Student Sol11 4e

STUDENT SOLUTIONS MANUAL
CHAPTER 11: PROCESS COSTING
EXERCISES
11-28 Equivalent Units; Weighted-Average Method (20 min)
Quantity Schedule
Input
Work-in-process inventory, 1/1 30,000
Units started 150,000
Total units to account for 180,000
Output
Units completed 165,000
Work in process inventory, 12/31 15,000
Total units accounted for 180,000
Equivalent Units -- Weighted-Average Method

Materials
Work-in-process inventory,12/31 15,000 x 70% = 10,500
Total equivalent units 175,500
Conversion:
Work-in-process inventory,12/31 15,000 x 60% = 9,000
Blocher,Stout,Cokins,Chen:Cost Management,4e 11-1 The McGraw-Hill Companies, Inc., 2008

11-30 Equivalent Units; FIFO Method (25 min)
Units Materials Conversion

Beginning WIP 200 100% 9%
Units started or Trans-in 900
Total to account for 1,100
Units Finished or Trans-out 800

Ending WIP 300 100% 12%
Total accounted for 1,100
EQUIVALENT UNITS: Weighted Average

Materials 1,100
Conversion 836
EQUIVALENT UNITS: FIFO
Materials 900
Conversion 818
Weighted Average:
Materials = 800 + 1.0 x 300 = 1,100
Conversion = 800 + .12 x 300 = 836
FIFO
Materials = 800 + 1.0 x 300 1.0 x 200 = 900
Conversion = 800 + .12 x 300 - .09 x 200 = 818

11-32 Equivalent Units; FIFO Unit Cost (25 min)

1.
Weighted Average:
Materials: $2.25
Conversion: $4.378
FIFO:
Materials: $2.40
Conversion: $4.412
2. The differences between the cost per equivalent unit (FIFO vs weighted-
average) for materials and conversion are due to differences in the per unit
amounts in beginning WIP and current costs. These differences are
averaged together in the weighted-average method, while in the FIFO
method, the cost per equivalent unit is based on current costs only.

11-34 FIFO Method (25 min)
1. Equivalent units
Returns completed during March 1,200*
Returns in process, 3/31: 200 x 90% = 180
- Returns in process, 3/1: 100 x 30% = (30)
FIFO equivalent units 1,350
* 100 + 1,300 - 200 = 1,200
2. Cost per equivalent unit

$148,500 / 1,350 = $110
3. Cost of completed returns

From beginning inventory, 3/1: $ 330
Added to finish the beginning
inventory: $110 x 100 x (1 - 30%) = 7,700
Total first batch $ 8,030
Second batch--started and finished:
$110 x (1,200 - 100) = 121,000
Total cost of completed returns $129,030
4. Cost of returns in process on March 31

$110 x (200 x 90%) = $19,800

11-36 Backflush Costing (10 min)
1.
First, at the time materials are purchased.
Materials Inventory $190,000
Accounts Payable, Cash $190,000
Second, conversion cost are incurred.

Conversion Cost Account $350,000
Wages payable, other accounts $350,000
Third, accounting for completed product at the end of the month.

Finished goods $590,000
Materials inventory (for actual usage) $210,000
Conversion Cost (applied) 380,000
The overapplied conversion cost of $30,000 (=$380,000 - $350,000) is

closed to the cost of goods sold account at the end of the year.
2. Backflush costing is used when the level of WIP inventory is very small.
This can be the case for firms that use just-in-time manufacturing (JIT), so
that purchases are carefully coordinated with scheduled production on a
daily basis. Backflush costing is a practical and convenient costing method
for cases like this.

