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CHAPTER 6
DISCUSSION QUESTIONS

Q6-1. The basic objective of process costing is to
determine the costs of the products manufactured by the company. Determining the cost of
the products manufactured is necessary in
order to properly cost ending inventories for
external reporting purposes (i.e., reporting to
creditors and owners of the company, the
SEC, and the IRS) and to evaluate the profitability of the manufacturing activity. In order
to cost products, the costs must be determined for materials, labor, and factory overhead used to process each unit of product
through each department.
Q6-2. The products manufactured within a department (or cost center) during the period can be
heterogeneous if job order costing is used,
but must be homogeneous if process costing
is used. In job order costing, products are
accounted for in batches. The cost of each
unit of product manufactured on a job is determined by dividing the total cost charged to the
job by the number of units produced on the
job. Since the manufacturing cost of each job
is accounted for separately, accurate and
useful product cost can be determined even
when the products manufactured on different
jobs are substantially different. By contrast, in
process costing, all manufacturing costs are
charged to the department, and the unit cost
is determined by dividing the cost charged to
the department by the number of units produced. As a consequence, the units of product manufactured within a department must
be essentially alike in order for the cost allocated to each unit to be meaningful (i.e., to

reasonably reflect the actual cost of the
resources used to manufacture the product).
Q6-3. (a) Process
(b) Process, unless significantly different
models are manufactured
(c) Process
(d) Job order
(e) Process
(f) Process
(g) Job order

(h) Process, unless different fabrics are used
for different models, in which case the
conversion costs may be accounted for
using process, but the materials using job
order
Q6-4. Three product flow formats are: sequential,
parallel, and selective.
Sequential means that the product flows or is
manufactured in an unchanging fixed set of
operations, going from one department to the
next.
Parallel means that certain operational
phases take place simultaneously in other
departments and the partially completed units
or parts are brought together in subsequent
departments.
Selective refers to the fact that a product does
not necessarily move through every department. Depending upon the character or shape
of the final product, different departments are

engaged in completing the desired product.
Q6-5. Materials Costs—In job order costing, materials requisitions are used and charges are
made to jobs; in process costing, charges for
materials issued to production are made to
departments, with infrequent use of materials
requisitions.
Labor Costs—Time tickets are used in job
order costing to accumulate labor costs for
each job; in process costing, labor costs are
charged to departments, and, therefore,
detailed time records are not necessary.
Factory Overhead—Job order costing
requires the use of predetermined rates for
charging overhead to jobs; in process costing,
actual overhead may be used. (However, predetermined rates are often used in order to
smooth overhead that is not incurred at the
same rate as production activity.)
Summarizing Costs—A job order cost sheet is
used to accumulate the costs of an order in job
order costing; a cost of production report is
used in process costing. In job order costing,
costs are summarized on completion of the
job; in process costing, costs charged to the

6-1


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6-2


department and costs accounted for are summarized in the cost of production report each
month (or sometimes each week).
Q6-6. Predetermined overhead rates can and
should be used if the pattern of overhead cost
incurrence does not follow the pattern of production activity. Some items of overhead are
fixed and not responsive to changes in production activity. If production volume varies each
month, then predetermined overhead rates
should be used. Some items of overhead are
incurred only at certain times during the year,
but benefit production throughout the year
(e.g., payroll taxes, insurance, property taxes,
vacation pay, etc.). These items can be
recorded as prepaid expenses and amortized
uniformly to each month if actual overhead is
charged to production. Alternatively, estimates
of such costs can be included in the predetermined overhead rate, and the actual cost
charged to overhead when incurred. The use
of predetermined rates is often simpler than
the allocation of actual costs because a single
predetermined rate requires only one overhead charge to each department each month.
In contrast, the capitalization and amortization of each item of actual overhead would
require numerous charges each month.
Q6-7. A cost of production report is an effective
monthly (or weekly) summary of the cost of
materials, labor, and overhead consumed by
each department or cost center, along with a
record of the quantity of products manufactured.
It provides information necessary to cost


