Chapter 17 – In class Exercise: Part II

Problem 1. Four Seasons Company makes snow blowers. Materials are added at the beginning of the
process and conversion costs are uniformly incurred. At the beginning of September, work in process
is 40% complete and at the end of the month it is 60% complete. Other data for the month include:

Beginning work-in-process inventory 1,600 units

Units started 2,000 units
Units placed in finished goods 3,200 units

Conversion costs $200,000

Cost of direct materials $260,000
Beginning work-in-process costs:
Materials $154,000
Conversion $ 82,080

Required: Prepare a production cost worksheet with supporting schedules using the weighted-
average method of process costing.
PRODUCTION COST WORKSHEET
Flow of production Physical Units Direct Materials Conversion
Work in process, beginning 1,600
Started during period 2,000
To account for 3,600

Units completed 3,200 3,200 3,200

Work in process, ending 400 400 240
Accounted for 3,600 3,600 3,440

Costs Totals Direct Materials Conversion

Work in process, beginning $ 236,080 $154,000 $82,080
Costs added during period 460,000 260,000 200,000
Total costs to account for $696,080 $414,000 $282,080
Divided by equivalent units 3,600 3,440
Equivalent unit costs $197 $115 $82

Assignment of costs
Completed units $630,400 $115*3200 $82*3200
Work in process, ending 65,680 $115*400 $82*240
Costs accounted for $696,080 $414,000 $282,080

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 Problem 2. Shiffon Electronics manufactures music player. Its costing system uses two cost
categories, direct materials and conversion costs. Each product must pass through the Assembly
Department, the Programming department, and the Testing Department. Direct materials are added
at the beginning of the production process. Conversion costs are allocated evenly throughout
production. Shiffon Electronics uses weighted-average costing. The following information is available
for the month of March 2015 for the Assembly department.

Work in process, beginning inventory 300 units

Conversion costs (30% complete)
Units started during March 800 units
Work in process, ending inventory: 100 units
Conversion costs (50% complete)

The cost details for the month of March are as follows:

Work in process, beginning inventory:
Direct materials $345,000
Conversion costs $360,000
Direct materials costs added during March$700,000
Conversion costs added during March $1,120,000

a) What are the equivalent units for direct materials and conversion costs, respectively, for March?
Direct materials Conversion costs
Completed and transferred out 1,000 1,000
Work in process, ending 100 50
Total equivalent units 1,100 1,050

b) What is the direct materials cost per equivalent unit during March?

Total cost of direct materials = $345,000 + $700,000 = $1,045,000

Direct material cost per equivalent unit = $1,045,000 / 1,100 units = $950

c) What is the conversion cost per equivalent unit in March?

Total conversion cost = 360,000 + $1,120,000 = $1,480,000

Conversion cost per equivalent unit in June = $1,480,000 / 1,050 = $1,409.52

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 Problem 3. Jane Industries manufactures plastic toys. During October, Jane's Fabrication Department
started work on 10,000 models. During the month, the company completed 11,000 models, and
transferred them to the Distribution Department. The company ended the month with 1,500 models
in ending inventory. There were 2,500 models in beginning inventory. All direct materials costs are
added at the beginning of the production cycle and conversion costs are added uniformly throughout
the production process. The FIFO method of process costing is being followed. Beginning work in
process was 25% complete as to conversion costs, while ending work in process was 50% complete as
to conversion costs.

Beginning inventory:
Direct materials costs $19,200
Conversion costs $10,800

Manufacturing costs added during the accounting period:

Direct materials costs $70,000
Conversion costs $240,000

a) How many of the units that were started and completed during October?

Number of units started and completed during October = 11,000 units – 2,500 units (beginning
inventory) = 8,500 units

b) What were the equivalent units for conversion costs during October?

Total of equivalent units = 2500*(1-25%) + 8,500 + 1500*50% = 11,125 units

c) What is the amount of direct materials cost assigned to ending work-in-process inventory at the
end of October?

Direct material cost per unit = $70,000 / 10,000 units = $7.00

Direct materials cost assigned to ending work-in-process inventory = $7.00 × 1,500 = $10,500

d) What is the cost assigned to ending inventory during October?

Conversion costs per equivalent units during October

$240,000/11,125 (from b) = $21.57
Conversion costs cost assigned to ending work-in-process = 1,500 × 0.50 × $21.57 = $16,178

From c), Direct materials cost assigned to ending work-in-process inventory = $10,500

Total cost of work in process, ending =Direct materials + Conversion costs = $26,678

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 Problem 4. Shining Star Company uses an automated process to clean and polish its souvenir items. For
March, the company had the following activities:
Beginning work in process inventory 3,000 items, 1/3 complete
Units placed in production 12,000 units
Units completed 9,000 units
Ending work in process inventory 6,000 items, 2/5 complete

Cost of beginning work in process $2,500

Direct material costs, current $9,000
Conversion costs, current $8,320
Direct materials are placed into production at the beginning of the process and conversion costs are incurred
evenly throughout the process.
Required: Prepare a production cost worksheet using the FIFO method.

Flow of production Physical Units Direct Materials Conversion

Work in process, beginning 3,000
Started during period 12,000
To account for 15,000
Units completed
Work in process, beginning 3,000 3000*(1-1/3) = 2000
Started and completed 6,000 6,000 6,000
Work in process, ending 6,000 6,000 6000*(2/5) = 2,400
15,000 12,000 10,400

Costs Totals Direct Materials Conversion

Work in process, beginning $2,500
Costs added during period 17,320 $9,000 $8,320
Total costs to account for $19,820

Costs added during current period $9,000 $8,320

Divided by equivalent units 12,000 10,400
Equivalent unit costs $1.55 $0.75 $0.80

Assignment of costs Direct Conversion

Materials Costs
Completed and transferred out (400 units)
Work in process, beginning (225 units) $ 2,500
Costs added to beginning work in process in current $ 1,600 = 0*$0.75 + 2000*$0.8
period
Total from beginning inventory $ 4,100
Started and completed (175 units) $ 9,300 = 6000*$0.75 + 6000*0.8
Total costs of units completed and transferred out $ 13,400
Work in process, ending (100 units): 6,420 = 6000*$0.75 + 2400*$0.8

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