4. Equivalent Units of Production: During April, 20,000 units were transferred in from department A at a cost of $39,000.

Materials cost of $6,500 and conversion cost of $9,000 were added in department B. On April 30, department B had 5,000 units of work in process 60% complete as to conversion as costs. Materials are added in the beginning of the process in department B. Required: 1. Equivalent units of production calculation. 2. The cost per equivalent unit for conversion costs.

Solution:
(1) Quantity Schedule: Units received from preceding department A 20,000 ====== Units transferred to finished goods Units still in process 15,000 5,000 -------Equivalent Production: Transferred in from Department A Transferred to finished goods Ending inventory 15,000 5,000 ------20,000 ====== 20,000 ======

Materials 15,000 5,000 -------20,000 ======

Conversion 15,000 3,000 ------20,000 ======

(2) cost per equivalent unit for conversion costs: $9,000 / 18,000 = $0.50 per unit

5. Costing of Units Transferred Out; Abnormal Loss During February, the Assembly department received 60,000 units from Cutting department at a unit cost of $3.54. Costs added in the Assembly department were: materials, $41,650; labor, $101,700; and factory overhead. $56,500. There was no beginning inventory. Of the 60,000 units received, 50,000 were transferred out; 9,000 units were in process at the end of the month (all materials, 2/3 converted); 1,000 lost units were 1/2 complete as to materials and conversion costs. The entire loss is considered abnormal and is to be charged to factory overhead. Required: Cost of production report.

Solution:
Assembly Department Cost of Production Report For the month of April, 19|____ Quantity Schedule: Units received from preceding department 60,000 ====== Units transferred to next department Units still in process
(All materials - 2/3 labor and overhead)

50,000 9,000

Units lost in process (Abnormal loss - 1/2 materials, labor, and overhead) 1,000 ------Cost Charged to the Department: Cost from preceding department: Transferred in during the month
(60,000 units)

60,000 ====== Unit Cost

Total Cost

$212,400 --------

$3.54 ------

Cost added by the department: Materials Labor Factory overhead $41,650 $101,700 $56,500 -------Total cost added $199,850 -------Total cost to be accounted for $412,250 ======= Cost Accounted for as Follows: $1.70 $1.80 $1.00 -----$3.50 -----$7.04 =====

Transferred to next department

(50,000 $7.04)

$352,000

Transferred to Factory Overhead: From preceding department Materials Labor

(1,000 1/2 $0.70) (1,000 $3.54)

$3,540 350 900 500 -------5,290

(1,000 1/2 $1.80) (1,000 1/2 $1.00)

Factory overhead

Work in process - ending inventory: Cost from preceding department Materials Labor
(9,000 0.70) (9000 $3.54)

$31,860 6,300 10,800 6,000 -------54,960 ------$412,250 ======

(9,000 2/3 1.80) (9,000 2/3 1.00)

Factory overhead

Total cost accounted for

Additional Computations
Equivalent Production: Materials = 50,000 + 9,000 + 1,000/2 lost units = 59,500 units Labor and factory overhead = 50,000 + (9,000 2/3) + 1,000/2 lost units = 56,500 Unit Cost: Materials = $41,650 / 59,500 = $0.70 per unit Labor = $101,700 / 56,500 = $1.80 per unit Factory overhead = $56,500 / 56,500 = $1.00 per unit

6. Cost of Production Report; Normal and Abnormal Loss:

The Sterling Company uses process costing. In department B, conversion costs are incurred uniformly throughout the process. Materials are added at the end of the process, following

inspection. Normal spoilage is expected to be 5% of good output. The following information related to department B for January:

Units Received from department A Transferred to finished goods Ending inventory (70% complete) Cost incurred: Materials Labor and factory overhead 12,000 9,000 2,000

Dollars $84,000

18,000 45,600

Required: Cost of Production report for department B.

Solution:
The Sterling Company Department B Cost of Production Report For the month of January Quantity Schedule: Units received from preceding department 12,000 ====== Units transferred to finished goods Units still in process Units lost in process Units lost in process
(Normal Spoilage 9000 5%) (Abnormal Spoilage 1,000 - 450)

9,000 2,000 450 550 ------12,000 ====== Unit Cost

Cost Charged to the Department:

Total Cost

Cost from preceding department: Transferred in during the month

(12,000 units)

$84,000 --------

$7.00 ------

Cost added by the department: Materials Labor and factory 0verhead $18,000 $45,600 -------Total cost added $63,600 -------Total cost to be accounted for $147,600 ======= Cost Accounted for as Follows: Transferred to finished goods
[(9,000 $13) + (450* $11)] (550** $11)