PROBLEMS
11-38: Weighted Average Method (20 min)
Whole
Beginning WIP 6,000 100% 50%
Total to account for 21,000
Units Finished 18,000

Ending WIP 3,000 100% 50%
Total accounted for 21,000

Units Completed 18,000 18,000
Materials (Ending WIP) 3,000
Conversion (Ending WIP) - 1,500
Total 21,000 19,500
EQUIVALENT UNITS: FIFO
Materials (Beginning WIP) 6,000
Conversion (Beginning WIP) - 3,000
Total 15,000 16,500
COST ADDED Materials Conversion Total

Beginning WIP $ 88,000 $ 126,000 $ 214,000
Current Costs 220,000 356,000 576,000
TOTAL $ 308,000 $ 482,000 $ 790,000
WTAVG Cost per EU $ 14.667 $ 24.718 $ 39.385

FIFO Cost per EU 14.667 21.576 36.242
COST ASSIGNED - WEIGHTED AVERAGE

Finished Goods 18,000 units
Good production 708,923
TOTAL
Ending WIP 3,000 units

Materials 44,000
Conversion 37,077
TOTAL 81,077
TOTAL $ 790,000
COST ASSIGNED -FIFO

Prior period costs in Beginning WIP 214,000
Current per. cost to complete Beg WIP 64,727
Cost of units started and finished 434,909
TOTAL $ 713,636

Materials 44,000
Conversion 32,364
TOTAL 76,364
TOTAL $ 790,000
11-39 FIFO Method (20 min) -- see solution above

11-40 Weighted-Average Method (30-40 min)
1. Quantity Schedule (not required)

Input
Output
Equivalent Units:
Material X
Work-in-process inventory, 8/31 17,000 x 100% = 17,000
Material Y
Work-in-process inventory, 8/31 17,000 x 0% = 0
Conversion
2. Costs per equivalent unit:

Costs Material X Material Y Conversion Total
WIP, 8/1 $ 64,800 $ 89,100 $119,880 $273,780
Costs added 152,700 138,400 302,520 593,620
Total $217,500 $227,500 $422,400 $867,400
EU 87,000 70,000 76,800
Unit cost $2.50 $3.25 $5.50 $11.25
Problem 11-40: (continued)

3. Cost of units transferred out:

($2.50 + $3.25 + $5.50) x 70,000 = $787,500
4. Cost of ending work-in-process inventory:

Material X $2.50 x 17,000 = $ 42,500
Material Y 0
Conversion $5.50 x 6,800 = 37,400
$ 79,900

11-42 Weighted-Average Method (30 min)
1. Equivalent units:
Direct Materials: 175,000 + (30,000 x 80%) = 199,000
Conversion: 175,000 + (30,000 x 40%) = 187,000
2. Cost per equivalent unit:

Direct Materials:
(57,000 renminbi + 736,000 renminbi) / 199,000 = 3.9849 renminbi
Conversion:
(45,000 renminbi + 1,094,950 renminbi) / 187,000 = 6.096 renminbi
Total unit costs: 3.9849 + 6.096 = 10.0809 renminbi
3. Cost of goods completed and transferred out:

10.0809 x 175,000 = 1,764,157.50 renminbi
4. Cost of work-in-process, 10/31:

Direct Materials:
3.9849 x 30,000 x 80% = 95,637.60 renminbi
Conversion:
6.096 x 30,000 x 40% = 73,152.00 renminbi
Total: 95,637.60 + 73,152.00 = 168,789.60 renminbi
5. Exchange rate depends on a particular date, which an instructor

selected.
The exchange rate as of July 6, 2006 was $1 US = 7.9908

11-44 Reconditioning Service; Weighted-Average (20 min)

Problem 11-44 (continued)
2. The information in the cost report shows two relevant items of

information regarding planning for the coming months work. First,
note there has been an increase in WIP during November, a month in
which there were fewer units in process (900 units) . Decembers
work will require 900 + 200 = 1,100 units in process, somewhat larger
than Novembers requirement. Bauer should be concerned about its
capacity and ability to meet the December orders on a timely basis.
Second, the cost report shows that the cost per equivalent unit for
conversion, at $365, is somewhat higher than the average for prior
months. This might reflect higher labor costs and could be a result of
the decrease in volume (November completed 700 units relative to an
average of 800-850 completed units per month).


