CMA 11, 2010,
PROCESS COSTING
Solutions
Q_1. (14-A1)
1. (Step 2)
(Step 1) Equivalent Units
Physical Direct Conversion
Flow of Production Units Materials Costs
Started and completed 17,000 17,000 17,000
Work in process, ending inventory 2,000
Direct materials added: 2,000 x 1 2,000
Conversion costs added: 2,000 x .5 1,000
Total accounted for 19,000
Total work done 19,000 18,000
Total costs to account for (Step 3): $150,800 $60,800 $90,000
Divide by equivalent units (Step 4) 19,000 18,000
Unit costs $ 8.20 $ 3.20 $ 5.00
2. Totals Details
Application of costs (Step 5):
To units completed and transferred to
Testing, 17,000 units ($8.20) $139,400
To units not completed and still in
process, Feb. 28, 2,000 units:
Direct materials $ 6,400 2,000($3.20)
Conversion costs 5,000 1,000($5.00)
Work in process, Jan. 31 $ 11,400
Total costs accounted for $150,800
FIFO Approach
14-38 (25-35 min.)
(Step 2)
(Step 1) Equivalent Units
Physical Direct Conversion
Flow of Production Units Materials Costs
Work in process, beginning
inventory 10,000 (25%)*
Started 80,000
To account for 90,000
Completed and transferred out
during current period 70,000 70,000 70,000
Work in process, ending inventory 20,000 (50%)* 20,000 10,000
Units accounted for 90,000
Work done to date 90,000 80,000
Less: Equivalent units of work from previous
periods included in beginning inventory,
100 % and 25% of 10,000 10,000 2,500
Work done in current period only 80,000 77,500
*Degrees of completion for conversion costs at inventory dates.
Direct Conversion
Costs Totals Materials Costs
Work in process, beginning
inventory $ 175,500
Costs added currently 1,486,500 $852,000 $634,500
Total costs to account for (Step 3) $1,662,000
Divide by equivalent units (Step 4) ÷80,000 ÷77,500
Cost per equivalent unit $18.8371 $10.65 $8.1871
Direct Conversion
Application of Costs (Step 5) Totals Materials Costs
Work in process, ending inventory
Direct materials $ 213,000 20,000($10.65)
Conversion costs 81,871 10,000($8.1871)a
Total work in process (20,000 units) $ 294,871
Completed and transferred out
(70,000 units); $1,662,000 - $294,871 1,367,129b
Total costs accounted for $1,662,000
aEquivalent units of work done x $8.1871
bCheck: Work in process, beginning inventory $ 175,500
Additional costs to complete, conversion costs
(75% of 10,000 x $8.1871) or 7,500 x $8.1871 = 61,403
Started and completed this period,
(70,000 - 10,000) x $18.8371 = 1,130,226
Total cost transferred $1,367,129
Q 2. (14-B1)
1. (Step 2)
Equivalent Units
(Step 1)
Physical Direct Conversion
Flow of Production Units Materials Costs
Started and completed 600,000 600,000 600,000
Work in process, ending inv. 300,000 300,000 150,000*
Units accounted for 900,000
Units work done to date 900,000 750,000
Total costs to account for (Step 3) $2,295,000 $1,620,000 $675,000
Divide by equivalent units (Step 4) 900,000 750,000
Unit costs $2.70 $1.80 $ .90
*300,000 x .5
2.
