Hilton,Chp4 solution

1. CHAPTER 4 Process Costing and Hybrid Product-Costing Systems ANSWERS TO REVIEW QUESTIONS 4-1 4-1 In a job-order costing system, costs are assigned to batches or job orders of In a job-order costing system, costs are assigned to batches or job orders of production. Job-order costing is used by firms that produce relatively small production. Job-order costing is used by firms that produce relatively small numbers of dissimilar products. In a process-costing system, costs are averaged numbers of dissimilar products. In a process-costing system, costs are averaged over a large number of product units. Process costing is used by firms that over a large number of product units. Process costing is used by firms that produce large numbers of nearly identical products. produce large numbers of nearly identical products. 4-2 4-2 Process costing would be an appropriate product-costing system in the following Process costing would be an appropriate product-costing system in the following industries: petroleum, food processing, lumber, chemicals, textiles, and industries: petroleum, food processing, lumber, chemicals, textiles, and electronics. Each of these industries is involved in the production of very large electronics. Each of these industries is involved in the production of very large numbers of highly similar products. numbers of highly similar products. 4-3 4-3 Process costing could be used in the following nonmanufacturing enterprises: Process costing could be used in the following nonmanufacturing enterprises: processing of tests in a medical diagnostic laboratory, processing of tax returns by processing of tests in a medical diagnostic laboratory, processing of tax returns by the Internal Revenue Service, and processing of loan applications in a bank. the Internal Revenue Service, and processing of loan applications in a bank. 4-4 4-4 Product-costing systems are used for the following purposes: Product-costing systems are used for the following purposes: (a) (a) In financial accounting: Product costs are needed to value inventory on the In financial accounting: Product costs are needed to value inventory on the balance sheet and to compute the cost-of-goods-sold expense on the income balance sheet and to compute the cost-of-goods-sold expense on the income statement. statement. (b) (b) In managerial accounting: Product costs are needed for planning, for cost In managerial accounting: Product costs are needed for planning, for cost control, and to provide managers with data for decision making. control, and to provide managers with data for decision making. (c) (c) In reporting to interested organizations: Product cost information is used to In reporting to interested organizations: Product cost information is used to report on relationships between firms and various outside organizations. For report on relationships between firms and various outside organizations. For example, hospitals keep track of the costs of medical procedures that are example, hospitals keep track of the costs of medical procedures that are reimbursed by insurance companies or by the federal government under the reimbursed by insurance companies or by the federal government under the Medicare program. Medicare program. 4-5 4-5 An equivalent unit is a measure of the amount of productive effort applied in the An equivalent unit is a measure of the amount of productive effort applied in the production process. In process costing, costs are assigned to equivalent units production process. In process costing, costs are assigned to equivalent units rather than to physical units. rather than to physical units.  2002 The McGraw-Hill Companies, McGraw-Hill/Irwin Inc. Managerial Accounting, 5/e 4-1

2. 4-6 4-6 The following four steps are used in process costing: The following four steps are used in process costing: (a) (a) Analysis of physical flow of units: All of the units in the beginning and ending Analysis of physical flow of units: All of the units in the beginning and ending inventories, those started during the period, and those transferred out to inventories, those started during the period, and those transferred out to finished goods are accounted for. finished goods are accounted for. (b) (b) Calculation of equivalent units: The equivalent units of activity are computed Calculation of equivalent units: The equivalent units of activity are computed for direct material and for conversion. for direct material and for conversion. (c) (c) Computation of unit costs: The costs per equivalent unit for direct material and Computation of unit costs: The costs per equivalent unit for direct material and conversion are computed. conversion are computed. (d) (d) Analysis of total costs: The cost of the goods completed and transferred out Analysis of total costs: The cost of the goods completed and transferred out and the cost of the ending work-in-process inventory are determined. and the cost of the ending work-in-process inventory are determined. 4-7 4-7 (a) (a)Journal entry to enter direct-material costs into Work-in-Process Inventory Journal entry to enter direct-material costs into Work-in-Process Inventory account: account: Work-in-Process Inventory: Department A Work-in-Process Inventory: Department A................ Raw-Material Inventory Raw-Material Inventory.................................. .................................. (b) (b) Journal entry to record transfer of goods from the first to the second Journal entry to record transfer of goods from the first to the second department in the production sequence: department in the production sequence: Work-in-Process Inventory: Department B Work-in-Process Inventory: Department B................ Work-in-Process Inventory: Department A Work-in-Process Inventory: Department A....... Transferred-in costs are the costs assigned to partially completed products that Transferred-in costs are the costs assigned to partially completed products that have been transferred from one production department into the next department. have been transferred from one production department into the next department. ................ XXX XXX XXX XXX ................ XXX XXX ....... XXX XXX 4-8 4-8 4-9 4-9 The $175,000 of transferred-in costs were incurred prior to January 1 and in the The $175,000 of transferred-in costs were incurred prior to January 1 and in the mixing department. The costs must have been incurred prior to January 1, mixing department. The costs must have been incurred prior to January 1, because they are included in the cost of the beginning work-in-process inventory because they are included in the cost of the beginning work-in-process inventory on that date. Moreover, these costs must have been incurred in the mixing on that date. Moreover, these costs must have been incurred in the mixing department, because they have been transferred into the cooking department. department, because they have been transferred into the cooking department. 4-10 4-10 The name ''weighted-average method'' comes from the fact that the cost per The name ''weighted-average method'' comes from the fact that the cost per equivalent unit computed under this method is a weighted average of costs equivalent unit computed under this method is a weighted average of costs incurred during the current period and costs incurred during prior periods. incurred during the current period and costs incurred during prior periods.  2002 The McGraw-Hill Companies, McGraw-Hill/Irwin Inc. 4-2 Solutions Manual

3. 4-11 4-11 The difference between normal and actual costing lies in the calculation of the The difference between normal and actual costing lies in the calculation of the manufacturing-overhead cost of the current period. Under actual costing, the manufacturing-overhead cost of the current period. Under actual costing, the manufacturing-overhead cost of the current period is the actual overhead cost manufacturing-overhead cost of the current period is the actual overhead cost incurred during the period. Under normal costing, the current-period incurred during the period. Under normal costing, the current-period manufacturing overhead is computed as the product of the predetermined manufacturing overhead is computed as the product of the predetermined overhead rate and the actual level of the cost driver used to apply manufacturing overhead rate and the actual level of the cost driver used to apply manufacturing overhead. overhead. 4-12 4-12 If manufacturing overhead were applied according to some activity base (or cost If manufacturing overhead were applied according to some activity base (or cost driver) other than direct labor, then direct-labor costs and manufacturing-overhead driver) other than direct labor, then direct-labor costs and manufacturing-overhead costs would be accounted for separately instead of being combined into one costs would be accounted for separately instead of being combined into one account called "conversion costs." Thus, instead of two columns for direct- account called "conversion costs." Thus, instead of two columns for direct- material and conversion costs, there would be three columns: direct material, material and conversion costs, there would be three columns: direct material, direct labor, and manufacturing overhead. direct labor, and manufacturing overhead. 4-13 4-13 Operation costing is a hybrid product-costing system that is used when conversion Operation costing is a hybrid product-costing system that is used when conversion activities are very similar across product lines, but the direct materials differ activities are very similar across product lines, but the direct materials differ significantly. This is often the case in batch manufacturing operations. Conversion significantly. This is often the case in batch manufacturing operations. Conversion costs are accumulated by department, and process-costing methods are used to costs are accumulated by department, and process-costing methods are used to assign these costs to products. In contrast, direct-material costs are accumulated assign these costs to products. In contrast, direct-material costs are accumulated by job order or by batch, and job-order costing is used to assign direct-material by job order or by batch, and job-order costing is used to assign direct-material costs to products. costs to products. 4-14 4-14 The departmental production report is the key document in a process-costing The departmental production report is the key document in a process-costing system rather than the job-cost sheet used in job-order costing. The departmental system rather than the job-cost sheet used in job-order costing. The departmental production report shows the analysis of the physical flow of units, the calculation production report shows the analysis of the physical flow of units, the calculation of equivalent units, the computation of the cost per equivalent unit, and the of equivalent units, the computation of the cost per equivalent unit, and the analysis of the total costs incurred in the production department. The report analysis of the total costs incurred in the production department. The report shows the cost of the ending work-in-process inventory as well as the cost of the shows the cost of the ending work-in-process inventory as well as the cost of the goods completed and transferred out of the department. goods completed and transferred out of the department. 4.15 4.15 There is no direct material in the March 1 work in process for the stitching There is no direct material in the March 1 work in process for the stitching department because direct material (rawhide lacing) is added at the end of the department because direct material (rawhide lacing) is added at the end of the process in that department. process in that department.  2002 The McGraw-Hill Companies, McGraw-Hill/Irwin Inc. Managerial Accounting, 5/e 4-3

4. SOLUTIONS TO EXERCISES EXERCISE 4-16 (10 MINUTES) EXERCISE 4-16 (10 MINUTES) The general formula for all The general formula for all three cases is the following: three cases is the following: Work-in-process, Work-in-process, beginning beginning Units started Units started during month during month Units completed Units completed during month during month Work-in-process, Work-in-process, ending ending + + – – = = Using this formula, the missing amounts are: Using this formula, the missing amounts are: 1. 1. 12,000 units 12,000 units 2. 2. 5,300 kilograms 5,300 kilograms 3. 3. 750,000 gallons 750,000 gallons EXERCISE 4-17 (30 MINUTES) EXERCISE 4-17 (30 MINUTES) All three of these companies manufacture large numbers of relatively homogeneous All three of these companies manufacture large numbers of relatively homogeneous products (i.e., lumber and paper). Therefore, process costing is an appropriate product- products (i.e., lumber and paper). Therefore, process costing is an appropriate product- costing system. costing system.  2002 The McGraw-Hill Companies, McGraw-Hill/Irwin Inc. 4-4 Solutions Manual

