Question

av Normal No Spacing Ch 3 Homework Problem A The following data refer to a production center of Sipp-Fizz, a soft drink bottler: Work in process inventory, August 1, 4,000 units including costs of: Direct materials $12,000 Direct labor $ 6,120 Manufacturing overhead applied $8,000 Units started in August 12,500 units Costs incurred in August: Direct materials $ 36,000 Direct labor $ 48,000 Manufacturing overhead applied $ 60,000 The beginning inventory was 100% complete for materials and 50% complete for conversion costs. The ending inventory on August 31 consisted of 6,000 units (100% complete for materials, 70% complete for conversion costs meaning direct labor and overhead). Required: a. Prepare the journal entries to record the costs incurred in August. b. Show the physical flow of units. c. Calculate the equivalent units of production for materials, direct labor, and overhead costs using the weighted average method. Problem D A bottling company bottles soft drinks using a process cost system. Following are cost and production data for the mixing department for June: Work in Process, June 1: 56,000 units (65% complete for materials, BOX complete for conversion) Direct material cost $11,620 Conversion cost $16,240 Added during June: 133,000 units Direct material cost $29,960 Conversion cost $41,720 Work in Process, June 30: 63,000 units (100% complete for materials, 30% complete for conversion) Prepare a production cost report for the month ended June 30 using the weighted average method. Provide the journal entry to record transferring completed units to finished goods. Critical Thinking: Explain why we use equivalent units in Process Costing.

Answer 1

3
a.

Account Titles	Debit	Credit
Work in Process Inventory	$        36,000
Raw Materials Inventory		$            36,000
(Issued raw material to production)
Work in Process Inventory	$        48,000
Wages Payable		$            48,000
(Wages for production)
Work in Process Inventory	$        60,000
Manufacturing Overhead		$            60,000
(Manufacturing Overhead applied)

b.

	Physical Units
Units accounted for
Completed and transferred out	10500
Ending Work in process	6000
Total Units accounted for	16500

Units completed and transferred out = 4000 + 12500 - 6000 = 10500

c. Equivalent units of Production = Units completed + Ending WIP x completion
Material = 10500 + 6000 x 100% = 16500
Labor = 10500 + 6000 x 70% = 14700
Overhead = 10500 + 6000 x 70% = 14700

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