Reference no: EM131793703
Questions -
Q1. Francisco's mass-produces folding chairs in Mexico. All direct materials are added al the beginning of production, and conversion costs are incurred evenly throughout production. The following production information is for the month of May.
Physical Units
Beginning WIP (40% complete) 9,000
Started in May 50,000
Completed in May 47,000
Ending WIP (30% complete) 12,000
a) Calculate the equivalent units used to calculate cost per unit under the weighted average method.
b) Calculate the equivalent units used to calculate cost per unit under the FIFO method.
Q2. Fine Fans mass-produces small electric fans in Taiwan for home use. All direct materials are added at the beginning of production, and conversion costs are incurred evenly throughout production. The following production information is for the month of October.
Physical Units
Started in October 100,000
Completed in October 94,000
Ending WIP (60% complete) 15,000
Beginning WIP (20% complete) 9,000
COSTS
Beginning work in process costs:
Direct material 18,000
Conversion Cost 36,000
Cost added this period:
Direct material 100,000
Conversion cost 200,000
a) Calculate the equivalent cost per unit using the weighted average method.
b) Calculate the equivalent cost per unit using the FIFO method.
Q3. Rejected castings in a foundry are treated as spoilage. During the current period, 80 castings (costing $200 each to produce) were spoiled and sold at a net realizable value of $25 each.
a) Prepare the journal entry, assuming that the spoilage was abnormal.
Q4. A department started 10,000 units last month, and the total cost per equivalent unit was $5.00. The department completed and transferred 8,000 units to finished goods inventory. There were no beginning or ending WIP inventories.
a) Calculate the number and cost os spoiled units.
b) Prepare journal entries for the spoilage if it is all considered normal.
c) Prepare journal entries for the spoilage if it is all considered abnormal
Q5. Kim Mills produces yardage for knitwear. The knit cloth is sold by the bolt. November data for its milling process follow. Beginning WIP was 20,000 units. Good units completed and transferred out during current period totaled 90,000. Ending WIP was 17,000 units. Inspection occurs at the 100% stage of completion regarding conversion costs, which are incurred evenly throughout the process. Total spoilage is 7,000 units. Normal spoilage is 3,000 units. Direct material are added at the beginning of the process.
a) Compute abnormal spoilage in units.
b) Assume that the manufacturing cost of a spoiled unit is $1,000. Compute the amount of potential savings if all spoilage were eliminated, assuming that all other costs would be unaffected.
Q6. Use the information for Kim Mills from problem 5. Now assume that inspection occurs when units are 40% complete.
a) Calculate total spoilage for conversion cost calculations.
b) If normal spoilage is 1,800 units instead of 3,000, what is abnormal spoilage this period for conversion cost?
Q7. Process costing under weighted average and FIFO, choice of method Red Dog Products manufactures toys for dogs and cats. The most popular toy is a small ball that dispenses tiny treats and is placed within a larger ball. To get the treats, dogs must roll the balls around until the treats fall out. These balls are mass-produced from plastic. Direct materials are introduced at the beginning of the process, and conversion costs are incurred evenly throughout the manufacturing process. Once each unit is completed, it is transferred to finished goods. Data for the month of March are as follows.
Beginning WIP (30% complete):
Direct material $25,000
Conversion costs 3,000
Total $28,000
Units started during March 80,000 units
Units completed and transferred out during March 88,000 units
Ending WIP inventory (50% complete) 12,000 units
Direct material cost added during March $220,000
Conversion costs added during March $74,000
a. Prepare a process cost report using the weighted average method.
b. Prepare a process cost report using the FIFO method.
c. What factors might affect the cost accountant's choice of process costing method?