5. EXERCISE 4-18 (15 MINUTES) EXERCISE 4-18 (15 MINUTES) 1. 1. 6,000 6,000 equivalent equivalent units (refer to (a) in the following table) units (refer to (a) in the following table) 2. 2. 4,400 equivalent units (refer to (b) in the following table) 4,400 equivalent units (refer to (b) in the following table) CALCULATION OF EQUIVALENT UNITS: RAINBOW GLASS COMPANY CALCULATION OF EQUIVALENT UNITS: RAINBOW GLASS COMPANY Weighted-Average Method Weighted-Average Method Percentage Percentage of of Completion with Completion with Respect to Respect to Conversion Conversion 60% 60% Equivalent Units Equivalent Units Physical Physical Units Units 1,000 1,000 5,000 5,000 6,000 6,000 Direct Direct Material Material Conversion Conversion Work in process, October 1 Work in process, October 1. . . . Units started during October Units started during October. . Total units to account for Total units to account for...... ...... Units completed and Units completed and transferred transferred out during October out during October Work in process, October 31 Work in process, October 31 Total units accounted for Total units accounted for...... Total equivalent units Total equivalent units........... 4,000 4,000 2,000 2,000 6,000 6,000 100% 100% 20% 20% 4,000 4,000 2,000 2,000 _____ _____ 4,000 4,000 400 400 ____ ____ 4,400 ...... ........... (a) (a) (b) (b) 4,400 6,000 6,000 EXERCISE 4-19 (15 MINUTES) EXERCISE 4-19 (15 MINUTES) CALCULATION OF EQUIVALENT UNITS: TERRA ENERGY COMPANY - LODI PLANT CALCULATION OF EQUIVALENT UNITS: TERRA ENERGY COMPANY - LODI PLANT Weighted-Average Method Weighted-Average Method Percentage Percentage of of Completion Completion with with Respect to Respect to Conversion Conversion 25% 25% Equivalent Units Equivalent Units Direct Direct Material Material Physical Physical Units Units 2,000,000 2,000,000     950,000 950,000 2,950,000 2,950,000 Conversion Conversion Work in process, November 1 Work in process, November 1............ Units started during November Units started during November.......... Total units to account for Total units to account for................... ............ .......... ................... Units completed and transferred Units completed and transferred out during November out during November..................... ..................... 2,710,000 2,710,000 100% 100% 2,710,00 2,710,00 2,710,000 2,710,000 0 0 Work in process, November 30 Work in process, November 30.......... ..........     240,000 240,000 80% 80% 240,000 240,000 192,000 192,000  2002 The McGraw-Hill Companies, McGraw-Hill/Irwin Inc. Managerial Accounting, 5/e 4-5

6. Total units accounted for Total units accounted for................... Total equivalent units Total equivalent units........................ ................... ........................ 2,950,000 2,950,000 ________ ________ 2,950,00 2,950,00 ________ ________ 2,902,000 2,902,000 0 0 EXERCISE 4-20 (20 MINUTES) EXERCISE 4-20 (20 MINUTES) CALCULATION OF EQUIVALENT UNITS: FIT-FOR-LIFE FOODS CORPORATION CALCULATION OF EQUIVALENT UNITS: FIT-FOR-LIFE FOODS CORPORATION Weighted-Average Method Weighted-Average Method Percentage Percentage of of Percentage Percentage Completion Completion with with Respect to Respect to Direct Direct Material Material of of Completion Completion with with Respect to Respect to Conversion Conversion 60% 60% Equivalent Units Equivalent Units Direct Direct Material Material Physical Physical Units Units Conversion Conversion Work in process, January 1 Work in process, January 1. . . . Units started during the year Units started during the year Total units to account for Total units to account for...... 20,000 20,000 120,000 120,000 140,000 140,000 80% 80% ...... Unit completed and Unit completed and transferred transferred out during the year out during the year Work in process, December Work in process, December 31 31 Total units accounted for Total units accounted for...... Total equivalent units Total equivalent units........... 125,000 125,000     15,000 15,000 100% 100% 70% 70% 100% 100% 30% 30% 125,000 125,000 10,500 10,500 125,000 125,000 4,500 4,500 ...... 140,000 140,000 ______ ______ 135,500 135,500 _______ _______ 129,500 129,500 ........... EXERCISE 4-21 (15 MINUTES) EXERCISE 4-21 (15 MINUTES) CALCULATION OF COST PER EQUIVALENT UNIT: IDAHO LUMBER COMPANY CALCULATION OF COST PER EQUIVALENT UNIT: IDAHO LUMBER COMPANY Weighted-Average Method Weighted-Average Method Direct Direct Material Material $ 65,000 $ 65,000         425,000 425,000 $490,000 $490,000 7,000 7,000 Conversion Conversion $180,000 $180,000     690,000 690,000 $870,000 $870,000 1,740 1,740 $500 $500† † Total Total Work in process, November 1 Work in process, November 1.............. Costs incurred during November Costs incurred during November.......... Total costs to account for Total costs to account for..................... Equivalent units Equivalent units................................... ................................... Costs per equivalent unit Costs per equivalent unit..................... .............. .......... ..................... $ 245,000 $ 245,000     1,115,000 1,115,000    $1,360,000 $1,360,000                    ..................... $70* $70* $570 $570        *$70 = $490,000 ÷ 7,000 *$70 = $490,000 ÷ 7,000 † †$500 = $870,000 ÷ 1,740 $500 = $870,000 ÷ 1,740  2002 The McGraw-Hill Companies, McGraw-Hill/Irwin Inc. 4-6 Solutions Manual

7. EXERCISE 4-22 (15 MINUTES) EXERCISE 4-22 (15 MINUTES) CALCULATION OF COST PER EQUIVALENT UNIT: OTSEGO GLASS COMPANY CALCULATION OF COST PER EQUIVALENT UNIT: OTSEGO GLASS COMPANY Weighted-Average Method Weighted-Average Method Direct Direct Material Material Conversion Conversion $ 36,750 $ 36,750     Total Total Work in process, June 1 Work in process, June 1.................... .................... $ $              $ 73,750 $ 73,750             37,000 37,000         Costs incurred during June Costs incurred during June................ ................     230,000 230,000     380,000 380,000        150,000 150,000         $187,000 $187,000          Total costs to account for Total costs to account for.................. .................. $266,750 $266,750 $453,750 $453,750               Equivalent units Equivalent units................................ ................................ Costs per equivalent unit Costs per equivalent unit................... 17,000 17,000         $11.00* $11.00*    48,500 48,500 $5.50 $5.50† † ................... $16.50 $16.50            *$11.00 = $187,000 ÷ 17,000 *$11.00 = $187,000 ÷ 17,000 $5.50 = $266,750 ÷ 48,500     † †$5.50 = $266,750 ÷ 48,500  2002 The McGraw-Hill Companies, McGraw-Hill/Irwin Inc. Managerial Accounting, 5/e 4-7

8. EXERCISE 4-23 (25 MINUTES) EXERCISE 4-23 (25 MINUTES) SAVANNAH TEXTILES COMPANY SAVANNAH TEXTILES COMPANY Weighted-Average Method Weighted-Average Method Direct Direct Material Material $ 94,000 $ 94,000         164,000 164,000 $258,000 $258,000 60,000 60,000 $4.30 $4.30 Conversion Conversion $ 44,400 $ 44,400         272,800 272,800 $317,200 $317,200 52,000 52,000 $6.10 $6.10 Total Total Work in process, September 1 Work in process, September 1............. Costs incurred during September Costs incurred during September......... Total costs to account for Total costs to account for..................... Equivalent units Equivalent units................................... ................................... Costs per equivalent unit Costs per equivalent unit..................... ............. ......... $138,400 $138,400        436,800 436,800    $575,200 $575,200                ..................... ..................... $10.40 $10.40        1. 1. Cost of goods completed and Cost of goods completed and transferred out during transferred out during September: September: number of units units number of total cost total cost per per     50,000 50,000 $10.4 $10.4 $520,000 $520,000 0 0     .................................................. ..................................................     transferred out d out transferre equivalent unit unit equivalent 2. 2. Cost remaining in September 30 Cost remaining in September 30 work in process: work in process: Direct material (10,000* Direct material (10,000* $4.30) $4.30) $43,000 $43,000 Conversion (2,000* Conversion (2,000* Total Total....................................... ....................................... Total costs accounted for Total costs accounted for............. $6.10) $6.10)....     12,200 12,200 ....       55,200 55,200 $575,200 $575,200 ............. *Equivalent units in September 30 work in process: *Equivalent units in September 30 work in process: Direct Direct  2002 The McGraw-Hill Companies, McGraw-Hill/Irwin Inc. 4-8 Solutions Manual

9. Material Material 60,000 60,000   (50,000) (50,000)     10,000 10,000 Conversion Conversion 52,000 52,000      (50,000) (50,000)           2,000 2,000 Total equivalent units (weighted average) Total equivalent units (weighted average)................... Units completed and transferred out Units completed and transferred out........................... Equivalent units in ending work in process Equivalent units in ending work in process................. ................... ........................... .................                                 2002 The McGraw-Hill Companies, McGraw-Hill/Irwin Inc. Managerial Accounting, 5/e 4-9