Chapter 6

products, prepare journal entries to record the
transfer of costs between departments, and
control costs.
Q6-8. The sections commonly found in a cost of production report are: (a) a quantity schedule
indicating the source and disposition of the
units of product, (b) a cost charged to the
department section, indicating the cost in total
and per unit for the cost transferred in from
the preceding department, as well as materials, labor and overhead charged to the
department, and (c) a cost accounted for section indicating the amount of cost assigned to
the units transferred out of the department, as
well as the cost of ending inventory.
Q6-9. Separate departmental cost of production
reports are used to accumulate costs more
accurately and to provide more detailed data
for cost control purposes than a plant-wide
cost of production report could provide. In
some cases (e.g., a manufacturing plant that
has a selective production flow for its products), a plant-wide cost of production report
cannot be used.
Q6-10. An equivalent unit of production is the amount
of a resource (e.g., materials, labor, or overhead) that would be required to complete one
unit of the product with respect to the cost element being considered. The total number of
equivalent units, with respect to a particular
element of cost, represents the number of
units of the product that could have been
completed with the resources used during the
period.



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Chapter 6

6-3

EXERCISES
E6-1
(1)

Equivalent units transferred out .................
Equivalent units in ending inventory:
Cost from preceding department
(100% × 5,000) ................................
Materials (100% × 5,000) ....................
Labor (80% × 5,000) ..............................
Factory overhead (60% × 5,000) .........
Total equivalent units...................................
(2)

Cost in beginning inventory........................
Cost added during current period ..............
Total cost to be accounted for ....................
Divided by total equivalent units ................
Cost per equivalent unit ..............................

Cost from
Preceding

Department

20,000

Materials

Labor

Factory
Overhead

20,000

20,000

20,000

5,000
5,000
4,000
25,000
Cost from
Preceding
Department

0
$40,000
$40,000
25,000
$ 1.60


25,000

24,000

Materials

Labor

0
$15,000
$15,000
25,000
$
.60

E6-2
Work in Process—Department X .............................................
Work in Process—Department Y .............................................
Materials ........................................................................

0
$ 9,600
$ 9,600
24,000
$
.40

3,000
23,000


Factory
Overhead

0
$16,330
$16,330
23,000
$
.71

50,000
40,000
90,000

Work in Process—Department X .............................................
Work in Process—Department Y .............................................
Payroll ............................................................................

80,000
70,000

Work in Process—Department X .............................................
Work in Process—Department Y .............................................
Factory Overhead ........................................................

180,000
70,000

Work in Process—Department Y .............................................

Work in Process—Department X ................................

300,000

Finished Goods Inventory........................................................
Work in Process—Department Y.................................

448,000

150,000

250,000
300,000
448,000


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6-4

E6-3

Chapter 6

Tyndol Fabricators Inc.
Cutting and Forming Department
Cost of Production Report
For November

Quantity Schedule

Beginning inventory................................
Started in process this period ...............
Transferred to Assembling Department
Ending Inventory .....................................

Materials

Labor

75%

40%

Overhead

25%

Quantity
800
3,200
4,000
3,400
600
4,000

Cost Charged to Department
Beginning inventory:
Materials .....................................................................................
Labor ..........................................................................................
Factory overhead.......................................................................

Total cost in beginning inventory....................................

Total
Cost
$ 17,923
2,352
3,800
$ 24,075

Equivalent
Units*

Unit
Cost**

Cost added during current period:
Materials .....................................................................................
Labor...........................................................................................
Factory overhead.......................................................................
Total cost added during current period............................
Total cost charged to department ..................................................

$ 68,625
14,756
29,996
$113,377
$137,452

3,850
3,640

3,550

$22.48
4.70
9.52

Cost Accounted for as Follows
Transferred to Assembling Department
Work in Process, ending inventory:
Materials ............................................
Labor ..................................................
Factory overhead ..............................
Total cost accounted for ........................