11-46 (continued)

11-48 Weighted-Average Method; Transferred-In Costs (40-50 min)

1.
Whole Equivalent Units

Beginning WIP 4,000 100% 80%
Units started or Trans-in 15,000
TOTAL IN Process 19,000
Units Finished or Trans-out 16,000
Normal spoilage
Abnormal spoilage
Ending WIP 3,000 90% 60%
TOTAL OUT Process 19,000

Transferred In 19,000
Materials 18,700 = finished units + spoiled units + % completion x Ending WIP
Conversion 17,800 = finished units + spoiled units + % completion x Ending WIP
Cost Added: -----This Dept-----
Trans-in Materials Conversion Total
Beginning WIP 57,800 23,400 23,360 104,560
Current Costs 141,700 93,475 110,140 345,315
Total 199,500 116,875 133,500 449,875
Cost per EU $ 10.500 $ 6.250 $ 7.500 $ 24.250
COST ASSIGNMENT - WEIGHTED AVERAGE

Good production (@ $24.25) 388,000
Total
Trans-in (3,000 x $10.50) 31,500
Materials (3,000 x .9 x $6.25) 16,875
Conversion (3,000 x . 6 x $7.50) 13,500
Total 61,875
Total Cost to Account For 449,875
2. On March 17, 2006, the exchange rate was $1 US = 970 South Korean
Won (KRW). The dollar had fallen from a rate of $1 US = 1,200 KRW three
years earlier.

1. Quantity Schedule (not required)

Input
Output
Equivalent Units -- FIFO Method:

Material A
Total 95,000
Less: EU in WIP inventory, 6/1 15,000 x 100% = (15,000)
Material B
Total 95,000
Less: EU in WIP inventory, 6/1 15,000 x 0% = ( 0)
Conversion:
Total 86,250
Less: EU in WIP inventory, 6/1 15,000 x 40% = ( 6,000)

.
Problem 11-50 (Continued)
2. Costs per equivalent unit:

Costs Material A Material B Conversion
Costs incurred in June $260,000 $403,750 $461,437.50
Divided by EU 80,000 95,000 80,250
Unit cost $3.25 $4.25 $5.75
3. Cost of units transferred out:

Work-in-process inventory, June 1 $ 85,437.50
Cost to finish beginning WIP:
Material B 15,000 x $4.25 = $63,750
Conversion 15,000 x 60% x $5.75 = 51,750 115,500.00
Total $200,937.50
Cost of units started and completed:
($3.25 + $4.25 + $5.75) x (70,000 - 15,000) = 728,750.00
Cost of units transferred out $929,687.50
4. Cost of ending work-in-process inventory:

Material A $3.25 x 25,000 = $ 81,250.00
Material B $4.25 x 25,000 = 106,250.00
Conversion $5.75 x 16,250 = 93,437.50
$280,937.50

11-52 FIFO Method; Two Departments (60-70 min)
Production Report - Molding Department (FIFO Method)

Physical Percent Equivalent Units
Units Complete DM Conv
WIP, January 1 0
Units started during Jan.50,000
Total units to acct. for 50,000
Units completed & transferred

out during Jan. 50,000 100% 50,000 50,000
WIP, January 31 0
Total units acct. for 50,000
Weighted average equivalent units 50,000 50,000

Less: equivalent units in Jan.1 WIP 0 0
FIFO equivalent units 50,000 50,000
Costs:
DM Conv Total
WIP, January 1 $ 0 $ 0 $ 0
Costs incurred during Jan. 300,000 50,000 350,000
Total costs to acct. for $300,000 $50,000 $350,000
Divided by equivalent units 50,000 50,000

Costs per equivalent unit $6.00 $1.00 $7.00
Cost of goods completed and transferred out of the molding department

during January:
Cost of January 1 WIP inventory $ 0
Cost incurred to produce units that were both started and completed during
January:
( # of units ) x ( total cost per equivalent unit ) = 50,000 x $7.00 = $350,000
Total cost of goods completed and transferred out: $350,000
Cost remaining in January 31 WIP Inventory in the molding department: $ 0

