EXERCISE CHAPTER 4

EXRERCISE 4-1 Process Costing Journal Entries Quality Brick Company produces bricks in
two processing departments – Molding and Firing. Information relating to the company’s
operations in March follows”
a. Raw materials were issued for use in production: Molding Department, $23,000; and
Firing Department, $8,000.
Work in progress - 23,000
Molding Department
Work in progress - Firing 8,000
Department
Raw material 31,000

b. Direct labor costs were incurred: Molding Department, $12,000; and Firing
Department, $7,000.
Work in progress - 12,000
Molding Department
Work in progress - Firing 7,000
Department
Salaries and wages 19,000
payable

c. Manufacturing overhead was applied: Molding Department, $25,000; and Firing

Department, $37,000.
Work in progress Molding 25,000
Department
Work in progress - Firing 37,000
Department
Manufacturing overhead 62,000

d. Unfired, molded bricks were transferred from the Molding Department to the Firing
Department. According to the company’s process costing system, the cost of the unfired,
molded bricks was $57,000.
Work in progress - Firing 57,000
Department
Work in progress - 57,000
Molding Department

e. Finished bricks were transferred from the Firing Department to the finished goods
warehouse. According to the company’s process costing system, the cost of the finished
bricks was $103,000.
Finished goods 103,000
Work in progress - 103,000
Firing Department
f. Finished bricks were sold to customers. According to the company’s process costing
system, the cost of the finished bricks sold was $101,000.
COGS 101,000
Finished goods - Firing 101,000
Department

Material Conversion
Units transferred out 190,000 190,000
Work in process, ending:
15,000 x 80% 12,000
15,000 x 40% 6,000
Equivalent units of 202,000 196,000
production

EXRERCISE 4-3 Cost per Equivalent Unit – Weighted-Average Method Superior Micro
Products uses the weighted-average method in its process costing system. Data for the
Assembly Department for May appear below:

Required:
1. Compute the cost per equivalent unit for materials, for labor, and for overhead.
2. Compute the total cost per equivalent whole unit.
1.
Material Labor Overhead
 (18,000 + 238,900 2,6 13
)/35,000 = 7,34
2. 7,34 + 2,6 + 13 = 22,94
EXRERCISE 4-4 Applying Costs to Units – Weighted-Average Method Data concerning a
recent period’s activity in the Prep Department, the first processing department in a
company that uses process costing, appear below:

A total of 20,100 units were completed and transferred to the next processing department during
the period. Required: Compute the cost of the units transferred to the next department during the
period and the cost of ending work in process inventory
Ending work in Material Conversion Total
process inventory
Equivalent units of 2,000 800
production
Cost per equivalent 13,86 4,43
uni
Cost of ending work 27,720 3,544 31,264
in process inventory

Units completed and Material Conversion Total

transferred out:
Units transferred to 20,100 20,100
the next department
Cost per equivalent 13,86 4,43
uni
Cost of units 278,586 89,043 367,629
transferred out

EXRERCISE 4-5 Cost Reconciliation Report – Weighted-Average Method

Maria Am Corporation uses a process costing system. The Baking Department is one of the
processing departments in its strudel manufacturing facility. In June in the Baking
Department, the cost of beginning work in process inventory was $3,570, the cost of ending
work in process inventory was $2,860, and the cost added to production was $43,120.
Required:
Prepare a cost reconciliation report for the Baking Department for June
Baking Department Cost
Reconciliation
Costs to be accounted for
Cost of beginning work in process 3,570
inventory
 Costs added to production during the 43,120
period
Total cost to be accounted for 46,690

Baking Department Cost

Reconciliation
Costs to be accounted for
Cost of ending work in process 2,860
inventory
Cost of units completed and transferred 43,830
out
Total cost to be accounted for 46,690

Cost of beginning work in process inventory + Costs added to production during the period =
Cost of ending work in process inventory + Cost of units completed and transferred out
→ Cost of units completed and transferred out = 46,690 – 2,860 = 43,830