Application of costs (Step 5): Totals Details
To units completed and
transferred to Finishing,
600,000 units ($2.70) $1,620,000
To units not completed and still
in process, end, 300,000 units:
Direct materials $ 540,000 300,000 ($1.80)
Conversion costs 135,000 150,000($.90)
Work in process, end $ 675,000
Total costs accounted for $2,295,000
Q_3. (14-A2)
(Step 2)
(Step 1) Equivalent Units
Physical Direct Conversion
Flow of Production Units Materials Costs
Work in process, beginning inv. 10,000 (25%)*
Started 80,000
To account for 90,000
Completed and transferred out
during current period 70,000 70,000 70,000
Work in process, ending inv. 20,000 (50%)* 20,000 10,000
Units accounted for 90,000
Work done to date 90,000 80,000
Details
Direct Conversion
Costs Totals Materials Costs
Work in process, beginning inv. $ 175,500 $138,000 $ 37,500
Costs added currently 1,486,500 852,000 634,500
(Step 3) Total costs to account for $1,662,000 $990,000 $672,000
(Step 4) Divisor, equivalent units for
work done to date ÷ 90,000 ÷ 80,000
Cost per equivalent unit $ 19.40 $ 11.00 $ 8.40
(Step 5) Application of Costs
Completed and transferred
(70,000 units) $1,358,000 70,000 ($19.40)
Work in process, ending inv.
(20,000 units):
Direct materials $ 220,000 20,000($11.00)
Conversion costs 84,000 10,000($8.40)
Total work in process $ 304,000
Total costs accounted for $1,662,000
*Degree of completion for conversion costs.
Q 3 _ii (14-38)
(Step 2)
(Step 1) Equivalent Units
Physical Direct Conversion
Flow of Production Units Materials Costs
Work in process, beginning
inventory 10,000 (25%)*
Started 80,000
To account for 90,000
Completed and transferred out
during current period 70,000 70,000 70,000
Work in process, ending inventory 20,000 (50%)* 20,000 10,000
Units accounted for 90,000
Work done to date 90,000 80,000
Less: Equivalent units of work from previous
periods included in beginning inventory,
100 % and 25% of 10,000 10,000 2,500
Work done in current period only 80,000 77,500
*Degrees of completion for conversion costs at inventory dates.
Direct Conversion
Costs Totals Materials Costs
Work in process, beginning
inventory $ 175,500
Costs added currently 1,486,500 $852,000 $634,500
Total costs to account for (Step 3) $1,662,000
Divide by equivalent units (Step 4) ÷80,000 ÷77,500
Cost per equivalent unit $18.8371 $10.65 $8.1871
Direct Conversion
Application of Costs (Step 5) Totals Materials Costs
Work in process, ending inventory
Direct materials $ 213,000 20,000($10.65)
Conversion costs 81,871 10,000($8.1871)a
Total work in process (20,000 units) $ 294,871
Completed and transferred out
(70,000 units); $1,662,000 - $294,871 1,367,129b
Total costs accounted for $1,662,000
aEquivalent units of work done x $8.1871
bCheck: Work in process, beginning inventory $ 175,500
Additional costs to complete, conversion costs
(75% of 10,000 x $8.1871) or 7,500 x $8.1871 = 61,403
Started and completed this period,
(70,000 - 10,000) x $18.8371 = 1,130,226
Total cost transferred $1,367,129
Q 4. (14-B2
(Step 2)
(Step 1) Equivalent Units
Physical Direct Conversion
Flow of Production Units Materials Costs
Work in process, beg. inv. 550 (40%)*
Started 7,150
To account for 7,700
Completed and transferred
out during current period,
550 + 7,150 – 400 7,300 7,300 7,300
Work in process, ending inv. 400 (20%)* 400 80
Units accounted for 7,700
Work done to date 7,700 7,380
Details
Direct Conversion
Costs Totals Materials Costs
Work in process, beg. inv. $ 5,104 $ 3,190 $ 1,914
Costs added currently 101,064 65,340 35,724
(Step 3) Total costs to account for $106,168 $68,530 $37,638
(Step 4) Divisor, equivalent units for
work done to date ÷ 7,700 ÷ 7,380
Cost per equivalent unit $14.00 $8.90 $5.10
(Step 5) Application of Costs
Completed, (7,300 units) $102,200 7,300 ($14.00)
Work in process, ending inventory
(400 units):
Direct materials (400) $ 3,560 400($8.90)
Conversion costs (80) 408 80($5.10)
Total work in process $ 3,968
Total costs accounted for $106,168
*Degree of completion for conversion costs.