10. EXERCISE 4-24 (25 MINUTES) EXERCISE 4-24 (25 MINUTES) TULSA PAPERBOARD COMPANY TULSA PAPERBOARD COMPANY Weighted-Average Method Weighted-Average Method Direct Direct Material Material $ 5,500 $ 5,500           110,000 110,000 $115,500 $115,500 110,000 110,000 $ $         Conversion Conversion $ 17,000 $ 17,000           171,600 171,600 $188,600 $188,600 92,000 92,000 $ $         Total Total Work in process, February 1 Work in process, February 1............... Costs incurred during February Costs incurred during February........... Total costs to account for Total costs to account for.................... Equivalent units Equivalent units................................. ................................. Costs per equivalent unit Costs per equivalent unit.................... ............... ........... .................... $ 22,500 $ 22,500         281,600 281,600    $304,100 $304,100                    .................... 1.05 1.05 2.05 2.05 $ $ 3.10 3.10                 1. 1. Cost of goods completed and Cost of goods completed and transferred out during February: transferred out during February: number of number of units units total cost per per total cost     90,000 90,000 $3.1 $3.1 $279,000 $279,000 0 0     .................................................... ....................................................     transferred out d out transferre equivalent unit unit equivalent 2. 2. Cost remaining in February 28 work Cost remaining in February 28 work in process: in process: Direct material (20,000* Direct material (20,000* Conversion (2,000* Conversion (2,000* Total Total........................................ ........................................ Total costs accounted for Total costs accounted for.............. $1.05) $1.05) $2.05).... $ $           21,000 21,000       4,100 4,100 $2.05) ....       25,100 25,100 $304,100 $304,100 .............. *Equivalent units in February 28 work in process: *Equivalent units in February 28 work in process: Direct Direct Material Material 110,000 110,000   Conversion Conversion 92,000 92,000       Total equivalent units (weighted average) Total equivalent units (weighted average).................. ..................  2002 The McGraw-Hill Companies,        McGraw-Hill/Irwin Inc. 4-10 Solutions Manual

11. Units completed and transferred out Units completed and transferred out......................... Equivalent units in ending work in process Equivalent units in ending work in process................ ......................... ................ (90,000) (90,000)     20,000 20,000 (90,000) (90,000)        2,000 2,000                        2002 The McGraw-Hill Companies, McGraw-Hill/Irwin Inc. Managerial Accounting, 5/e 4-11

12. EXERCISE 4-25 (45 MINUTES) EXERCISE 4-25 (45 MINUTES) 1. 1. Diagram of production process: Diagram of production process: Work-in-Process Inventory: Work-in-Process Inventory: Preparation Department Preparation Department Batch P25 Batch P25 Batch S33 Batch S33 Accumulated Accumulated by by department department Conversion costs: Conversion costs: Direct-labor Direct-labor Manufacturing Manufacturing overhead overhead Work-in-Process Inventory: Work-in-Process Inventory: Finishing Department Finishing Department Batch P25 Batch P25 Batch S33 Batch S33 Accumulated Accumulated by by batch batch Direct- Direct- material material costs costs Work-in-Process Inventory: Work-in-Process Inventory: Packaging Department Packaging Department Batch P25 Batch P25 Finished-Goods Inventory Finished-Goods Inventory  2002 The McGraw-Hill Companies, McGraw-Hill/Irwin Inc. 4-12 Solutions Manual

13. EXERCISE 4-25 (CONTINUED) EXERCISE 4-25 (CONTINUED) 2. 2. The product cost for each basketball is computed as follows: The product cost for each basketball is computed as follows: Professional Professional Scholastic Scholastic Direct material: Direct material:.......................................................... .......................................................... Batch P25 ($42,000 ÷ 2,000) Batch P25 ($42,000 ÷ 2,000)................................. Batch S33 ($45,000 ÷ 4,000) Batch S33 ($45,000 ÷ 4,000).................................    Conversion: Preparation Department Conversion: Preparation Department.........................    Conversion: Finishing Department Conversion: Finishing Department............................ *Conversion: Packaging Department *Conversion: Packaging Department..........................    Total product cost Total product cost..................................................... ..................................................... ................................. ................................. ......................... ............................ .......................... $21.00 $21.00 -0- -0-            $11.25 $11.25      7.50 7.50      6.00 6.00              -0- -0- $24.75 $24.75      -0- -0-                                     7.50 7.50 6.00 6.00 .50 .50         $35.00 $35.00 *The two production departments each worked on a total of 6,000 balls, but the *The two production departments each worked on a total of 6,000 balls, but the Packaging Department handled only the 2,000 professional balls. Packaging Department handled only the 2,000 professional balls. 3. 3. Journal entries: Journal entries: Work-in-Process Inventory: Preparation Department Work-in-Process Inventory: Preparation Department....... Raw-Material Inventory Raw-Material Inventory......................................... ....... 39,500* 39,500* ......................................... 39,500 39,500 *$39,500 = $42,000 of direct material *$39,500 = $42,000 of direct material for batch P25 – $2,500 of packaging material for batch P25 – $2,500 of packaging material Work-in-Process Inventory: Preparation Department Work-in-Process Inventory: Preparation Department....... Raw-Material Inventory Raw-Material Inventory......................................... ....... 45,000* 45,000* ......................................... 45,000 45,000 *Direct-material cost for batch S33. *Direct-material cost for batch S33. Work-in-Process Inventory: Preparation Department Work-in-Process Inventory: Preparation Department....... Applied Conversion Costs Applied Conversion Costs..................................... ....... 45,000* 45,000* ..................................... 45,000 45,000 *$45,000 = 6,000 units *$45,000 = 6,000 units $7.50 per unit $7.50 per unit Work-in-Process Inventory: Finishing Department Work-in-Process Inventory: Finishing Department.......... Work-in-Process Inventory: Preparation Department Work-in-Process Inventory: Preparation Department .......... 129,500* 129,500* 129,500 129,500 *$129,500 = $39,500 + $45,000 + $45,000 *$129,500 = $39,500 + $45,000 + $45,000  2002 The McGraw-Hill Companies, McGraw-Hill/Irwin Inc. Managerial Accounting, 5/e 4-13

14. EXERCISE 4-25 (CONTINUED) EXERCISE 4-25 (CONTINUED) Work-in-Process Inventory: Finishing Department Work-in-Process Inventory: Finishing Department.......... Applied Conversion Costs Applied Conversion Costs..................................... .......... 36,000* 36,000* ..................................... 36,000 36,000 *$36,000 = 6,000 units *$36,000 = 6,000 units $6.00 per unit $6.00 per unit Work-in-Process Inventory: Packaging Department Work-in-Process Inventory: Packaging Department........ Finished-Goods Inventory Finished-Goods Inventory.............................................. .............................................. Work-in-Process Inventory: Finishing Department Work-in-Process Inventory: Finishing Department. . . . ........ 66,500* 66,500* 99,000 99,000† † 165,500 165,500 *$66,500 = $39,500 + (2,000 *$66,500 = $39,500 + (2,000 (2,000 (2,000 $6.00). $6.00). These are the costs accumulated for batch P25 only. These are the costs accumulated for batch P25 only. $99,000 = $45,000 + (4,000 (4,000 (4,000 $6.00). $6.00). These are the costs accumulated for batch S33 only. These are the costs accumulated for batch S33 only. $7.50) + $7.50) + $7.50) + $7.50) + † †$99,000 = $45,000 + (4,000 Work-in-Process Inventory: Packaging Department Work-in-Process Inventory: Packaging Department........ Raw-Material Inventory Raw-Material Inventory......................................... Applied Conversion Costs Applied Conversion Costs..................................... ........ 3,500 3,500 ......................................... ..................................... 2,500* 2,500* 1,000 1,000† † *Cost of packaging material for batch P25. *Cost of packaging material for batch P25. $1,000 = 2,000 units $.50 per unit $.50 per unit † †$1,000 = 2,000 units Finished-Goods Inventory Finished-Goods Inventory.............................................. .............................................. Work-in-Process Inventory: Packaging Department Work-in-Process Inventory: Packaging Department 70,000* 70,000* 70,000 70,000 *$70,000 = $66,500 + $3,500 *$70,000 = $66,500 + $3,500  2002 The McGraw-Hill Companies, McGraw-Hill/Irwin Inc. 4-14 Solutions Manual

15. EXERCISE 4-26 (10 MINUTES) EXERCISE 4-26 (10 MINUTES) 1. 1. Work-in-Process Inventory: Pouring Department Work-in-Process Inventory: Pouring Department........... Raw-Material Inventory Raw-Material Inventory......................................... Wages Payable Wages Payable.................................................... .................................................... Manufacturing Overhead Manufacturing Overhead...................................... ........... 1,090,000 1,090,000 ......................................... 70,000 70,000 340,000 340,000 680,000 680,000 ...................................... 2. 2. Work-in-Process Inventory: Finishing Department Work-in-Process Inventory: Finishing Department......... Work-in-Process Inventory: Pouring Department Work-in-Process Inventory: Pouring Department.... ......... 900,000 900,000 .... 900,000 900,000 3. 3. Work-in-Process Inventory: Finishing Department Work-in-Process Inventory: Finishing Department......... Raw-Material Inventory Raw-Material Inventory....................................... Wages Payable Wages Payable................................................... ................................................... Manufacturing Overhead Manufacturing Overhead..................................... ......... 725,000 725,000 ....................................... 25,000 25,000 280,000 280,000 420,000 420,000 ..................................... 4. 4. Finished-Goods Inventory Finished-Goods Inventory............................................ ............................................ Work-in-Process Inventory: Finishing Department Work-in-Process Inventory: Finishing Department 400,000 400,000 400,000 400,000  2002 The McGraw-Hill Companies, McGraw-Hill/Irwin Inc. Managerial Accounting, 5/e 4-15