Units
3,400
600
600
600

$36.70

%
Complete Unit Cost
100%
$36.70
75%
40%
25%


$22.48
4.70
9.52

Total Cost
$124,780
$10,116
1,128
1,428

12,672
$137,452

*Total number of equivalent units required in the cost accounted for section determined as follows:

Equivalent units transferred out ............
Equivalent units in ending inventory ....
Total equivalent units..............................

Materials
3,400
450
3,850

Labor
3,400
240
3,640

Overhead

3,400
150
3,550

** Total cost (i.e., the cost in beginning inventory plus the cost added during the current period)
divided by the total number of equivalent units required in the cost accounted for section


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Chapter 6

E6-4

6-5

Tokyo Manufacturing Company
Molding Department
Cost of Production Report
For August

Quantity Schedule
Beginning inventory................................
Started in process this period ...............
Transferred to Finishing Department ....
Ending inventory .....................................

Materials

75%


Labor

25%

Overhead

25%

Quantity
1,000
9,000
10,000
9,200
800
10,000

Cost Charged to Department
Beginning inventory:
Materials .....................................................................................
Labor...........................................................................................
Factory overhead.......................................................................
Total cost in beginning inventory....................................

Total
Cost
$ 4,120
522
961
$ 5,603


Equivalent
Units*

Unit
Cost**

Cost added during current period:
Materials .....................................................................................
Labor...........................................................................................
Factory overhead.......................................................................

$39,980
12,638
18,779

9,800
9,400
9,400

$4.50
1.40
2.10

Total cost added during current period............................
Total cost charged to department ..................................................

$71,397
$77,000


$8.00

%
Complete Unit Cost
100%
$8.00

Total Cost
$73,600

Cost Accounted for as Follows
Transferred to Finishing Department ....
Work in Process, ending inventory:
Materials ..............................................
Labor ....................................................
Factory overhead ................................
Total cost accounted for ........................

Units
9,200
800
800
800

75%
25%
25%

$4.50
1.40

2.10

$2,700
280
420

3,400
$77,000

*Total number of equivalent units required in the cost accounted for section determined as follows:

Equivalent units transferred out .......
Equivalent units in ending inventory
Total equivalent units ........................

Materials
9,200
600
9,800

Labor
9,200
200
9,400

Overhead
9,200
200
9,400


** Total cost (i.e., the cost in beginning inventory plus the cost added during the current period)
divided by the total number of equivalent units required in the cost accounted for section


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6-6

E6-5

Chapter 6

Stanislov Corporation
Forming Department
Cost of Production Report
For September

Quantity Schedule
Beginning inventory................................
Received from Cutting Department.......
Transferred to Painting Department ......
Ending inventory .....................................

Materials

60%

Labor

30%


Overhead

30%

Quantity
1,400
4,600
6,000
5,000
1,000
6,000

Cost Charged to Department
Beginning inventory:
Cost from preceding department.............................................
Materials ....................................................................................
Labor...........................................................................................
Factory overhead.......................................................................
Total cost in beginning inventory......................................

Total
Cost
$ 21,120
5,880
2,614
5,228
$ 34,842

Equivalent

Units*

Unit
Cost**

Cost added during current period:
Cost from preceding department.............................................
Materials .....................................................................................
Labor...........................................................................................
Factory overhead ......................................................................
Total cost added during current period............................
Total cost charged to department .................................................

$ 68,280
20,440
17,526
35,052
$141,298
$176,140

6,000
5,600
5,300
5,300

$14.90
4.70
3.80
7.60


Cost Accounted for as Follows
Transferred to Painting Department ......
Work in Process, ending inventory:
Cost from preceding department ....
Materials ............................................
Labor ..................................................
Factory overhead ..............................
Total cost accounted for.........................

Units
5,000

%
Complete
100%

Unit Cost
$31.00

1,000
1,000
1,000
1,000

100%
60%
30%
30%

$14.90

4.70
3.80
7.60

$31.00

Total Cost
$155,000
$14,900
2,820
1,140
2,280

21,140
$176,140

*Total number of equivalent units required in the cost accounted for section determined as follows:

Equivalent units transferred out ............
Equivalent units in ending inventory ....
Total equivalent units..............................

