Q38PGA - Horngren'S Financial And Managerial Accounting

Question

Work Problem P18-33A using the FIFO method. The Mixing Department beginning work in process of 300 units is 40% complete as to both direct materials and conversion costs. Round equivalent unit of production costs to four decimal places. Round all other costs to the nearest whole dollar.

 

Step-by-Step Solution

Answer

1. Production cost report

Production Cost Report-Mixing Department
		Equivalent unit of production
UNITS	Physical units	Direct material	Conversion costs	Total
Units to account for:
Beginning WIP	300
Started in production	4,700
Total units to account for	5,000
Units accounted for:
Completed and transferred	4,500	4,380	4,380
Ending WIP	500	100	100
Total units accounted for	5,000	4,480	4,480
COSTS		Direct material	Conversion costs	Total costs
Costs to account for:
Beginning WIP		$350	$445	$795
Cost added during the period		4,940	6,225	11,165
Total cost to account for		5,290	6,670	11,960
Divided by: total EUP		4,480	4,480
Cost per equivalent unit		$1.18	$1.49
Costs accounted for:
-       Completed and transferred out		5,172 (4,380 x $1.18)	6,521 (4,380x$1.49)	11,693
-       Ending WIP		118 (100x $1.18)	149 (100x$1.49)	267
Total costs accounted for		5,290	6,670	11,960

 

2. The journal entries to show the transaction affecting the mixing department are shown in step  4.

Step-by-Step Solution: Step 1: Production Cost Report

 A production cost report is a report prepared by a company that has several manufacturing processes, and this report shows the various kinds of costs of the product.

Step 2: Equivalent unit of production for direct material cost

Particulars	EUP
Opening WIP (300 x 60%)	180
Completed and transferred (4,500 – 300) x 100%	4,200
Ending WIP (500 x 20%)	100
Total EUP	4,480

Step 3: Equivalent unit of production for conversion costs

Particulars	EUP
Opening WIP (300 x 60%)	180
Completed and transferred (4,500 – 300) x 100%	4,200
Ending WIP (500 x 20%)	100
Total EUP	4,480

Step 4: Journal Entries

Date	Particulars	Debit ($)	Credit ($)
1.	WIP Inventory-Mixing department	4,940
	Raw material		4,940
2.	WIP inventory-Mixing department	3,000
	Wages payable		3,000
3.	WIP inventory – mixing department	3,225
	Manufacturing overhead		3,225
4.	WIP inventory-cooking department	11,693
	WIP inventory – mixing department		11,693