16. SOLUTIONS TO PROBLEMS PROBLEM 4-27 (50 MINUTES) PROBLEM 4-27 (50 MINUTES) 1. 1. Physical flow of units: Physical flow of units: Physical Physical Units Units 200,000 200,000 1,000,000 1,000,000 1,200,000 1,200,000 Work in process, 1/1/x1 Work in process, 1/1/x1............................................................... ............................................................... Units started during 20x1 Units started during 20x1............................................................ ............................................................ Total units to account for Total units to account for............................................................. ............................................................. Units completed and transferred out during 20x1 Units completed and transferred out during 20x1.......................... Work in process, 12/31/x1 Work in process, 12/31/x1........................................................... ........................................................... Total units accounted for Total units accounted for............................................................. ............................................................. .......................... 900,000 900,000       300,000 300,000 1,200,000 1,200,000 2. 2. Equivalent units: Equivalent units: Percentage Percentage of of Completion Completion with with Respect to Respect to Conversion Conversion 80% 80% Equivalent Units Equivalent Units Direct Direct     Material Material Physical Physical Units Units 200,000 200,000 1,000,00 1,000,00 Conversion Conversion Work in process, 1/1/x1 Work in process, 1/1/x1........... Units started during 20x1 Units started during 20x1......... ........... ......... 0 0 Total units to account for Total units to account for.......... .......... 1,200,00 1,200,00 0 0 Units completed and transferred Units completed and transferred out during 20x1 out during 20x1................... Work in process, 12/31/x1 Work in process, 12/31/x1........ ................... 900,000 900,000 100% 100% 50% 50% 900,000 900,000 300,000 300,000 900,000 900,000 150,000 150,000 ........     300,000 300,000 1,200,00 1,200,00 Total units accounted for Total units accounted for.......... .......... ________ ________ ________ ________ 0 0 Total equivalent units Total equivalent units............... ............... 1,200,00 1,200,00 1,050,000 1,050,000 0 0  2002 The McGraw-Hill Companies, McGraw-Hill/Irwin Inc. 4-16 Solutions Manual

17. PROBLEM 4-27 (CONTINUED) PROBLEM 4-27 (CONTINUED) 3. 3. Costs per equivalent unit: Costs per equivalent unit: Direct Direct Material Material Conversion Conversion $ 504,000 $ 504,000     Total Total a a Work in process, 1/1/x1 Work in process, 1/1/x1........................... ........................... $ $    $ $    200,000 200,000 704,000 704,000 3,192,000 3,192,000b b Costs incurred during 20x1 Costs incurred during 20x1...................... ......................         1,300,000 1,300,000 $1,500,00 $1,500,00 4,492,000 4,492,000 $5,196,00 $5,196,00 Total costs to account for Total costs to account for......................... ......................... $3,696,000 $3,696,000 0 0 0 0 Equivalent units Equivalent units....................................... ....................................... Costs per equivalent unit Costs per equivalent unit......................... 1,200,000 1,200,000 $1.25 $1.25c c 1,050,000 1,050,000 $3.52 $3.52d d $4.77 $4.77e e ......................... a aConversion cost Conversion cost = = = = = = = = = = direct labor + overhead direct labor + overhead direct labor + (60% direct labor + (60% 160% 160% direct labor direct labor 160% 160% $315,000 $315,000 $504,000 $504,000 direct labor) direct labor) b bConversion cost Conversion cost 160% 160% 160% 160% $3,192,000 $3,192,000 direct labor direct labor $1,995,000 $1,995,000 = = = = = = c c$1.25 = $1,500,000 ÷ 1,200,000 $1.25 = $1,500,000 ÷ 1,200,000 $3.52 = $3,696,000 ÷ 1,050,000 $4.77 = $1.25 + $3.52 d d$3.52 = $3,696,000 ÷ 1,050,000 e e$4.77 = $1.25 + $3.52  2002 The McGraw-Hill Companies, McGraw-Hill/Irwin Inc. Managerial Accounting, 5/e 4-17

18. PROBLEM 4-27 (CONTINUED) PROBLEM 4-27 (CONTINUED) 4. 4. Cost of ending inventories: Cost of ending inventories: Cost of goods completed and transferred out: Cost of goods completed and transferred out: number number units units of of per per cost cost total total     900,000 900,000 $4.77 $4.77 $4,293,000 $4,293,000              .................................................. .................................................. transferre transferre out out dd equivalent equivalent unit unit Cost remaining in 12/31/x1 work-in-process inventory: Cost remaining in 12/31/x1 work-in-process inventory: Direct material: Direct material: number number of of cost cost per per     300,000 300,000 $1.25 $1.25 $375,000 $375,000     equivalent equivalent equivalent equivalent          .................................................... .................................................... of of units units of of unit unit             direct direct material material direct direct material material  2002 The McGraw-Hill Companies, McGraw-Hill/Irwin Inc. 4-18 Solutions Manual

19. Conversion: Conversion: number number of of cost cost per per     150,000 150,000 $3.52 $3.52     528,000 528,000     equivalent equivalent equivalent equivalent          of of units units of of unit unit             conversion conversion conversion conversion Total cost of 12/31/x1 work in process Total cost of 12/31/x1 work in process............................................ ............................................ $903,000 $903,000 Check: Cost of goods completed and transferred out Check: Cost of goods completed and transferred out..................... Cost of 12/31/x1 work-in-process inventory Cost of 12/31/x1 work-in-process inventory........................ Total costs accounted for Total costs accounted for................................................... ................................................... ..................... ........................ $4,293,000 $4,293,000       903,000 903,000 $5,196,000 $5,196,000 The cost of the ending work-in-process inventory is $903,000 The cost of the ending work-in-process inventory is $903,000 Ending finished-goods inventory: Of the 900,000 units completed during 20x1, Ending finished-goods inventory: Of the 900,000 units completed during 20x1, 200,000 units remain in finished-goods inventory on December 31, 20x1. 200,000 units remain in finished-goods inventory on December 31, 20x1. Therefore: Therefore: $4,293,000 $4,293,000 (200,000 ÷ 900,000) = $954,000* (200,000 ÷ 900,000) = $954,000* The cost of the ending finished-goods inventory is $954,000. The cost of the ending finished-goods inventory is $954,000. *Also, $954,000 = 200,000 *Also, $954,000 = 200,000 PROBLEM 4-28 (45 MINUTES) PROBLEM 4-28 (45 MINUTES) $4.77 per unit $4.77 per unit 1. 1.      Physical Physical Units Units       50,000 50,000 200,000 200,000 Work in process, June 1 Work in process, June 1............................................................... ............................................................... Units started during June Units started during June.............................................................. ..............................................................  2002 The McGraw-Hill Companies, McGraw-Hill/Irwin Inc. Managerial Accounting, 5/e 4-19

20. Total units to account for Total units to account for.............................................................. .............................................................. 250,000 250,000 Units completed and transferred out during June Units completed and transferred out during June........................... Work in process, June 30 Work in process, June 30.............................................................. .............................................................. Total units accounted for Total units accounted for............................................................... ............................................................... ........................... 190,000 190,000 60,000 60,000 250,000 250,000 2. 2. Percentage Percentage of of Completion Completion with with Respect to Respect to Conversion Conversion 40% 40% Equivalent Units Equivalent Units Direct Direct Material Material Physical Physical Units Units 50,000 50,000   200,000 200,000    Conversion Conversion Work in process, June 1 Work in process, June 1........ Units started during June Units started during June...... ........ ......        Total units to account for Total units to account for....... ....... 250,000 250,000        Units completed and Units completed and transferred transferred out during June out during June................. Work in process, June 30 Work in process, June 30...... 190,000 190,000    100% 100% 190,00 190,00 190,000 190,000        ................. 0 0                ...... 60% 60%     36,000 36,000        60,000 60,000   250,000 250,000    60,000 60,000 Total units accounted for Total units accounted for....... .......     Total equivalent units Total equivalent units............ ............ 250,00 250,00 226,000 226,000        0 0 3. 3. Direct Direct Material Material $120,000 $120,000     492,500 492,500 $612,500 $612,500 250,000 250,000 $2.45 $2.45 Conversion Conversion $ 34,400 $ 34,400         349,800 349,800 $384,200 $384,200 226,000 226,000 $1.70 $1.70      Total Total $154,400 $154,400       842,300 842,300   $996,700 $996,700   Work in process, June 1 Work in process, June 1............ Costs incurred during June Costs incurred during June........ Total costs to account for Total costs to account for........... Equivalent units Equivalent units......................... ......................... Costs per equivalent unit Costs per equivalent unit........... ............ ........ ...........          ........... $4.15 $4.15       2002 The McGraw-Hill Companies, McGraw-Hill/Irwin Inc. 4-20 Solutions Manual

21. PROBLEM 4-28 (CONTINUED) PROBLEM 4-28 (CONTINUED) 4. 4. Cost of goods completed and transferred out during June: Cost of goods completed and transferred out during June: number of number of units units total cost total cost per per     190,000 190,000 $4.1 $4.1 $788,500 $788,500 5 5     ................................................... ...................................................     transferred out d out transferre equivalent unit unit equivalent Cost remaining in June 30 work-in-process inventory: Cost remaining in June 30 work-in-process inventory: Direct material: Direct material: number of number of cost per cost per                    60,000 60,000 $2.4 $2.4 $147,000 $147,000 5 5 equivalent equivalent equivalent equivalent  ................................................... ................................................... units of units of unit of unit of      direct material erial direct mat direct material erial direct mat  2002 The McGraw-Hill Companies, McGraw-Hill/Irwin Inc. Managerial Accounting, 5/e 4-21

22. Conversion: Conversion: number of number of cost per cost per                    36,000 36,000 $1.7 $1.7     61,200 61,200 0 0 equivalent equivalent equivalent equivalent  .......................................................... .......................................................... units of units of unit of unit of      conversion conversion conversion conversion Total cost of June 30 work in process Total cost of June 30 work in process.............................................. .............................................. $208,200 $208,200 Check: Cost of goods completed and transferred out Check: Cost of goods completed and transferred out........................ Cost of June 30 work-in-process inventory Cost of June 30 work-in-process inventory............................ Total costs accounted for Total costs accounted for..................................................... ..................................................... ........................ ............................ $788,500 $788,500     208,200 208,200 $996,700 $996,700  2002 The McGraw-Hill Companies, McGraw-Hill/Irwin Inc. 4-22 Solutions Manual