$2.00 $4.00 -----$6.00 -----$13.00 =====

$121,950 6,050

Transferred to Factory Overhead

Work in process - ending inventory: Cost from preceding department Labor and factory overhead
(2000 $7.00)

$14,000 5,600 -------19,600 ------$147,600 ======

(2,000 70% $4)

Total cost accounted for

*Normal spoilage **Abnormal spoilage

Additional Computations
Equivalent Production: Materials = 9,000 units Labor and factory overhead = 9,000 + (2,000 70%) + 450 + 550 Unit Costs:

Materials = $18,000 / 9,000 = $2.00 per unit Labor and factory overhead = $45,600 / 11,400 = $4.00 per unit

7. Cost of Production Report; Spoiled Units - Normal and Abnormal:

Hettinger Inc., uses process costing system in its two producing departments. In department 2, inspection takes place at the 96% stage of completion, after which materials are added to good units. A spoilage rate of 3% of good output is considered normal. Department 2 records for April shows:

Received from department 1 Cost Materials Conversion cost (labor + factory overhead) Transferred to finished goods Ending work in process inventory (50% complete)

30,000 units $135,000 $12,500 $139,340 25,000 units 4,200 units

Required: Cost of production report.

Solution:
The Sterling Company Department B Cost of Production Report For the month of January Quantity Schedule: Units received from preceding department 30,000 ====== Units transferred to finished goods Units still in process
(50% complete)

25,000 4,200

Units lost in process Units lost in process

(Normal Spoilage 25,000 3%) (Abnormal Spoilage 800 - 750)

750 50 ------30,000 ====== Unit Cost

Cost Charged to the Department: Cost from preceding department: Transferred in during the month
(30,000 units)

Total Cost

$135,000 --------

$4.50 ------

Cost added by the department: Materials Labor and factory 0verhead

(Conversion cost)

$12,500 $139,340 --------

$0.50 $5.00 -----$5.50 -----$10.00 =====

Total cost added

$151,840 --------

Total cost to be accounted for

$286,840 =======

Cost Accounted for as Follows: Transferred to finished goods: Cost of completed units Normal spoilage (25,000 $10.00)

$250,000

all related to units transferred to finished goods: (750 $4.50)

Cost from preceding department Conversion cost

(720 $5.00)

3,375 3,600 -------$256,975

Transferred to Factory Overhead

- Abnormal spoilage: (50 $4.50)

Cost from preceding department Conversion cost

(48 $5.00)

$225 240 -------465

Work in process - ending inventory:

Cost from preceding department Labor and factory overhead

(4,200 $4.50)

$18,900 10,500 -------29,400 ------$286,840 ======

(2,100 $5)

Total cost accounted for

Additional Computations
Equivalent Production: Materials = 25,000 units Labor and factory overhead = 25,000 + (42,00 50%) + (750 96%) + (50 96%) = 27,888 units Unit Costs: Materials = $12,500 / 25,000 = $.50 per unit Labor and factory overhead = $139,340 / 27,888 = $5.00 per unit

8.Computation of Equivalent Production:

Pietra - Gonatas, Inc. uses process costing to account for the costs of its only product, product D. Production takes place in three departments; Fabrication, Assembly, and Packaging. At the end of the fiscal year, June 30, the following inventory of product D is on hand: y y y y y No unused raw materials or packaging materials. Fabrication department: 300 units, 1/3 complete as to raw materials and 1/2 complete as to direct labor Assembly department: 1,000 units, 2/5 complete as to direct labor. Packaging department: 100 units, 3/4 complete as to packaging materials and 1/4 complete as to direct labor. Shipping for finished goods are: 400 units.

Required:

1. The number of equivalent units of raw materials in all inventories at June 30. 2. The number of equivalent units of the fabrication department's direct labor in all
inventories at June 30

3. The number of equivalent units of packaging materials in all inventories at June 30.

Solution:
(1) Equivalent units of raw materials in all inventories, June 30, 19__ Fabrication department Assembly department Packaging department Shipping area
(300 1/3)

100 1,000 100 400 -------1,600 =======

(2) Equivalent units of Fabrication department's direct labor in all inventories, Jun 30, 19___ Fabrication department Assembly department Packaging department Shipping area
(300 1/3)

150 1,000 100 400 --------1,650 =======

(3) Equivalent units of packaging materials in all inventories, June 30, 19___ Packaging department
(300 4/3)

75

Shipping area

400 ------475 ======