Prior Dept.
Cost
Materials
5,000
5,000
1,000
600
6,000

5,600

Labor
5,000
300
5,300

Overhead
5,000
300
5,300

** Total cost (i.e., the cost in beginning inventory plus the cost added during the current period)
divided by the total number of equivalent units required in the cost accounted for section


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Chapter 6

E6-6

6-7

Sonneli Corporation
Assembly Department
Cost of Production Report
For February

Quantity Schedule

Beginning inventory................................
Received from Cutting Department.......
Transferred to Finished Goods ..............
Ending inventory ....................................

Materials

80%

Labor

60%

Cost Charged to Department
Beginning inventory:

Overhead

60%

Total
Cost

Cost from preceding department.............................................
Materials .....................................................................................
Labor ..........................................................................................
Factory overhead.......................................................................
Total cost in beginning inventory......................................

$11,800

4,000
1,200
2,400
$19,400

Cost added during current period:
Cost from preceding department.............................................
Materials .....................................................................................
Labor ..........................................................................................
Factory overhead ......................................................................
Total cost added during current period ..........................
Total cost charged to department ..................................................

$63,200
21,200
17,660
35,320
$137,380
$156,780

Cost Accounted for as Follows
Transferred to Finished Goods ..............
Work in Process, ending inventory:
Cost from preceding department ....
Materials ............................................
Labor ..................................................
Factory overhead ..............................
Total cost accounted for.........................

Units

2,000
500
500
500
500

Quantity
400
2,100
2,500
2,000
500
2,500
Equivalent
Units*

Unit
Cost**

2,500
2,400
2,300
2,300

$30.00
10.50
8.20
16.40
$65.10


%
Complete Unit Cost
100%
$65.10
100%
80%
60%
60%

$30.00
10.50
8.20
16.40

Total Cost
$130,200
$15,000
4,200
2,460
4,920

26,580
$156,780

*Total number of equivalent units required in the cost accounted for section determined as follows:

Equivalent units transferred out ............
Equivalent units in ending inventory ....
Total equivalent units..............................


Prior Dept.
Cost
Materials
2,000
2,000
500
400
2,500
2,400

Labor
2,000
300
2,300

Overhead
2,000
300
2,300

** Total cost (i.e., the cost in beginning inventory plus the cost added during the current period)
divided by the total number of equivalent units required in the cost accounted for section


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6-8

E6-7


Chapter 6

Saleri Manufacturing Corporation
Forming Department
Cost of Production Report
For June

Quantity Schedule
Beginning inventory................................
Received from Cutting Department.......
Transferred to Finishing Department ....
Ending inventory .....................................

Material A

100%

Material B

0%

Labor

30%

Overhead

30%

Quantity

600
3,900
4,500
4,100
400
4,500

Cost Charged to Department
Beginning inventory:
Cost from preceding department.............................................
Material A ...................................................................................
Material B ...................................................................................
Labor...........................................................................................
Factory overhead.......................................................................
Total cost in beginning inventory ....................................

Total
Cost
$ 4,422
2,805
0
1,250
1,875
10,352

Equivalent
Units*

Unit
Cost**


Cost added during current period:
Cost from preceding department.............................................
Material A ...................................................................................
Material B ...................................................................................
Labor...........................................................................................
Factory overhead ......................................................................
Total cost added during current period............................
Total cost charged to department ..................................................

$ 29,328
19,695
10,250
15,630
23,445
$ 98,348
$108,700

4,500
4,500
4,100
4,220
4,220

$ 7.50
5.00
2.50
4.00
6.00


Cost Accounted for as Follows
Transferred to Finishing Department ....
Work in Process, ending inventory:
Cost from preceding department ....
Material A ..........................................
Material B ..........................................
Labor ..................................................
Factory overhead .............................
Total cost accounted for ........................