23. PROBLEM 4-29 (50 MINUTES) PROBLEM 4-29 (50 MINUTES) The missing amounts are shown below. A completed production report follows. The missing amounts are shown below. A completed production report follows. Units started during July Units started during July.......................................................................... .......................................................................... Units completed and transferred out during July Units completed and transferred out during July....................................... Total equivalent units: conversion Total equivalent units: conversion............................................................ ............................................................ 45,000 45,000 50,000 50,000 56,000 56,000 ....................................... Work in process, July 1: conversion Work in process, July 1: conversion......................................................... ......................................................... Costs incurred during July: direct material Costs incurred during July: direct material............................................... Cost per equivalent unit: conversion Cost per equivalent unit: conversion........................................................ ........................................................ Cost of goods completed and transferred out during July Cost of goods completed and transferred out during July.......................... Cost remaining in ending work-in-process inventory: direct material Cost remaining in ending work-in-process inventory: direct material.......... $ $ 79,800 79,800       371,850 371,850 13.20 13.20 1,072,500 1,072,500 123,750 123,750 ............................................... .......................... .......... PRODUCTION REPORT: VESUVIUS TILE COMPANY PRODUCTION REPORT: VESUVIUS TILE COMPANY Weighted­Average Method Percentage Percentage of of Completion Completion with with Respect to Respect to Conversion Conversion 30% 30% Equivalent Units Equivalent Units Direct Direct Material Material Physical Physical Units Units 20,000 20,000 45,000 45,000 65,000 65,000 Conversion Conversion Work in process, July 1 Work in process, July 1................ Units started during July Units started during July.............. Total units to account for Total units to account for.............. ................ .............. .............. Units completed and transferred Units completed and transferred out during July out during July........................ Work in process, July 31 Work in process, July 31.............. Total units accounted for Total units accounted for.............. Total equivalent units Total equivalent units................... ........................ .............. .............. ................... 50,000 50,000 15,000 15,000 65,000 65,000 100% 100% 40% 40% 50,000 50,000 15,000 15,000 _____ _____ 65,000 65,000 50,000 50,000   6,000 6,000   _____ _____   56,000 56,000                2002 The McGraw-Hill Companies, McGraw-Hill/Irwin Inc. Managerial Accounting, 5/e 4-23

24. PROBLEM 4-29 (CONTINUED) PROBLEM 4-29 (CONTINUED) Direct Direct Material Material $164,400 Conversion Conversion $ 79,800 $ 79,800     Total Total Work in process, July 1 Work in process, July 1............................... ............................... $164,400 $ $              244,200 244,200   Costs incurred during July Costs incurred during July........................... ...........................     371,850 371,850     659,400 659,400 1,031,250 1,031,250   $1,275,450 $1,275,450    Total costs to account for Total costs to account for............................. ............................. $536,250 $536,250 $739,200 $739,200     Equivalent units Equivalent units.......................................... .......................................... Costs per equivalent unit Costs per equivalent unit............................. 65,000 65,000 $8.25* $8.25* 56,000 56,000 $13.20 $13.20† † ............................. $21.45** $21.45**      *$8.25 = $536,250 ÷ 65,000 *$8.25 = $536,250 ÷ 65,000 † †$13.20 = $739,200 ÷ 56,000 $13.20 = $739,200 ÷ 56,000 **$21.45 = $8.25 + $13.20 **$21.45 = $8.25 + $13.20 Cost of goods completed and transferred out during July: Cost of goods completed and transferred out during July: number number units units of of per per cost cost total total     50,000 50,000 $21.45 $21.45 $1,072,50 $1,072,50 0 0              .......................................................... .......................................................... transferre transferre out out dd equivalent equivalent unit unit Cost remaining in July 31 work-in-process inventory: Cost remaining in July 31 work-in-process inventory: Direct material: Direct material:  2002 The McGraw-Hill Companies, McGraw-Hill/Irwin Inc. 4-24 Solutions Manual

25. number number of of cost cost per per     15,000 15,000 $8.25 $8.25 $ 123,750 $ 123,750         equivalent equivalent equivalent equivalent          ............................................................ ............................................................ of of units units of of unit unit             direct direct material material direct direct material material Conversion: Conversion: number number of of cost cost per per     6,000 6,000 $13.20 $13.20     79,200 79,200     equivalent equivalent equivalent equivalent          ................................................................. ................................................................. of of units units of of unit unit             conversion conversion conversion conversion Total cost of July 31 work in process Total cost of July 31 work in process............................................. ............................................. $202,950 $202,950 Check: Check: Cost of goods completed and transferred out Cost of goods completed and transferred out. . $1,072,50 $1,072,50  2002 The McGraw-Hill Companies, McGraw-Hill/Irwin Inc. Managerial Accounting, 5/e 4-25

26. 0 0 Cost of July 31 work-in-process inventory Cost of July 31 work-in-process inventory...... ......         202,950 202,950 $1,275,45 $1,275,45 Total costs accounted for Total costs accounted for.............................. .............................. 0 0 PROBLEM 4-30 (40 MINUTES) PROBLEM 4-30 (40 MINUTES) 1. 1. a. a. Percentage Percentage of of Completion Completion with with Respect to Respect to Conversion Conversion 40% 40% Equivalent Units Equivalent Units Direct Direct Material Material Physical Physical Units Units 25,000 30,000 55,000 Conversion Conversion Work in process, May 1 Work in process, May 1................ Units started during May Units started during May.............. Total units to account for Total units to account for.............. ................ 25,000 .............. 30,000 .............. 55,000 Units completed and Units completed and transferred out during May transferred out during May........ Work in process, May 31 Work in process, May 31.............. Total units accounted for Total units accounted for.............. Total equivalent units Total equivalent units................... ........ 35,000 35,000 .............. 20,000 .............. 55,000 ................... 100% 100% 80% 80% 35,000 35,000 20,000 20,000 _____ _____ 55,000 55,000 35,000 35,000 16,000 16,000 _____ _____ 51,000 51,000 20,000 55,000 b. b. Direct Direct Material Material $308,000 $308,000 55,000 55,000 Conversion Conversion $2,483,700 $2,483,700 51,000 51,000 Total Total Total cost Total costs to accou s to account for Equivalent Equivalent units nt for units Costs per equivalent unit Costs per equivalent unit $5.60 $5.60 $48.70 $48.70 $54.30* $54.30* *$54.30 = $5.60 + $48.70 *$54.30 = $5.60 + $48.70  2002 The McGraw-Hill Companies, McGraw-Hill/Irwin Inc. 4-26 Solutions Manual

27. PROBLEM 4-30 (CONTINUED) PROBLEM 4-30 (CONTINUED) c. c. Cost of goods completed and transferred out during May: Cost of goods completed and transferred out during May: number number units units of of cost cost total total per per     35,000 35,000   $54.30 $1,900,500 $1,900,500 $54.30              equivalent equivalent unit unit transferre transferre out out dd Cost remaining in May 31 work-in-process inventory: Cost remaining in May 31 work-in-process inventory: Direct material: Direct material: cost cost per per number number of of     20,000   $112,000 $112,000 ................... ...................20,000 $5.60 $5.60     equivalent equivalent equivalent equivalent          of of unit unit of of units units             direct direct material material direct direct material material Conversion: Conversion:  2002 The McGraw-Hill Companies, McGraw-Hill/Irwin Inc. Managerial Accounting, 5/e 4-27

28. cost cost per per number number of of     16,000   779,200 779,200 .......................... ..........................16,000 $48.70 $48.70     equivalent equivalent equivalent equivalent          of of unit unit of of units units             conversion conversion conversion conversion Total cost of May 31 work in process Total cost of May 31 work in process........................................... ........................................... $891,200 $891,200 Check: Check: Cost of goods completed and transferred out Cost of goods completed and transferred out....................... ....................... $1,900,50 $1,900,50 0 0       Cost of May 31 work-in-process inventroy Cost of May 31 work-in-process inventroy   ......................... ......................... 891,200 891,200 $2,791,70 $2,791,70 Total costs accounted for Total costs accounted for.................................................... .................................................... 0 0 2. 2. Journal entry: Journal entry: Finished-Goods Inventory Finished-Goods Inventory....................................... ....................................... 1,900,500 1,900,500 Work-in-Process Inventory Work-in-Process Inventory....................................................... ....................................................... 1,900,500 1,900,500 1,900,500 1,900,500  2002 The McGraw-Hill Companies, McGraw-Hill/Irwin Inc. 4-28 Solutions Manual

29. PROBLEM 4-31 (45 MINUTES) PROBLEM 4-31 (45 MINUTES) 1. 1. Physical Physical   Units Units    10,000 10,000   100,000 100,000   110,000 110,000                   Work in process, April 1 Work in process, April 1................................................................ ................................................................ Units started during April Units started during April............................................................... ............................................................... Total units to account for Total units to account for............................................................... ............................................................... Units completed and transferred out during April Units completed and transferred out during April............................ Work in process, April 30 Work in process, April 30.............................................................. .............................................................. Total units accounted for Total units accounted for........................................................................ ........................................................................110,000 ............................ 80,000 80,000       30,000 30,000   110,000            2. 2. Percentage Percentage of of Completion Completion with with Respect to Respect to Conversion Conversion 20% 20% Equivalent Units Equivalent Units Direct Direct Material Material Physical Physical Units Units 10,000   100,000    Conversion Conversion Work in process, April 1 Work in process, April 1............... Units started during April Units started during April.............. ............... 10,000 .............. 100,000        Total units to account for Total units to account for.............. .............. 110,000 110,000        Units completed and Units completed and transferred out during April transferred out during April....... Work in process, April 30 Work in process, April 30 ....... 80,000 80,000   100% 100% 80,000 80,000   30,000 30,000   80,000 80,000   10,000 10,000                         33 1/3% 33 1/3%        30,000 30,000   110,000    Total units accounted for Total units accounted for.............. .............. 110,000 ______ ______   _____ _____             Total equivalent units Total equivalent units................... ................... 110,000 110,000    90,000 90,000          3. 3. Direct Direct Material Material Conversion Conversion $ 4,500 $ 4,500       Total Total Work in process, April 1 Work in process, April 1............................... ............................... $ $        $ $              22,000 22,000    26,500 26,500   Costs incurred during April Costs incurred during April.......................... ..........................     158,400 158,400     198,000 198,000    $220,000 $220,000   356,400 356,400   $382,900 $382,900           Total costs to account for Total costs to account for............................. ............................. $162,900 $162,900  2002 The McGraw-Hill Companies, McGraw-Hill/Irwin Inc. Managerial Accounting, 5/e 4-29

