Reference no: EM133062387

Homework Questions

Discussions
1. "Both a job costing system and a process costing system enable the calculation of the unit cost of a product. However, process costing provides a more accurate unit cost." Do you agree? Discuss.

2. "It is difficult to understand how costs can be assigned to equivalent units when such units do not really exist in a physical form." Discuss.

Exercises

Question 1. Foamtastic Ltd is calculating equivalent units for conversion costs. Determine equivalent units using the weighted average method.

Units completed during the month	Ending work in process		Weighted average equivalent units
	Units	% complete
1) 10 000	0	-	a)
2) 36 000	6000	50%	b)
3) 48 000	4000	30%	c)
4) 15 000	5000	20%	d)

Problems

Question 1. Arona Co. produces a liquid cleaner for floors. At the beginning of March, 30,000 litres of liquid cleaner were in process. 100% complete as to raw material and 60% complete as to conversion costs. During the month, the company started 320,000 litres of liquid cleaner in production. At the end of the month, 40,000 litres of liquid cleaner were in work in process inventory, 100% completed as to raw materials and 40% completed in terms of conversion costs.

Assume that following costs were recorded by Arona Co. for the beginning work in process and the production performance for March:

Beginning inventory:

Raw materials costs                            $ 12,000

Conversion costs                                    15,800 March production costs:

Raw materials costs                              163,000

Conversion costs                                   310,200

Required:
a) Prepare a schedule analysing the physical flow of units and calculating the equivalent units of both direct material and conversion for March. Use weighted average process costing.
b) Calculate the unit cost for each litre of liquid cleaner.
c) Determine the total costs of the litres of liquid cleaner finished during March. What is the balance of the ending work in process inventory?

Question 2. MacCheese Ltd produces cheese topping for the fast pizza industry. At the beginning of October 50,000 kilograms of cheese topping was in process, 100% complete as to raw materials and 50% complete as to conversion costs. During the month, the company started 200,000 kilograms of cheese topping in production. At the end of the month, 30,000 kilograms of cheese topping was in work in process inventory, 100% completed as to raw materials and 40% completed in terms of conversion costs.

Assume that the following costs were recorded by MacCheese Ltd for the beginning work in process and the production performance for October:

Beginning inventory:

Raw materials costs                            $ 50,000

Conversion costs                                    18,000 October production costs:

Raw materials costs                             200,000

Conversion costs                                  190,800

Required:

a) Prepare a schedule analysing the physical flow of units and calculating the equivalent units of both direct material and conversion for October. Use weighted average process costing.

b) Calculate the unit cost for each kilogram of cheese topping.

c) Determine the total costs of the kilogram of cheese topping finished during October. What is the balance of the ending work in process inventory?