Problem 11-52 (Continued 1)
Production Report - Finishing Department (FIFO Method)

Physical Percent Equivalent Units
Units Complete DM Conv
WIP, January 1 5,000 25%
Units transferred in
during Jan. 50,000
Total units to acct. for 55,000
Units completed and

transferred out
during January 53,000 100% 53,000 53,000
WIP, January 31 2,000 25% 2,000 500
Total units acct. for 55,000
Weighted-average equivalent units 55,000 53,500

Less: equivalent units in Jan.1 WIP (5,000) ( 1,250)
FIFO equivalent units 50,000 52,250
Costs: Trans.In Conv Total

WIP, January 1 $15,000
Costs incurred during Jan. $350,000 $40,000 390,000
Total costs to acct. for $405,000
Divided by equivalent units 50,000 52,250

Costs per equivalent unit $7.00 $0.7656 $7.7656
Cost of goods completed and transferred out of the finishing department

during January:
Cost of Jan. 1 WIP Inv., which is transferred out first: $15,000
Cost incurred to finish the Jan.1 WIP Inv.:
(# of units) x (% of conversion remaining) x (cost per equivalent unit of
conversion) = 5,000 x 0.75 x $0.7656 = $2,871

Problem 11-52 (Continued 2)
Cost incurred to produce units that were both started and completed during
Jan.:
(# of units) x (total cost per equivalent unit)

= (53,000 - 5,000) x $7.7656 = $372,748.80
Total cost of goods completed and transferred out:

= $15,000 + $2,871 + $372,748.80 = $390,619.80
Cost remaining in Jan.31 WIP inventory in the finishing department:

Transferred-in costs:
(# of equivalent units of transferred-in cost) x (transferred-in cost per
equivalent unit) = 2,000 x $7.00 = $14,000
Conversion:
(# of equivalent units of conversion.) x (Conversion cost per equivalent
unit)
= 500 x $0.7656 = $382.80
Total cost of Jan.31 WIP inventory: $14,382.80
Check: Cost of goods completed & transferred out $390,619.80

Cost of Jan.31 WIP Inv. 14,382.80
Total costs accounted for $405,002.60*
* $2.60 difference due to rounding

11-54 Appendix: Spoilage (30 Min)
1. The revised cost production report for November 2004 as follows.
Romano Foods- Mixing Department

Revised Production Cost Report
Month ended November 30, 2007
Good 10% Good

Input Total Output Normal Abnormal Unit
Units Costs Units Spoilage Spoilage Cost
120,000 $45,360 107,000 10,700 2,300 $0.4158
Budgeted unit cost $.4350

Actual cost per good unit .4158
Favorable variance $.0192
Cost Reconciliation
Cost of 107,000 good units at $.4158 $44,490.60
Abnormal spoilage (2,300 X $.378) 869.40
Total production costs $45,360.00
Supporting Calculations
a. 10% of good output = units of normal spoilage

.10 X 107,000 units = 10,700 units of normal spoilage
b. Total spoilage 13,000

Less normal spoilage10,700
Abnormal spoilage 2,300
c. Total cost of November production $45,360

Divide by total input (units) 120,000
Unit cost of production $ .378
Problem 11-54 (Continued)
Good units completed $40,446.00

(107,000 X $.378)
Normal spoilage 4,044.60
(10,700 X $.378)
Total cost of good units $44,490.60
Units cost of good units $ .4158

($44,490.60/107,000)
d. Abnormal spoilage (units) 2,300

Multiplied by unit cost of production .378
Total cost of abnormal spoilage $869.40
2. The journal entry, required to transfer November costs of the Mixing

Department to the Assembly Department, charges the cost of good
production to the Assembly Department, charges a loss account for
abnormal spoilage, and credits the Mixing Department with the total
cost of production.
Debit Credit
Work in process Assembly $ 44,490.60
Loss from Abnormal spoilage 869.40
Work in process Mixing $45,360.00
3. Corolla's report is less favorable than the revised report because he

ignored the normal spoilage in calculating the unit cost. In addition, he
miscalculated normal spoilage as ten percent of total input rather than
ten percent of good output and , thus, miscalculated abnormal
spoilage. Corolla divided the November production costs ($45,360) by
the good units produced plus the incorrect amount of abnormal
spoilage (107,000 + 1,000 = 108,000) to get the $.42 per unit. By
ignoring the equivalent units of the normal spoilage, he used a higher
base for calculating the unit cost. Normal spoilage should always be
incorporated into the equivalent unit calculation to get an accurate
representation of the unit cost.