Q4-ii (14-37) (Step 2)
(Step 1) Equivalent Units
Physical Direct Conversion
Flow of Production Units Materials Costs
Work in process, beginning inventory 550 (40%)*
Started 7,150
To account for 7,700
Completed and transferred out during
current period, 550 + 7,150 - 400 7,300 7,300 7,300
Work in process, ending inventory 400 (20%)* 400 80
Units accounted for 7,700
Work done to date (that is, done in the
current and previous periods) 7,700 7,380
Less: equivalent units of work from previous
previous period included in beginning
inventory, 100% and 40% of 550 550 220
Work done in current period only 7,150 7,160
Details
Direct Conversion
Costs Totals Materials Costs
Work in process, beginning,
$1,914 + $3,190 $ 5,104
Costs added currently 101,064 $65,340 $35,724
Costs to account for (Step 3) $106,168
Divide by equivalent units (Step 4) ÷7,150 ÷7,160
Cost per equivalent unit $ 14.1279 $ 9.1385 $ 4.9894**
Details
Costs to Direct Conversion
Application of Costs (Step 5) Account for Materials Costs
Work in process, ending inventory:
Direct materials $ 3,655 400 ($9.1385)
Conversion costs 399 80($4.9894)
Total work in process (400 units) $ 4,054
Completed and transferred out
(7,300 units), $106,168 - $4,054
= $102,114*** 102,114***
Total costs accounted for $106,168
* Degree of completion for conversion costs.
** A sidelight: There must have been enormous inefficient use of conversion costs in the preceding period. Why? Because the unit conversion cost of the beginning inventory was $1,914 ÷ 220 = $8.70, as compared with a current cost of work done of $35,724 ÷ 7,160 = $4.99.
*** Check: Work in process, beginning inventory $ 5,104
Additional costs to complete, conversion costs of
60% of 550 x $4.9894 1,647
Started and completed, 7,300 - 550 = 6,750;
6,750 x $14.1279 95,363
Total cost transferred $102,114
Q 5. (14-24)
Equivalent Units
Physical Direct Conversion
Flow of Production Units Materials Costs
Beginning work in process 1,000(50%)
Started 35,000
To Account for 36,000
Completed and transferred out 33,000 33,000 33,000
Ending work in process 3,000(30%) 3,000 900
Units accounted for 36,000
Work done to date 36,000 33,900
Equivalent units in beginning inventory 1,000 500
Work done in current period only 35,000 33,400
Q_6. (14-26)
(Step 2)
(Step 1) Equivalent Units
Physical Direct Conversion
Flow of Production in Units Units Materials Costs
Work in process, beg. inventory 30,000a
Started 45,000
To account for 75,000
Completed and transferred 73,000 73,000 73,000
Work in process, ending inventory 2,000b 800 200
Units accounted for 75,000
Work done to date 73,800 73,200
Less: Equivalent units of work from previous
Periods included in beginning inventory 24,000c 12,000c
Work done in current period only (FIFO) 49,800 61,200
aDegree of completion: direct materials 80%; conversion costs, 40%
bDegree of completion: direct materials 40%; conversion costs, 10%
c80% and 40% of 30,000
Q_7. (14-20)
1. (Step 2)
Equivalent Units
(Step 1)
Physical Direct Conversion
Flow of Production Units Materials Costs
Units started and completed 68,000 68,000 68,000
Work in process, end: 6,000
Materials added: 6,000 x .90 5,400
Conversion costs: 6,000 x .70 4,200
Units accounted for 74,000
Work done to date 73,400 72,200
2. Details
Total Direct Conversion
Costs Materials Costs
Costs to account for (Step 3) $602,620 $205,520 $397,100
Divide by equivalent units (Step 4) 73,400 72,200
Unit costs $8.30 $2.80 $5.50
Application of costs (Step 5):
To units completed and transferred,
68,000($8.30) $564,400
To units still in process, end,
6,000 units:
Direct materials $ 15,120 5,400($2.80)
Conversion costs 23,100 4,200($5.50)
Work in process, end $ 38,220
Total costs accounted for $602,620
M.J. January
END
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