) $1.19 $0.49 $0.74

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8 Managerial Accounting, 15th Edition

Exercise 4-10 (10 minutes)

Weighted-Average Method

Materia Labor &

ls Overhead
Pounds transferred to the Packing 375,00
Department during July* 0 375,000
Work in process, July 31:
Materials: 25,000 pounds × 100%
complete 25,000
Labor and overhead:
25,000 pounds × 60% complete 15,000
400,00
Equivalent units of production 0 390,000

* 20,000 + 380,000 – 25,000 = 375,000

Exercise 4-11 (30 minutes)

Weighted-Average Method

1 Equivalent units of production

.
Pulping Conversi
on
Transferred to next department 157,00 157,000
0
Ending work in process:
Pulping: 8,000 units x 100% complete 8,000
Conversion: 8,000 units x 25% complete 2,000
Equivalent units of production 165,00 159,000
0

2 Cost per equivalent unit

.
Pulping Conversi
on
Cost of beginning work in process $ 4,80 $ 500
0
Cost added during the period 102,45 31,300
0
Total cost (a) $107,25 $31,800
0
Equivalent units of production (b) 165,000 159,000
Cost per equivalent unit, (a) ÷ (b) $0.65 $0.20

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10 Managerial Accounting, 15th Edition

3 Cost of ending work in process inventory and units transferred
. out
Pulping Conversi Total
on
Ending work in process
inventory:
Equivalent units of
production 8,000 2,000
Cost per equivalent unit $0.65 $0.20
Cost of ending work in
process inventory $5,200 $400 $5,600
Units completed and transferred out:
Units transferred to the next
department 157,000 157,000
Cost per equivalent unit $0.65 $0.20
Cost of units completed and $102,05 $133,45
transferred out 0 $31,400 0
Exercise 4-11 (continued)

4 Cost reconciliation
.
Costs to be accounted for:
Cost of beginning work in process
inventory
($4,800 + $500) $ 5,300
Costs added to production during the
period
($102,450 + $31,300) 133,750
Total cost to be accounted for $139,050
Costs accounted for as follows:
Cost of ending work in process
inventory $ 5,600
Cost of units completed and transferred
out 133,450
Total cost accounted for $139,050

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12 Managerial Accounting, 15th Edition

Exercise 4-12 (20 minutes)

Weighted-Average Method

1. Computation of equivalent units in ending inventory:

Material Overhea
s Labor d
Units in ending inventory 3,000 3,000 3,000
Percent completed 80% 60% 60%
Equivalent units of
production 2,400 1,800 1,800

2. Cost of ending work in process inventory and units transferred

out:

Material Labor Overhea Total

s d
Ending work in process inventory:
Equivalent units of
production 2,400 1,800 1,800
Cost per equivalent
unit $12.50 $3.20 $6.40
Cost of ending work
in process inventory $30,000 $5,760 $11,520 $47,280

Units completed and transferred

out:
Units transferred to
the next department 25,000 25,000 25,000
 Cost per equivalent
unit $12.50 $3.20 $6.40
Cost of units
completed and $312,50 $80,00 $160,00 $552,50
transferred out 0 0 0 0

3. Cost reconciliation:

Total cost to be accounted for $599,780

Costs accounted for as follows:
Cost of ending work in process
inventory $ 47,280
Cost of units completed and transferred
out 552,500
Total cost accounted for $599,780

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14 Managerial Accounting, 15th Edition

Problem 4-13 (60 minutes)

Weighted-Average Method

1. Computation of equivalent units in ending inventory:

Mixing Material Conversio

s n
Units transferred to the next department 50.0 50.0 50.0
Ending work in process:
Mixing: 1 unit × 100% complete 1.0
Materials: 1 unit × 80% complete 0.8
Conversion: 1 unit × 70% complete 0.7
Equivalent units of production 51.0 50.8 50.7

2. Costs per equivalent unit:

Mixing Material Conversio

s n
Cost of beginning work in process $ 1,67 $ 90 $ 605
 inventory 0
81,46
Cost added during the period 0 6,006 42,490
$83,13 $43,09
Total cost (a) 0 $6,096 5
Equivalent units of production (b) 51.0 50.8 50.7
Cost per equivalent unit (a) ÷ (b) $1,630 $120 $850

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16 Managerial Accounting, 15th Edition

Problem 4-13 (continued)

3. Costs of ending work in process inventory and units transferred out:

Mixing Materials Conversio Total

n
Ending work in process inventory:
Equivalent units of production 1.0 0.8 0.7
Cost per equivalent unit $1,630 $120 $850
Cost of ending work in process $2,321
inventory $1,630 $96 $595
Units completed and transferred out:
Units transferred to the next
department 50.0 50.0 50.0
Cost per equivalent unit $1,630 $120 $850
Cost of units transferred out $130,00
$81,500 $6,000 $42,500 0

4. Cost reconciliation:
 Cost to be accounted for:
Cost of beginning work in process
inventory
($1,670 + $90 + $605) $ 2,365
Cost added to production during the
period
($81,460 + $6,006 + $42,490) 129,956
Total cost to be accounted for $132,321
Costs accounted for as follows:
Cost of ending work in process
inventory $ 2,321
Cost of units transferred out 130,000
Total cost accounted for $132,321