30.         Equivalent units Equivalent units.......................................... .......................................... Costs per equivalent unit Costs per equivalent unit............................. 110,000 110,000    $2.00    90,000 90,000 $1.81 $1.81         ............................. $2.00 $3.81 $3.81       2002 The McGraw-Hill Companies, McGraw-Hill/Irwin Inc. 4-30 Solutions Manual

31. PROBLEM 4-31 (CONTINUED) PROBLEM 4-31 (CONTINUED) 4. 4. Cost of goods completed and transferred out during April: Cost of goods completed and transferred out during April: numberof numberof units units per per cost cost total total     80,000 80,000 $3.8 $3.8 $304,800 $304,800 1 1              ........................................................... ........................................................... transferre transferre out out dd equivalent equivalent unit unit Cost remaining in April 30 work-in-process inventory: Cost remaining in April 30 work-in-process inventory: Direct material: Direct material: number number of of cost cost per per     30,000 30,000 $2.0 $2.0 $60,000 $60,000     0 0 equivalent equivalent equivalent equivalent          ............................................................ ............................................................ of of units units of of unit unit             direct direct material material direct direct material material Conversion: Conversion:  2002 The McGraw-Hill Companies, McGraw-Hill/Irwin Inc. Managerial Accounting, 5/e 4-31

32. number number of of cost cost per per     10,000 10,000 $1.8 $1.8 18,100 18,100     1 1 equivalent equivalent equivalent equivalent          ................................................................. ................................................................. of of units units of of unit unit             conversion conversion conversion conversion Total cost of April 30 work-in-process Total cost of April 30 work-in-process........................................... ........................................... $78,100 $78,100 Check: Check: Cost of goods completed and transferred out Cost of goods completed and transferred out................... Cost of April 30 work-in-process inventory Cost of April 30 work-in-process inventory....................... Total costs accounted for Total costs accounted for................................................ ................... ....................... $304,800 $304,800       78,100 78,100 $382,900 $382,900 ................................................  2002 The McGraw-Hill Companies, McGraw-Hill/Irwin Inc. 4-32 Solutions Manual

33. PROBLEM 4-32 (40 MINUTES) PROBLEM 4-32 (40 MINUTES) 1. 1. Percentage Percentage of of Completion Completion with with Respect to Respect to Conversion Conversion 80% 80% Equivalent Units Equivalent Units Direct Direct Material Material Physical Physical Units Units 40,000 80,000 120,000 Conversion Conversion Work in process, August 1 Work in process, August 1............ Units started during August Units started during August.......... Total units to account for Total units to account for.............. ............ 40,000 ..........    80,000 ..............120,000 Units completed and Units completed and transferred transferred out during August out during August..................... Work in process, August 31 Work in process, August 31.......... Total units accounted for Total units accounted for.............. Total equivalent units Total equivalent units................... 100,000 100,000 100% 100% 100,000 100,000 100,000 100,000 ..................... ..........    20,000 ..............120,000 ................... 20,000 120,000 30% 30% 20,000 20,000 ______ ______ 120,000 120,000 6,000 6,000 ______ ______ 106,000 106,000 2. 2. Direct Direct Material Material $138,000 $138,000 120,000 120,000 Conversion Conversion $1,089,680 $1,089,680 106,000 106,000 Total Total Total cost Total costs to accou s to account for Equivalent Equivalent units nt for units Costs per equivalent unit Costs per equivalent unit $1.15 $1.15 $10.28 $10.28 $11.43* $11.43* *$11.43 = $1.15 + $10.28 *$11.43 = $1.15 + $10.28 3. 3. Cost of goods completed and transferred out during August: Cost of goods completed and transferred out during August:  2002 The McGraw-Hill Companies, McGraw-Hill/Irwin Inc. Managerial Accounting, 5/e 4-33

34. number number units units of of per per cost cost total total     100,000 100,000 $11.4 $11.4 $1,143,00 $1,143,00 0 0 3 3              ........................................................ ........................................................ transferre transferre out out dd equivalent equivalent unit unit  2002 The McGraw-Hill Companies, McGraw-Hill/Irwin Inc. 4-34 Solutions Manual

35. PROBLEM 4-32 (CONTINUED) PROBLEM 4-32 (CONTINUED) 4. 4. Cost remaining in August 31 work-in-process inventory: Cost remaining in August 31 work-in-process inventory: Direct material: Direct material: number number of of cost cost per per     20,000 20,000 $1.15 $1.15 $23,000 $23,000     equivalent equivalent equivalent equivalent          ............................................................ ............................................................ of of units units of of unit unit             direct direct material material direct direct material material Conversion: Conversion:  2002 The McGraw-Hill Companies, McGraw-Hill/Irwin Inc. Managerial Accounting, 5/e 4-35

36. number number of of cost cost per per     6,000 6,000 $10.28 $10.28     61,680 61,680     equivalent equivalent equivalent equivalent          ................................................................. ................................................................. of of units units of of unit unit             conversion conversion conversion conversion Total cost of August 31 work in process Total cost of August 31 work in process........................................... ........................................... $ 84,680 $ 84,680     Check: Check: Cost of goods completed and transferred out Cost of goods completed and transferred out........................ ........................ $1,143,00 $1,143,00 0 0 Cost of August 31 work-in-process inventory Cost of August 31 work-in-process inventory......................... .........................           84,680 84,680 $1,227,68 $1,227,68 Total costs accounted for: Total costs accounted for:.................................................... .................................................... 0 0 5. 5. Journal entry: Journal entry: Finished-Goods Inventory Finished-Goods Inventory........................................ ........................................ Work-in-Process Inventory Work-in-Process Inventory.............................. 1,143,000 1,143,000 .............................. 1,143,000 1,143,000  2002 The McGraw-Hill Companies, McGraw-Hill/Irwin Inc. 4-36 Solutions Manual

37. PROBLEM 4-33 (35 MINUTES) PROBLEM 4-33 (35 MINUTES) 1. 1. Direct material cost was $1,404,000: Direct material cost was $1,404,000: XY634……… XY634……… .. .. AA788……… AA788……… . . GU321……… GU321……… . . Total…… Total…… . . $ $ 267,000 267,000 689,00 689,00 0 0 448,00 448,00 0 0 $1,404,00 $1,404,00 0 0 Goodson’s total direct-labor payroll amounted to $126,500 for 6,325 hours of work Goodson’s total direct-labor payroll amounted to $126,500 for 6,325 hours of work ($126,500 ÷ $20 per hour). Thus, conversion cost was $506,000: ($126,500 ÷ $20 per hour). Thus, conversion cost was $506,000: Direct labor………………………………. Direct labor………………………………. …….. …….. Overhead applied (6,325 hours x $60) Overhead applied (6,325 hours x $60) …….. …….. Total……………………………………… Total……………………………………… ….. ….. $126,500 $126,500 379,500 379,500 $506,000 $506,000 2. 2. Goods completed during April cost $1,872,000 (24,000 units x $78) as the Goods completed during April cost $1,872,000 (24,000 units x $78) as the following calculations show: following calculations show: Percentage Percentage Of Of Completion Completion With With Respect to Respect to Conversion Conversion Equivalent Units Equivalent Units Physical Physical Units Units Direct Direct Material Material Conversion Conversion Work Work 1………………. 1………………. Units Units April…………….. April…………….. Total Total for…………….. for…………….. in in process, process, April April 4,000 4,000 75% 75% started started during during 25,000 25,000 units units to to account account 29,000 29,000 Units completed and transferred Units completed and transferred out during out during 24,000 24,000 100% 100% 24,000 24,000 24,000 24,000  2002 The McGraw-Hill Companies, McGraw-Hill/Irwin Inc. Managerial Accounting, 5/e 4-37

38. April…………………….. April…………………….. Work in Work in 30…………….. 30…………….. Total Total for……………... for……………... Total Total units………………….. units………………….. process, process, April April 5,000 5,000 40% 40% 5,000 5,000 2,000 2,000 units units accounted accounted 29,000 29,000 equivalent equivalent 29,000 29,000 26,000 26,000  2002 The McGraw-Hill Companies, McGraw-Hill/Irwin Inc. 4-38 Solutions Manual