11-56 Appendix: Spoilage; Weighted-Average Method;

Transferred-in Costs (40 Min)
1. Physical quantity schedule
Beginning WIP 3,000 Bikes transferred out 40,000

Bikes transferred in 45,000 Ending WIP 4,000
Bikes to account for 48,000 Bikes lost 4,000
Bikes accounted for 48,000
a. Normal amount of defective or spoiled bikes
Bikes passing through assembly 48,000

Less:
Bikes not inspected during current year
Beginning work-in-process inventory
(inspected in prior year 80% complete) 3,000
Ending work-in-process inventory
(have not reached inspection point
20% complete) 4,000 7,000
Bikes that reached inspection point 41,000
Normal defective/spoiled rate .05
Normal amount of defective/spoiled bikes 2,050
b. Abnormal amount of defective/spoiled bikes

Total bikes lost 4,000
Normal amount of defective/spoiled bikes 2,050
Abnormal amount of defective/spoiled bikes 1,950

2. Equivalent units of production
a. Transferred- b. c.
in from Assembly Assembly
Molding Material Conversion
Units transferred out 40,000 40,000 40,000
Equivalent units in
ending work-in-process
4,000 x 100% 4,000
4,000 x 50% 2,000

4,000 x 20% 800
Equivalent units lost
4,000 x 100% 4,000 4,000
4,000 x 70% 2,800
Total equivalent units 48,000 46,000 43,600
3. Cost per equivalent unit for fully assembled dirt bike

Total
Prior Current Cost per
Period Period Total Equivalent Equivalent
Cost Cost Cost Units Unit
Transferred in $82,200 $1,237,800 $1,320,000 48,000 $27.50
Materials 6,660 96,840 103,500 46,000 2.25
Conversion 11,930 236,590 248,520 43,600 5.70
$35.45
4. The total production cost:
a. Normal defective/spoiled bikes

Transferred-in 2,050 x $27.50 = $56,375.00
Material 2,050 x 2.25 = 4,612.50
Conversion 2,050 x .7 x 5.70 = 8,179.50
$69,167.00

b. Abnormal defective/spoiled bikes

Transferred-in 1,950 x $27.50 = $53,625.00
Material 1,950 x 2.25 = 4,387.50
Conversion 1,950 x .7x 5.70 = 7,780.50
$65,793.00
c. Good bikes completed in the

Assembly Department
40,000 bikes x $35.45 = $ 1,418,000.00
d. Ending work-in-process 4,000 x $27.50 = $110,000.00

Transferred-in 2,000 x 2.25 = 4,500.00
Conversion 800 x 5.70 = 4,560.00
$ 119,060.00
Total costs accounted for $1,672,020.00
5. a. The cost of the normal spoiled units of $69,167 would be

transferred to the Packing Department as a portion of the cost
of the 40,000 good units transferred out. Thus, this amount
would be a portion of the Packing Departments inventory
account and/or cost of goods sold amount depending upon the
proportion of the units in the work-in-process inventory, finished
goods inventory, and units sold during the year.
b. The abnormal losses of $65,793 would appear as a period

expense on the companys income statement.
c. The cost of the good units completed and transferred to the

Packing Department ($1,418,000) would be included in the Packing
Departments production costs. Thus, this amount would be a
portion of the Packing Departments inventory accounts and/or cost
of goods sold account depending upon the proportion of the units in
the work-in-process inventory, finished goods inventory, and units
sold during the year.