EXRERCISE 4-6 Process Costing Journal Entries Chocolaterie de Geneve, SA, is located in
a French-speaking canton in Switzerland. The company makes chocolate truffles that are
sold in popular embossed tins. The company has two processing departments – Cooking
and Molding. In the Cooking Department, the raw ingredients for the truffles are mixed
and then cooked in special candy-making vats. In the Molding Department, the melted
chocolate and other ingredients from the Cooking Department are carefully poured into
molds and decorative flourishes are applied by hand. After cooling, the truffles are packed
for sale. The company uses a process costing system. The T-accounts below show the flow of
costs through the two department in April (all amounts are in Swiss francs):
Required: Prepare journal entries showing the flow of costs through the two processing
department during April.
Work in process – cooking 42,000
Raw Materials Inventory 42,000

Work in process – cooking 50,000

Work in Process—Molding.. 36,000
Wage payable 86,000

Work in process – cooking 75,000

Work in Process—Molding.. 45,000
Manufacturing Overhead 120,000

Work in process – Molding 160,000

Work in Process – Cooking 160,000

Finished goods 240,000

Work in process – Molding 240,000

EXRERCISE 4-7 Equivalent Units – Weighted-Average Method Hielta Oy, a Finnish

company, processes wood pulp for various manufacturers of paper products. Data relating
to tons of pulp processed during June are provided below:

Required:
1. Compute the number of tons of pulp completed and transferred out during June.
= 20,000 + 190,000 – 30,000 = 180,000
2. Compute the equivalent units of production for materials and for labor and overhead
for June.
Material Labor and
overhead
Completed and 180,000 180,000
transferred out
Work in process,
ending:
30,000 x 60% 18,000
 30,000 x 40% 12,000
Equivalent units 198,000 192,000
of production

EXRERCISE 4-8 Equivalent Units and Cost per Equivalent Unit – WeightedAverage
Method Pureform, Inc., manufactures a product that passed through two departments.
Data for a recent month for the first department follow:

The beginning work in process inventory was 80% complete with respect to materials and 60%
complete with respect to labor and overhead. The ending work in process inventory was 75%
complete with respect to materials and 50% complete to labor and overhead.
Required: Assume that the company uses the weighted-average method of accounting for units
and costs.
1. Compute the equivalent units for the month for the first department.
Material Labor Overhead
Completed and 42,000 42,000 42,000
transferred out
Work in process,
ending:
8,000 x 75% 6,000
8,000 x 50% 4,000 4,000
Equivalent units 48,000 46,000 46,000
of production

2. Determine the costs per equivalent unit for the month.

Material Labor Overhead
( 4,320 + 52,800 ) / 0,49 0,74
48,000 = 1,19

EXRERCISE 4-9 Equivalent Units and Cost per Equivalent Unit – WeightedAverage
Method Helix Corporation produces prefabricated flooring in a series of step carried out in
production departments. All of the material that is used in the first production department
is added at the beginning of processing in that department. Data for May for the first
production department follow:
Required:
1. Assume that the company uses the weighted-average method of accounting for units
and costs. Determine the equivalent units for May for the first process.
Material Labor and
Overhead
Completed and 175,000 175,000
transferred out
Work in process,
ending:
10,000 x 100% 10,000
10,000 x 30% 3,000
Equivalent units 185,000 178,000
of production

2. Compute the costs per equivalent unit for May for the first process.
Material Labor and
Overhead
Cost of beginning 1,500 4,000
work in process
Cost added 54,000 352,000
during the period
Total cost 55,500 357,000
Equivalent units 185,000 178,000
of production
Cost per 0,3 2
equivalent unit