39. PROBLEM 4-33 (CONTINUED) PROBLEM 4-33 (CONTINUED) Direct Direct Material Material Conversion Conversion Total Total Work Work 1…………………… 1…………………… Costs Costs April………………. April………………. Total Total for…………………. for…………………. Equivalent Equivalent units……………………………... units……………………………... Cost Cost unit…………………… unit…………………… in in process, process, April April $ $ $ 66,000 $ 66,000 $ $ 220,000 220,000 1,404,00 1,404,00 0 0 $1,624,00 $1,624,00 0 0 29,000 29,000 286,000 286,000 1,910,00 1,910,00 0 0 $2,196,00 $2,196,00 0 0 incurred incurred during during 506,000 506,000 costs costs to to account account $572,000 $572,000 26,000 26,000 $56 $56a a $22 $22b b $78 $78c c per per equivalent equivalent a a$1,624,000 ÷ 29,000 = $56 $1,624,000 ÷ 29,000 = $56 b b$572,000 ÷ 26,000 = $22 $572,000 ÷ 26,000 = $22 c c$56 + $22 = $78 $56 + $22 = $78 3. 3. The cost of the ending work-in-process inventory is $324,000: The cost of the ending work-in-process inventory is $324,000: Direct material (5,000 x $56) Direct material (5,000 x $56) …….. …….. Conversion cost (2,000 x $22) Conversion cost (2,000 x $22) ….. ….. Total………………………… Total………………………… …. …. $280,00 $280,00 0 0 44,00 44,00 0 0 $324,00 $324,00 0 0 4. 4. (a) (a) start of Goodson’s manufacturing process, and these units were begun in April. start of Goodson’s manufacturing process, and these units were begun in April. No material would be added during May. All material is introduced at the No material would be added during May. All material is introduced at the (b) (b) 60% of the conversion would be done in May. 60% of the conversion would be done in May. Since the work-in-process inventory is 40% complete at the end of April, Since the work-in-process inventory is 40% complete at the end of April, 5. 5. Given that the ending work-in-process inventory is at the 40% stage of Given that the ending work-in-process inventory is at the 40% stage of completion, these units would not have reached the 70% point in April where completion, these units would not have reached the 70% point in April where HH887 is added. Therefore, there would be zero equivalent units with respect to HH887 is added. Therefore, there would be zero equivalent units with respect to part HH887 in the ending work-in-process inventory. part HH887 in the ending work-in-process inventory.  2002 The McGraw-Hill Companies, McGraw-Hill/Irwin Inc. Managerial Accounting, 5/e 4-39

40. PROBLEM 4-34 (30 MINUTES) PROBLEM 4-34 (30 MINUTES) 1. 1. The ending work-in-process inventory consisted of 500 units (300 + 900 – 700). The ending work-in-process inventory consisted of 500 units (300 + 900 – 700). 2. 2. The cost of goods completed during June totaled $57,400 (700 units x $82): The cost of goods completed during June totaled $57,400 (700 units x $82): Percentage Percentage Of Of Completion Completion With With Respect to Respect to Conversion Conversion Equivalent Units Equivalent Units Physical Physical Units Units Direct Direct Material Conversion Material Conversion Work Work 1………………. 1………………. Units Units June…………….. June…………….. Total Total for……………... for……………... in in process, process, June June 300 300 30% 30% started started during during 900 900 units units to to account account 1,200 1,200 Units completed and transferred Units completed and transferred during during June………………………….. June………………………….. Work in Work in 30……………... 30……………... Total units Total units for……………… for……………… Total Total units………………….. units………………….. 700 700 100% 100% 700 700 700 700 process, process, June June 500 500 60% 60% 500 500 300 300 accounted accounted 1,200 1,200 equivalent equivalent 1,200 1,200 1,000 1,000 Direct Direct Material Material Conversion Conversion Total Total Work Work 1…………………… 1…………………… Costs Costs June………………. June………………. Total Total for…………………. for…………………. Equivalent Equivalent units……………………………... units……………………………... Cost Cost unit……………………. unit……………………. in in process, process, June June $15,000 $15,000 $ 6,300 $ 6,300 $21,300 $21,300 incurred incurred during during 45,000 45,000 25,700 25,700 70,700 70,700 costs costs to to account account $60,000 $60,000 $32,000 $32,000 $92,000 $92,000 1,200 1,200 1,000 1,000 $50 $50a a $32 $32b b $82 $82c c per per equivalent equivalent  2002 The McGraw-Hill Companies, McGraw-Hill/Irwin Inc. 4-40 Solutions Manual

41. a a$60,000 ÷ 1,200 = $50 $60,000 ÷ 1,200 = $50 b b$32,000 ÷ 1,000 = $32 $32,000 ÷ 1,000 = $32 c c$50 + $32 = $82 $50 + $32 = $82 Finished-Goods Inventory…………………………… Finished-Goods Inventory…………………………… Work-in-Process Inventory…………………. Work-in-Process Inventory…………………. 57,400 57,400 57,400 57,400 3. 3. The cost of the June 30 work-in-process inventory is $34,600: The cost of the June 30 work-in-process inventory is $34,600: Direct materials (500 x $50) Direct materials (500 x $50) ……... ……... Conversion cost (300 x $32) Conversion cost (300 x $32) …….. …….. Total…………………………… Total…………………………… … … PROBLEM 4-34 (CONTINUED) PROBLEM 4-34 (CONTINUED) $25,000 $25,000 0 0 $34,600 $34,600 9,60 9,60 4. 4. Equivalent units measure the amount of manufacturing activity (i.e., for direct Equivalent units measure the amount of manufacturing activity (i.e., for direct material or conversion) that has been applied to a batch of physical units. If, for material or conversion) that has been applied to a batch of physical units. If, for example, a company has 600 physical units in process that are 40% complete as example, a company has 600 physical units in process that are 40% complete as to conversion, the firm has done the equivalent amount of conversion activity as to conversion, the firm has done the equivalent amount of conversion activity as would be required to do would be required to do all all of the conversion work for 240 units (600 x 40%). of the conversion work for 240 units (600 x 40%). Equivalent units are needed to state manufacturing activity on a common Equivalent units are needed to state manufacturing activity on a common measurement scale. One cannot add completed units to units in process. Such a measurement scale. One cannot add completed units to units in process. Such a combination is like adding apples and oranges, as some units are complete and combination is like adding apples and oranges, as some units are complete and some are incomplete. Instead, these units are first converted to equivalent units, some are incomplete. Instead, these units are first converted to equivalent units, and the latter are then used in unit-cost calculations. and the latter are then used in unit-cost calculations.  2002 The McGraw-Hill Companies, McGraw-Hill/Irwin Inc. Managerial Accounting, 5/e 4-41

42. PROBLEM 4-35 (50 MINUTES) PROBLEM 4-35 (50 MINUTES) The missing amounts are shown below. A completed production report follows. The missing amounts are shown below. A completed production report follows. Work in process, May 1 (in units) Work in process, May 1 (in units)............................................................. ............................................................. Units completed and transferred out during May Units completed and transferred out during May....................................... Total equivalent units: conversion Total equivalent units: conversion............................................................ ............................................................ 15,000 15,000 65,000 65,000 71,000 71,000 ....................................... Work in process, May 1: conversion Work in process, May 1: conversion......................................................... ......................................................... Costs incurred during May: direct material Costs incurred during May: direct material............................................... Cost per equivalent unit: conversion Cost per equivalent unit: conversion........................................................ ........................................................ Cost of goods completed and transferred out during May Cost of goods completed and transferred out during May.......................... Cost remaining in ending work-in-process inventory: direct material Cost remaining in ending work-in-process inventory: direct material.......... $ $ 37,500 37,500       570,000 570,000 12.25 12.25 1,407,250 1,407,250 94,000 94,000 ............................................... .......................... .......... PRODUCTION REPORT: HERCULES TIRE AND RUBBER COMPANY PRODUCTION REPORT: HERCULES TIRE AND RUBBER COMPANY Weighted-Average Method Weighted-Average Method Percentage Percentage of of Completion Completion with with Respect to Respect to Conversion Conversion 20% 20% Equivalent Units Equivalent Units Direct Direct Material Material Physical Physical Units Units 15,000 15,000 60,000 60,000 75,000 75,000 Conversion Conversion Work in process, May 1 Work in process, May 1............. Units started during May Units started during May............ Total units to account for Total units to account for........... ............. ............ ........... Units completed and transferred Units completed and transferred out during May out during May................. Work in process, May 31 Work in process, May 31........... Total units accounted for Total units accounted for........... Total equivalent units Total equivalent units................. ................. ........... ........... ................. 65,000 65,000 10,000 10,000 75,000 75,000 100% 100% 60% 60% 65,000 65,000 10,000 10,000 _____ _____ 75,000 75,000 65,000 65,000    6,000 6,000 _____ _____ 71,000 71,000  2002 The McGraw-Hill Companies, McGraw-Hill/Irwin Inc. 4-42 Solutions Manual

43. PROBLEM 4-35 (CONTINUED) PROBLEM 4-35 (CONTINUED) Direct Direct Material Material $135,000 $135,000     570,000 570,000 $705,000 $705,000 75,000 75,000 $9.40* $9.40* Conversion Conversion $ 37,500 $ 37,500         832,250 832,250 $869,750 $869,750 71,000 71,000 $12.25 $12.25† † Total Total $ 172,500 $ 172,500         1,402,250 1,402,250 $1,574,750 $1,574,750 Work in process, May 1 Work in process, May 1............. Costs incurred during May Costs incurred during May......... Total costs to account for Total costs to account for........... Equivalent units Equivalent units........................ ........................ Costs per equivalent unit Costs per equivalent unit........... ............. ......... ........... ........... $21.65** $21.65** *$9.40 = $705,000 ÷ 75,000 *$9.40 = $705,000 ÷ 75,000 † †$12.25 = $869,750 ÷ 71,000 $12.25 = $869,750 ÷ 71,000 **$21.65 = $9.40 + $12.25 **$21.65 = $9.40 + $12.25  2002 The McGraw-Hill Companies, McGraw-Hill/Irwin Inc. Managerial Accounting, 5/e 4-43