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STUDENT SOLUTIONS MANUAL

CHAPTER 11: PROCESS COSTING

11-28 Equivalent Units; Weighted-Average Method (20 min)

Equivalent Units -- Weighted-Average Method

Blocher,Stout,Cokins,Chen:Cost Management,4e 11-1 The McGraw-Hill Companies, Inc., 2008

11-30 Equivalent Units; FIFO Method (25 min)

Units Materials Conversion

Units Finished or Trans-out 800

EQUIVALENT UNITS: Weighted Average

Blocher,Stout,Cokins,Chen:Cost Management,4e 11-2 The McGraw-Hill Companies, Inc., 2008

11-32 Equivalent Units; FIFO Unit Cost (25 min)

Blocher,Stout,Cokins,Chen:Cost Management,4e 11-3 The McGraw-Hill Companies, Inc., 2008

11-34 FIFO Method (25 min)

* 100 + 1,300 - 200 = 1,200

2. Cost per equivalent unit

3. Cost of completed returns

4. Cost of returns in process on March 31

Blocher,Stout,Cokins,Chen:Cost Management,4e 11-4 The McGraw-Hill Companies, Inc., 2008

11-36 Backflush Costing (10 min)

Second, conversion cost are incurred.

Third, accounting for completed product at the end of the month.

The overapplied conversion cost of $30,000 (=$380,000 - $350,000) is

Blocher,Stout,Cokins,Chen:Cost Management,4e 11-5 The McGraw-Hill Companies, Inc., 2008

Units Finished 18,000

EQUIVALENT UNITS: Weighted Average

COST ADDED Materials Conversion Total

WTAVG Cost per EU $ 14.667 $ 24.718 $ 39.385

COST ASSIGNED - WEIGHTED AVERAGE

Ending WIP 3,000 units

COST ASSIGNED -FIFO

Ending WIP 3,000 units

Blocher,Stout,Cokins,Chen:Cost Management,4e 11-6 The McGraw-Hill Companies, Inc., 2008

11-40 Weighted-Average Method (30-40 min)

1. Quantity Schedule (not required)

2. Costs per equivalent unit:

Problem 11-40: (continued)

Blocher,Stout,Cokins,Chen:Cost Management,4e 11-7 The McGraw-Hill Companies, Inc., 2008

3. Cost of units transferred out:

4. Cost of ending work-in-process inventory:

Blocher,Stout,Cokins,Chen:Cost Management,4e 11-8 The McGraw-Hill Companies, Inc., 2008

11-42 Weighted-Average Method (30 min)

2. Cost per equivalent unit:

3. Cost of goods completed and transferred out:

4. Cost of work-in-process, 10/31:

5. Exchange rate depends on a particular date, which an instructor

Blocher,Stout,Cokins,Chen:Cost Management,4e 11-9 The McGraw-Hill Companies, Inc., 2008

11-44 Reconditioning Service; Weighted-Average (20 min)

Blocher,Stout,Cokins,Chen:Cost Management,4e 11-10 The McGraw-Hill Companies, Inc., 2008

Problem 11-44 (continued)

2. The information in the cost report shows two relevant items of

Blocher,Stout,Cokins,Chen:Cost Management,4e 11-11 The McGraw-Hill Companies, Inc., 2008

11-46 FIFO Method (25 min)

Blocher,Stout,Cokins,Chen:Cost Management,4e 11-12 The McGraw-Hill Companies, Inc., 2008

Blocher,Stout,Cokins,Chen:Cost Management,4e 11-13 The McGraw-Hill Companies, Inc., 2008

11-48 Weighted-Average Method; Transferred-In Costs (40-50 min)

Whole Equivalent Units

EQUIVALENT UNITS: Weighted Average

Cost per EU $ 10.500 $ 6.250 $ 7.500 $ 24.250

COST ASSIGNMENT - WEIGHTED AVERAGE

Total Cost to Account For 449,875

Blocher,Stout,Cokins,Chen:Cost Management,4e 11-14 The McGraw-Hill Companies, Inc., 2008

11-50 FIFO Method (30 min)

1. Quantity Schedule (not required)