Units
4,100
400
400
400
400
400

$25.00

%
Complete Unit Cost
100%
$25.00
100%
100%
0%
30%
30%


$7.50
5.00
2.50
4.00
6.00

Total Cost
$102,500
$3,000
2,000
0
480
720

6,200
$108,700

*Total number of equivalent units required in the cost accounted for section determined as follows:

Equivalent units transferred out ............
Equivalent units in ending inventory ....
Total equivalent units..............................

Prior Dept.
Cost
Material A
4,100
4,100
400
400

4,500
4,500

Material B
4,100
0
4,100

Labor
4,100
120
4,220

Overhead
4,100
120
4,220

** Total cost (i.e., the cost in beginning inventory plus the cost added during the current period)
divided by the total number of equivalent units required in the cost accounted for section


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Chapter 6

E6-8

6-9


Canoli Cola Company
Carbonation Department
Cost of Production Report
For October

Quantity Schedule
Beginning inventory ................................................
Received from Syrup Department ..........................
Added to process in Carbonation Department .....
Transferred to Bottling Department .......................
Ending inventory ......................................................

Materials

100%

Cost Charged to Department
Beginning inventory:
Cost from preceding department ...........................................
Materials .....................................................................................
Labor ..........................................................................................
Factory overhead.......................................................................
Total cost in beginning inventory ....................................
Cost added during current period:
Cost from preceding department.............................................
Materials .....................................................................................
Labor...........................................................................................
Factory overhead.......................................................................
Total cost added during current period............................
Total cost charged to department ..................................................


Cost Accounted for as Follows
Transferred to Bottling Department ......
Work in Process, ending inventory:
Cost from preceding department ....
Materials ...........................................
Labor ..................................................
Factory overhead .............................
Total cost accounted for ........................

Units
7,800
1,200
1,200
1,200
1,200

Labor

25%

Overhead

25%

7,800
1,200
9,000

Total

Cost
$ 1,120
140
65
120
$ 1,445

Equivalent
Units*

Unit
Cost**

$ 9,680
1,210
1,960
3,120
$15,970
$17,415

9,000
9,000
8,100
8,100

$1.20
.15
.25
.40
$2.00


%
Complete Unit Cost
100%
$2.00
100%
100%
25%
25%

Quantity
1,000
2,000
6,000
9,000

$1.20
.15
.25
.40

Total Cost
$15,600
$1,440
180
75
120

1,815
$17,415


*Total number of equivalent units required in the cost accounted for section determined as follows:

Equivalent units transferred out ............
Equivalent units in ending inventory ....
Total equivalent units..............................

Prior Dept.
Cost
Materials
7,800
7,800
1,200
1,200
9,000
9,000

Labor
7,800
300
8,100

Overhead
7,800
300
8,100

** Total cost (i.e., the cost in beginning inventory plus the cost added during the current period)
divided by the total number of equivalent units required in the cost accounted for section



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6-10

E6-9

Chapter 6

Menezes Chemical Company
Blending Department
Cost of Production Report
For March

Quantity Schedule
Beginning inventory .................................................
Received from Refining Department ......................
Added to process in Blending Department ...........
Transferred to Finishing Department .....................
Ending inventory ......................................................

Materials

100%

Cost Charged to Department
Beginning inventory:
Cost from preceding department.............................................
Materials .....................................................................................
Labor...........................................................................................

Factory overhead.......................................................................
Total cost in beginning inventory ....................................
Cost added during current period:
Cost from preceding department.............................................
Materials .....................................................................................
Labor ..........................................................................................
Factory overhead.......................................................................
Total cost added during current period............................
Total cost charged to department ..................................................

Cost Accounted for as Follows
Transferred to Finishing Department ....
Work in Process, ending inventory:
Cost from preceding department ....
Materials ............................................
Labor ..................................................
Factory overhead ..............................
Total cost accounted for.........................