44. PROBLEM 4-35 (CONTINUED) PROBLEM 4-35 (CONTINUED) Cost of goods completed and transferred out during May: Cost of goods completed and transferred out during May: number number units units of of cost cost total total per per                  65,000 $21.65 $21.65 ........................................................ ........................................................ 65,000 $1,407,250 $1,407,250 equivalent equivalent unit unit transferre transferre out out dd Cost remaining in May 31 work-in-process inventory: Cost remaining in May 31 work-in-process inventory: Direct material: Direct material: number number of of cost cost per per         equivalent equivalent equivalent equivalent          10,000 $9.40 $9.40 .......................................................... .......................................................... 10,000 $94,000 $94,000 of of units units of of unit unit             direct direct material material direct direct material material Conversion: Conversion:  2002 The McGraw-Hill Companies, McGraw-Hill/Irwin Inc. 4-44 Solutions Manual

45. number number of of cost cost per per         equivalent equivalent equivalent equivalent          6,000 $12.25 $12.25 ............................................................... ............................................................... 6,000 73,500 73,500     of of units units of of unit unit             conversion conversion conversion conversion Total cost of May 31 work-in-process Total cost of May 31 work-in-process..................................................... ..................................................... $167,500 $167,500 Check: Cost of goods completed and transferred out Check: Cost of goods completed and transferred out... Cost of May 31 work-in-process inventory Cost of May 31 work-in-process inventory........ Total costs accounted for Total costs accounted for................................. ... $1,407,250 $1,407,250 167,500 167,500       $1,574,750 $1,574,750 ........ .................................  2002 The McGraw-Hill Companies, McGraw-Hill/Irwin Inc. Managerial Accounting, 5/e 4-45

46. PROBLEM 4-36 (30 MINUTES) PROBLEM 4-36 (30 MINUTES) 1. 1. a. a. Percentage Percentage of of Completion Completion with Respect with Respect to to Conversion Conversion (labor and (labor and overhead) overhead)      25% 25% Tax Tax Returns Returns (physical (physical units) units) ... 200 ........     825 ......... 1,025 Equivalent Units Equivalent Units Labor Labor Overhead Overhead Returns in process, February 1 Returns in process, February 1... Returns started in February Returns started in February........ Total returns to account for Total returns to account for......... 200 825 1,025 Returns completed Returns completed during February during February..................... Returns in process, February Returns in process, February 28 28 Total returns accounted for Total returns accounted for......... Total equivalent units of Total equivalent units of activity activity....................................... ....................................... ..................... 900 900 125      100% 100%      80% 80% 900 900    100 100    900 900           100 100            125     ......... 1,025 1,025 ____ ____    1,000 1,000    ____ ____    1,000 1,000                    b. b. Labor Labor £ 6,000 £ 6,000         89,000 89,000 £95,000 £95,000 1,000 1,000 £95.00 £95.00 Overhead Overhead £ 2,500 £ 2,500         45,000 45,000 £47,500 £47,500 1,000 1,000 £47.50 £47.50 Total Total 8,500 8,500           134,000 134,000 £142,500 £142,500 Returns in process, February 1 Returns in process, February 1............... Costs incurred during February Costs incurred during February.............. Total costs to account for Total costs to account for....................... Equivalent units Equivalent units..................................... ..................................... Costs per equivalent unit Costs per equivalent unit........................ ............... .............. £ £ ....................... ........................ £142.50 £142.50 2. 2. Cost of returns in process on February 28: Cost of returns in process on February 28: cost per equivalent unit cost per equivalent unit 100 100 £95.00 £95.00............................................. ............................................. equivalent units cost per equivalent unit cost per equivalent unit 100 100 £47.50 £47.50............................................. ............................................. Total cost of returns in process on February 28 Total cost of returns in process on February 28................................. equivalent units equivalent units Labor: Labor: £ 9,500 £ 9,500 Overhead: Overhead: equivalent units       4,750 4,750 £14,250 £14,250 .................................  2002 The McGraw-Hill Companies, McGraw-Hill/Irwin Inc. 4-46 Solutions Manual

47. PROBLEM 4-37 (45 MINUTES) PROBLEM 4-37 (45 MINUTES) 1. 1. PRODUCTION REPORT: MIXING DEPARTMENT PRODUCTION REPORT: MIXING DEPARTMENT (Weighted-Average Method) (Weighted-Average Method) Percentage Percentage of of Completion Completion with with Respect to Respect to Conversion Conversion 75% 75% Equivalent Units Equivalent Units Direct Direct Material Material Physical Physical Units Units 4,000 4,000 16,000 16,000     20,000 20,000     Conversion Conversion Work in process, November 1 Work in process, November 1.... Units started during November Units started during November... ... Total units to account for Total units to account for........... ....                 ........... Units completed and transferred Units completed and transferred out during November out during November........ Work in process, November 30 Work in process, November 30 Total units accounted for Total units accounted for........... Total equivalent units Total equivalent units................. ........ 15,000 15,000         5,000 5,000     20,000 20,000     100% 100% 20% 20% 15,000 15,000   5,000 5,000   ____ _ ____ _   20,000 20,000   15,000 15,000 1,000 1,000 _ ____ _ ____ 16,000 16,000                         ........... ................. Direct Direct Material Material $ 22,800 $ 22,800         81,600 81,600* * $104,400 $104,400 20,000 20,000   $5.22 $5.22   Conversion Conversion $ 46,510 $ 46,510         196,690 196,690† † $ 243,200 $ 243,200 16,000 16,000   $15.20 $15.20   Total Total $ 69,310 $ 69,310         278,290 278,290 $347,600 $347,600 Work in process, November 1 Work in process, November 1.... Costs incurred during November Costs incurred during November Total costs to account for Total costs to account for........... Equivalent units Equivalent units........................ ........................ Costs per equivalent unit Costs per equivalent unit........... ....             ...........                   ...........       $20.42 $20.42 *$81,600 = $10,000 + $51,000 + (4,000 ÷ 10,000)($51,500) *$81,600 = $10,000 + $51,000 + (4,000 ÷ 10,000)($51,500) † †$196,690 = $103,350 + (.40)($103,350) + $52,000 $196,690 = $103,350 + (.40)($103,350) + $52,000  2002 The McGraw-Hill Companies, McGraw-Hill/Irwin Inc. Managerial Accounting, 5/e 4-47

48. PROBLEM 4-37 (CONTINUED) PROBLEM 4-37 (CONTINUED) Cost of goods completed and transferred out during November: Cost of goods completed and transferred out during November: number number units units of of per per cost cost total total                  15,000 $20.42 $20.42 $306,300 ........................................................ ........................................................15,000 $306,300 transferre transferre out out dd equivalent equivalent unit unit Cost remaining in November 30 work-in-process inventory Cost remaining in November 30 work-in-process inventory Direct material: Direct material: number number of of cost cost per per         equivalent equivalent equivalent equivalent          5,000 $5.22 $5.22 ............................................................ ............................................................ 5,000 $26,100 $26,100 of of units units of of unit unit             direct direct material material direct direct material material Conversion Conversion  2002 The McGraw-Hill Companies, McGraw-Hill/Irwin Inc. 4-48 Solutions Manual

49. number number of of cost cost per per         equivalent equivalent equivalent equivalent          1,000 $15.20 $15.20 ............................................................... ...............................................................1,000 15,200 15,200     of of units units of of unit unit             conversion conversion conversion conversion Total cost of November 30 work in process Total cost of November 30 work in process............................................ ............................................ $41,300 $41,300 Check: Cost of goods completed and transferred out Check: Cost of goods completed and transferred out..... Cost of November 30 work-in-process inventory Cost of November 30 work-in-process inventory Total costs accounted for Total costs accounted for.................................. ..... $306,300 $306,300       41,300 41,300 $347,600 $347,600 .................................. 2. 2. a. a. Work-in-Process Inventory: Mixing Department Work-in-Process Inventory: Mixing Department......... Raw-Material Inventory Raw-Material Inventory.................................... ......... 81,600 81,600      .................................... 81,600 81,600 b. b. Work-in-Process Inventory: Mixing Department Work-in-Process Inventory: Mixing Department......... Wages Payable Wages Payable............................................... ............................................... ......... 103,350 103,350      103,350 103,350 c. c. Work-in-Process Inventory: Mixing Department Work-in-Process Inventory: Mixing Department......... Manufacturing Overhead Manufacturing Overhead.................................. ......... 93,340* 93,340* .................................. 93,340 93,340 *$93,340 = (.40)($103,350) + ($52,000) *$93,340 = (.40)($103,350) + ($52,000) d. d. Work-in-Process Inventory: Finishing Department Work-in-Process Inventory: Finishing Department..... Work-in-Process Inventory: Mixing Department Work-in-Process Inventory: Mixing Department. . ..... 306,300 306,300 306,300 306,300  2002 The McGraw-Hill Companies, McGraw-Hill/Irwin Inc. Managerial Accounting, 5/e 4-49

50. PROBLEM 4-38 (40 MINUTES) PROBLEM 4-38 (40 MINUTES) 1. 1. The unit costs and total costs for each of the products manufactured by Plasto The unit costs and total costs for each of the products manufactured by Plasto Corporation during the month of May are calculated as follows: Corporation during the month of May are calculated as follows: Extrusion Extrusion 16,000 16,000 $192,000 $192,000 12.00 12.00 392,000 392,000 24.50 24.50 Form Form 11,000 11,000 $ 44,000 $ 44,000 Trim Trim 5,000 5,000 $15,000 $15,000 3.00 3.00 69,000 69,000 13.80 13.80 Finish Finish 2,000 2,000    $12,000 $12,000    6.00 6.00    42,000 42,000    21.00 21.00    Units produced Units produced................. Material costs Material costs................... Unit material cost Unit material cost........ Conversion costs* Conversion costs*............. Unit conversion cost Unit conversion cost.... ................. ...................                     ........ 4.00 4.00 ............. 132,000 132,000 12.00 12.00 .... *Direct labor and manufacturing overhead. *Direct labor and manufacturing overhead.  2002 The McGraw-Hill Companies, McGraw-Hill/Irwin Inc. 4-50 Solutions Manual