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Process Costing Assignment

This document provides instructions for three process costing assignment questions. Question 1 involves journal entries for a perfume production process with two departments. Question 2 provides additional data for a computer assembly department and asks for calculations of units started/completed, equivalent units, and costs per equivalent unit. Question 3 asks which costing system a trophies manufacturer should use.

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Faisal Farooqui
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139 views3 pages

Process Costing Assignment

This document provides instructions for three process costing assignment questions. Question 1 involves journal entries for a perfume production process with two departments. Question 2 provides additional data for a computer assembly department and asks for calculations of units started/completed, equivalent units, and costs per equivalent unit. Question 3 asks which costing system a trophies manufacturer should use.

Uploaded by

Faisal Farooqui
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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Process Costing Assignment

Assessment weightage: 15%

Instruction: Solve the following question and upload the solution (word document)

Q-1

Nature’s Way, Inc., keeps one of its production facilities busy making a perfume called Essence de la
Vache. The perfume goes through two processing departments: Blending and Bottling. The following
incomplete Work in Process account is provided for the Blending Department for March:

The $32,800 beginning inventory in the Blending Department consisted of the following elements:
materials, $8,000; direct labor, $4,000; and overhead applied, $20,800.

Costs incurred during March in the Bottling Department were: materials used, $45,000; direct labor,
$17,000; and overhead cost applied to production, $108,000.

Required:

1. Prepare journal entries to record the costs incurred in both the Blending Department and Bottling
Department during March. Key your entries to items (a) through (g) below:

a. Raw materials were issued for use in production.

b. Direct labor costs were incurred.

c. Manufacturing overhead costs for the entire factory were incurred, $596,000. (Credit Accounts
Payable and use a single Manufacturing Overhead control account for the entire factory.)

d. Manufacturing overhead was applied to production using a predetermined overhead rate.

e. Units that were complete with respect to processing in the Blending Department were transferred to
the Bottling Department, $722,000.

f. Units that were complete with respect to processing in the Bottling Department were transferred to
Finished Goods, $920,000.

g. Completed units were sold on account for $1,400,000. The cost of goods sold was $890,000.
Q-2

Bell Computers, Ltd., located in Liverpool, England, assembles a standardized personal computer from
parts it purchases from various suppliers. The production process consists of several steps, starting with
assembly of the “mother” circuit board, which contains the central processing unit. This assembly takes
place in the CPU Assembly Department. The company recently hired a new accountant who prepared
the following report for the department for May using the weightedaverage method:

The company’s management would like some additional information about May’s operation in the CPU
Assembly Department. (The currency in England is the pound, which is denoted by the symbol £.)

Required:

1. How many units were started and completed during May?

2. What were the equivalent units for May for materials and conversion costs?

3. What were the costs per equivalent unit for May?

The following additional data are available concerning the department’s costs:
4. Verify the accountant’s ending work in process inventory figure (£8,200) given in the report.

5. The new manager of the CPU Assembly Department was asked to estimate the incremental cost of
processing an additional 1,000 units through the department. He took the unit cost for an equivalent
whole unit you computed in (3) above and multiplied this figure by 1,000. Will this method yield a valid
estimate of incremental cost? Explain.

Q-3

Watkins Trophies, Inc., produces thousands of medallions made of bronze, silver, and gold. The
medallions are identical except for the materials used in their manufacture. What costing system would
you advise the company to use?

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