Units
26,000
4,000
4,000
4,000
4,000

Labor

Overhead


80%

90%

26,000
4,000
30,000

Total
Cost
$4,750
2,415
180
787
$8,112

Equivalent
Units*

Unit
Cost**

$25,250
12,885
2,740
8,113
$48,988
$57,100

30,000

30,000
29,200
29,600

$1.00
.51
.10
.30
$1.91

%
Complete Unit Cost
100%
$1.91
100%
100%
80%
90%

Quantity
5,000
20,000
5,000
30,000

$1.00
.51
.10
.30


Total Cost
$49,660
$4,000
2,040
320
1,080

7,440
$57,100

*Total number of equivalent units required in the cost accounted for section determined as follows:

Equivalent units transferred out ............
Equivalent units in ending inventory ....
Total equivalent units..............................

Prior Dept.
Cost
Materials
26,000
26,000
4,000
4,000
30,000
30,000

Labor
26,000
3,200
29,200


Overhead
26,000
3,600
29,600

** Total cost (i.e., the cost in beginning inventory plus the cost added during the current period)
divided by the total number of equivalent units required in the cost accounted for section


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Chapter 6

6-11

E6-10 APPENDIX
Shankar Manufacturing Company
Cutting Department
Cost of Production Report
For July
Quantity Schedule
Beginning inventory................................
Started in process this period ...............
Transferred to Assembly Department ...
Ending inventory .....................................

Materials
60%


100%

Labor
20%

60%

Cost Charged to Department
Beginning inventory:
Materials .....................................................................................
Labor...........................................................................................
Factory overhead ......................................................................
Total cost in beginning inventory......................................
Cost added during current period:
Materials .....................................................................................
Labor...........................................................................................
Factory overhead.......................................................................
Total cost added during current period............................
Total cost charged to department ..................................................
Cost Accounted for as Follows
Transferred to Assembly Department:
Beginning inventory ........................
Cost to complete:
Materials ...............................
Labor .....................................
Factory overhead .................
Started and completed this period .
Total cost transferred to Assembly
Department ................................
Work in Process, ending inventory:

Materials ............................................
Labor ..................................................
Factory overhead .............................
Total cost accounted for ........................

Units

Overhead
20%

50%

Total
Cost
$2,940
390
585
$3,915
$46,530
18,860
27,150
$92,540
$96,455

Quantity
100
900
1,000
850
150

1,000
Equivalent
Units*

Unit
Cost**

940
920
905

$49.50
20.50
30.00
$100.00

Current % Unit Cost

Total Cost
$3,915

100
100
100
750

40%
80%
80%
100%


$49.50
20.50
30.00
100.00

1,980
1,640
2,400

$ 9,935
75,000
$84,935

150
150
150

100%
60%
50%

$49.50
20.50
30.00

$7,425
1,845
2,250


11,520
$96,455

*Number of equivalent units of cost added during the current period determined as follows:
To complete beginning inventory ..........
Started and completed this period........
Ending inventory .....................................
Total equivalent units..............................

Materials
40
750
150
940

Labor
80
750
90
920

Overhead
80
750
75
905

** Cost added during the current period divided by the number of equivalent units of cost added during the current period



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6-12

Chapter 6

E6-11 APPENDIX
Cantach Tool Company
Assembly Department
Cost of Production Report
For November
Quantity Schedule
Beginning inventory................................
Received from Cutting Department.......
Transferred to Finished Goods ..............
Ending inventory .....................................

Materials
50%

90%

Labor
40%

80%

Cost Charged to Department
Beginning inventory:
Cost from preceding department...........................................

Materials .....................................................................................
Labor...........................................................................................
Factory overhead.......................................................................
Total cost in beginning inventory....................................
Cost added during current period:
Cost from preceding department.............................................
Materials .....................................................................................
Labor...........................................................................................
Factory overhead.......................................................................
Total cost added during current period............................
Total cost charged to department ..................................................

Overhead
40%

80%

Quantity
1,200
2,800
4,000
3,000
1,000
4,000

Total
Cost
$ 17,280
5,550
2,400

3,600
$ 28,830

Equivalent
Units*

Unit
Cost**

$ 40,600
29,700
16,932
25,398
$112,630
$141,460

2,800
3,300
3,320
3,320

$14.50
9.00
5.10
7.65
$36.25


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Chapter 6

6-13

E6-11 APPENDIX (Concluded)
Cost Accounted for as Follows
Transferred to Finished Goods:
Beginning inventory .........................
Cost to complete:
Materials ...............................
Labor .....................................
Factory overhead .................
Started and completed this period
Total cost transferred to Finished Goods
Work in Process, ending inventory:
Cost from preceding department ....
Materials ............................................
Labor .................................................
Factory overhead ..............................
Total cost accounted for ........................