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18 Managerial Accounting, 15th Edition

Problem 4-14 (45 minutes)

Weighted-Average Method

1 Equivalent units of production

.
Materia Conversi
ls on
Transferred to next department* 170,00 170,000
0
Ending work in process:
Materials: 15,000 units x 100% 15,000
complete
Conversion: 15,000 units x 60% 9,000
complete
Equivalent units of production 185,00 179,000
0

*Units transferred to the next department = Units in beginning

work in process + Units started into production − Units in
ending work in process = 18,000 + 167,000 − 15,000 =
170,000

2 Cost per equivalent unit

.
Material Conversi
s on
Cost of beginning work in process $ 14,60 $ 7,200
0
Cost added during the period 133,40 225,500
0
 Total cost (a) $148,00 $232,700
0
Equivalent units of production (b) 185,000 179,000
Cost per equivalent unit, (a) ÷ (b) $0.80 $1.30

3 Cost of ending work in process inventory and units transferred

. out
Material Conversi Total
s on
Ending work in process
inventory:
Equivalent units of
production 15,000 9,000
Cost per equivalent unit $0.80 $1.30
Cost of ending work in
process inventory $12,000 $11,700 $23,700
Units completed and transferred out:
Units transferred to the next
department 170,000 170,000
Cost per equivalent unit $0.80 $1.30
Cost of units completed and $136,00 $357,00
transferred out 0 $221,000 0

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20 Managerial Accounting, 15th Edition

Problem 4-15 (45 minutes)

Weighted-Average Method

1 Equivalent units of production:

.
Materia Conversi
ls on
Transferred to next department 160,00
0 160,000
Ending work in process:
Materials: 40,000 units x 100% 40,000
complete
Conversion: 40,000 units x 25% 10,000
complete
Equivalent units of production 200,00
0 170,000

2 Cost per Equivalent Unit

.
Material Conversi
s on
Cost of beginning work in process $
25,200 $ 24,800
Cost added during the period 334,80
0 238,700
Total cost (a) $360,00
0 $263,500
Equivalent units of production (b) 200,000 170,000
Cost per equivalent unit, (a) ÷ (b) $1.80 $1.55
 3 Applying costs to units:
.
Material Conversi Total
s on
Ending work in process
inventory:
Equivalent units of
production 40,000 10,000
Cost per equivalent unit $1.80 $1.55
Cost of ending work in
process inventory $72,000 $15,500 $87,500
Units completed and transferred out:
Units transferred to the next
department 160,000 160,000
Cost per equivalent unit $1.80 $1.55
Cost of units completed and $288,00 $536,00
transferred out 0 $248,000 0

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22 Managerial Accounting, 15th Edition

Problem 4-15 (continued)

4 Cost reconciliation:
.

Costs to be accounted for:

Cost of beginning work in process
inventory
($25,200 + $24,800) $ 50,000
Costs added to production during the
period
($334,800 + $238,700) 573,500
Total cost to be accounted for $623,500
Costs accounted for as follows:
Cost of ending work in process
inventory $ 87,500
Cost of units completed and transferred
out 536,000
Total cost accounted for $623,500
Problem 4-16 (45 minutes)

Weighted-Average Method

1 Equivalent units of production

.
Materia Conversi
ls on
Transferred to next department* 95,000 95,000
Ending work in process:
Materials: 15,000 units x 60% complete 9,000
Conversion: 15,000 units x 20% 3,000
complete
Equivalent units of production 104,00 98,000
0

*Units transferred to the next department = Units in beginning

work in process + Units started into production − Units in
ending work in process = 10,000 + 100,000 − 15,000 = 95,000

2 Cost per equivalent unit

.
Material Conversi
s on
Cost of beginning work in process $ 1,50 $ 7,200
0
Cost added during the period 154,50 90,800
0
Total cost (a) $156,00 $98,000

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24 Managerial Accounting, 15th Edition

 0
Equivalent units of production (b) 104,000 98,000
Cost per equivalent unit, (a) ÷ (b) $1.50 $1.00

3 Cost of ending work in process inventory and units transferred

. out
Material Conversi Total
s on
Ending work in process
inventory:
Equivalent units of
production 9,000 3,000
Cost per equivalent unit $1.50 $1.00
Cost of ending work in
process inventory $13,500 $3,000 $16,500
Units completed and transferred out:
Units transferred to the next
department 95,000 95,000
Cost per equivalent unit $1.50 $1.00
Cost of units completed and $142,50 $237,50
transferred out 0 $95,000 0
Problem 4-16 (continued)

4 Cost Reconciliation
.
Costs to be accounted for:
Cost of beginning work in process
inventory
($1,500 + $7,200) $ 8,700
Costs added to production during the
period
($154,500 + $90,800) 245,300
Total cost to be accounted for $254,000
Costs accounted for as follows:
Cost of ending work in process
inventory $ 16,500
Cost of units completed and transferred
out 237,500
Total cost accounted for $254,000

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26 Managerial Accounting, 15th Edition