3. Determine the total cost of ending work in process inventory and the total of units
transferred to the next process in May
total cost of ending work in process inventory = 0,3 x 10,000 + 2 x 3,000 = 9,000
total of units transferred to the next process in May = 175,000 x ( 0,3 + 2 ) = 402,500
EXRERCISE 4-10 Comprehensive Exercise; Second Production Department – Weighted-
Average Method Scribners Corporation produces fine paper in three production
departments – Pulping, Drying, and Finishing. In the Pulping Department, raw materials
such as wood fiber and rag cotton are mechanically and chemically treated to separate their
fibers. The result is a thick slurry of fibers. In the Drying Department, the wet fibers
transferred from the Pulping Department are laid down on porous webs, pressed to remove
excess liquid, and dried in ovens. I the Finishing Department, the dried paper is coated, cut,
and spooled onto reels. The company uses the weighted-average method in its process
costing system. Data for March for the Drying Department follow:

No materials are added in the Drying Department. Pulping costs represents the costs of the
wet fibers transferred in from the Pulping Department. Wet fiber is processed in the Drying
Department in batches; each unit in the above table is a batch and one batch of wet fibers
produces a set amount of dried paper that is passed in to the Finishing Department.
Required:
1. Determine the equivalent units for March for pulping and conversion.
Pulging Conversion
Completed and 157,000 157,000
transferred out
Work in process,
ending:
8,000 x 100% 8,000
8,000 x 25% 2,000
Equivalent units 165,000 159,000
of production

2. Compute the costs per equivalent unit for March for pulping and conversion.

Pulging Conversion
Cost of beginning 4,800 500
work in process
Cost added 102,450 31,300
during the period
Total cost 107,250 31,800
Equivalent units 165,000 159,000
 of production
Cost per 0,65 0,2
equivalent unit

3. Determine the total cost of ending work in process inventory and the total cost of
units transferred to the Finished Department in March.
the total cost of ending work in process inventory = 8,000 x 0,65 + 2,000 x 0,2 = 5,600
the total cost of units transferred = 157,000 x ( 0,65 + 0,2 ) = 133,450
4. Prepare a cost reconciliation report for the Drying Department for March.

Baking Department Cost

Reconciliation
Costs to be accounted for
Cost of beginning work in process 5,300
inventory ( 4,800 + 500 )
Costs added to production during the 133,750
period ( 102,450 + 31,300 )
Total cost to be accounted for 139,050

Baking Department Cost

Reconciliation
Costs to be accounted for
Cost of ending work in process 5,600
inventory
Cost of units completed and transferred 133,450
out
Total cost to be accounted for 139,050

EXRERCISE 4-11 Cost Assignment; Cost Reconciliation – Weight-Average Method

Superior Micro Products uses the weight-average method in its process costing system.
During January, the Delta Assembly Department completed its processing of 25,000 units
and transferred them to the next department. The cost of beginning inventory and the costs
added during January amounted to $599,780 in total. The ending inventory in January
consisted of 3,000 units, which were 80% complete with respect to materials and 60%
complete with respect to labor and overhead. The costs per equivalent unit for the month
were as follows

Required:
1. Compute the equivalent units of materials, labor, and overhead in the ending
inventory for the month.
Material Labor Overhead
 Work in process,
ending:
3,000 x 80% 2,400
3,000 x 60% 1,800 1,800

2. Compute the cost of ending inventory and of the units transferred to the next
department for January.
the cost of ending inventory = 2,400 x 12,5 + 1,800 x ( 3,2 + 6,4 ) = 47,280
the units transferred = 25,000 x ( 12,5 + 3,2 + 6,4 ) = 552,500
3. Prepare a cost reconciliation for January. (Note: You will not be able to break the
cost to be accounted for into the cost of beginning inventory and costs added during
the month.)
Baking Department Cost
Reconciliation
Costs to be accounted for
Cost of ending work in process 47,280
inventory
Cost of units completed and transferred 552,500
out
Total cost to be accounted for 599,780

EXRERCISE 4-12 Equivalent Units – Weighted-Average Method Alaskan Fisheries, Inc.,

processes salmon for various distributors. Two departments are involved – Cleaning and
Packing. Data relating to pounds of salmon processed in the Cleaning Department during
July are presented below:

A total of 380,000 pounds of salmon were started into processing during July. All materials are
added at the beginning of processing in the Cleaning Department. Required: Compute the
equivalent units for July for both materials and labor and overhead assuming that the company
uses the weighted-average method of accounting for units.
Completed and transferred out = 20,000 + 380,000 – 25,000 = 375,000
Material Labor and
Overhead
Completed and 375,000 375,000
transferred out
Work in process,
ending:
25,000 x 100% 25,000
 25,000 x 60% 15,000
Equivalent units 400,000 390,000
of production

Exercise 4-13 [ 9A-5,computation of Equivalent Units_FIFO method,Lo06] MediSecure,

Inc., produces clear plastic containers for pharmacies in a process that starts in the Molding
Department. Data concerning that department’s operations in the most recent period
appear below:

Beginning work in process:

Units in process 500
Stage of completion with respect to materials 80%
Stage of completion with respect to conversion 40%
Units Started into production during the month 153,600
Units completed and transferred out 153,700
Ending work in process:
Units in process 400
Stage of completion with respect to materials 75%
Stage of completion with respect to conversion 20%
Require: MediSecure uses the FIFO method in its process costing system. Compute the
equivalent units of production for the period for the Molding Department.
Material Conversion
To complete beginning work
in process:
Material 500 x 20% 100
Conversion : 500 x 60% 300
Units started and completed 153,200 153,200
during the period (153,600 –
400)
Ending work in process
Material : 400 x 75% 300
Conversion : 400 x 20% 80
Equivalent units of production 153,600 153,580

Exercise 4-14 [ 9A-2, cost per Equivalent Unit-FiFo method, Lo07] Superior Micro
Products uses the FIFO method in its process costing system. Data for the Assembly
Department for May appear below:
Require: Compute the cost per equivalent unit for materials, labor, overhead, and in total.

Material Labor Overhead In total

193,320/27,000 = 7,16 2,48 12,4 22,04

Exercise 4-15 [9A-3, applying costs to Units-FIFO method, LO8] Data concerning a recent
period’s activity in the Assembly Department, the first processing department in a company
that uses process costing, appear below:

A total of $26,000 units were completed and transferred to the next processing department
during the period. Beginning work in process inventory consisted of 2,000 units and ending
work in process inventory consisted of 1,000 units. Require: Using the FIFO method,
compute the cost of the units transferred to the next department during the period and the
cost of ending work in process inventory

Material Conversion Total

Ending work in process
inventory:
Equivalent units of 400 200
production
Cost per equivalent unit 2,32 0,75
Cost of ending work in 928 150 1,078
process inventory

Material Conversion Total

Units transferred out:
Cost in beginning 3,200 650 3,850
inventory
Cost to complete the
units in beginning
inventory:
Equivalent units of 600 1,200
production required to
 complete the beginning
inventory
Cost per equivalent unit 2,32 0,75
Cost to complete the 1,392 900 2,292
units in beginning
inventory
Cost of units started
and completed this
period
Units started and 24,000 24,000
completed this
period(26,000 – 2,000 )
Cost per equivalent unit 2,32 0,75
Cost of units started 55,680 18,000 73,680
and completed this
period
Total cost of units 79,822
transferred out

Exercise 4-16 [9A-4, cost reconciliation report – FIFO method, lo9] Schroeder Baking
Corporation uses a process costing system in its large-scale baking operations. The Mixing
Department is one of the company’s processing departments. In the Mixing Department in
July, the cost of beginning work in process inventory was $1,460, the cost of ending work in
process inventory was $3,120, and the cost added to production was $36,540. Require:
Prepare a cost reconciliation report for the Mixing Department for July.
Begin + Add = Ending + Transferred
Transferred = 34,880
Baking Department Cost
Reconciliation
Costs to be accounted for
Cost of beginning work in process 1,460
inventory
Costs added to production during the 36,540
period
Total cost to be accounted for 38,000

Baking Department Cost

Reconciliation
Costs to be accounted for
Cost of ending work in process 3,120
inventory
Cost of units completed and transferred 34,880
out
Total cost to be accounted for 38,000