Units

Current % Unit Cost

Total Cost
$28,830

1,200
1,200

1,200
1,800

50%
60%
60%
100%

$9.00
5.10
7.65
36.25

1,000
1,000
1,000
1,000

100%
90%
80%
80%

$14.50
9.00
5.10
7.65

5,400
3,672

5,508

$14,500
8,100
4,080
6,120

$ 43,410
65,250
$108,660

32,800
$141,460

*Number of equivalent units of cost added during the current period determined as follows:

To complete beginning inventory ..........
Started and completed this period........
Ending inventory .....................................
Total equivalent units..............................

Prior Dept.
Cost
Materials
0
600
1,800
1,800
1,000
900

2,800
3,300

Labor
720
1,800
800
3,320

Overhead
720
1,800
800
3,320

** Cost added during the current period divided by the number of equivalent units of cost added during the current period


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6-14

Chapter 6

E6-12 APPENDIX
Southwell Chemical Corporation
Blending Department
Cost of Production Report
For May
Quantity Schedule

Beginning inventory................................
Received from Refining Department .....
Added to process in Blending Department
Transferred to Finished Goods .............
Ending inventory .....................................

Materials
100%

100%

Cost Charged to Department
Beginning inventory:
Cost from preceding department.............................................
Materials .....................................................................................
Labor...........................................................................................
Factory overhead.......................................................................
Total cost in beginning inventory......................................
Cost added during current period:
Cost from preceding department.............................................
Materials .....................................................................................
Labor...........................................................................................
Factory overhead.......................................................................
Total cost added during current period............................
Total cost charged to department ..................................................

Labor
20%

60%


Overhead
40%

80%

Quantity
2,000
5,000
5,000
12,000
10,500
1,500
12,000

Total
Cost
$2,460
500
150
600
$3,710

Equivalent
Units*

Unit
Cost**

$12,500

2,500
3,300
7,630
$25,930
$29,640

10,000
10,000
11,000
10,900

$1.25
.25
.30
.70
$2.50


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Chapter 6

6-15

E6-12 APPENDIX (Concluded)
Cost Accounted for as Follows
Transferred to Finished Goods:
Beginning inventory .........................
Cost to complete:
Materials ...............................

Labor ....................................
Factory overhead .................
Started and completed this period
Total cost transferred to Finished
Goods ..........................................
Work in Process, ending inventory:
Cost from preceding department ....
Materials ............................................
Labor ..................................................
Factory overhead ..............................
Total cost accounted for ........................

Units

Current % Unit Cost

Total Cost
$3,710

2,000
2,000
2,000
8,500

0%
80%
60%
100%

$ .25

.30
.70
2.50

0
480
840

$ 5,030
21,250
$26,280

1,500
1,500
1,500
1,500

100%
100%
60%
80%

$1.25
.25
.30
.70

$1,875
375
270

840

3,360
$29,640

*Number of equivalent units of cost added during the current period determined as follows:

To complete beginning inventory ..........
Started and completed this period........
Ending inventory .....................................
Total equivalent units..............................

Prior Dept.
Cost
Materials
0
0
8,500
8,500
1,500
1,500
10,000
10,000

Labor
1,600
8,500
900
11,000


Overhead
1,200
8,500
1,200
10,900

** Cost added during the current period divided by the number of equivalent units of cost added during the current period


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6-16

Chapter 6

PROBLEMS
P6-1
(1)

Meninquez Cabinet Company
Cutting Department
Cost of Production Report
For August

Quantity Schedule
Beginning inventory................................
Started in process this period ..............
Transferred to Assembly Department ...
Ending inventory .....................................


Materials

90%.

Labor

60%

Cost Charged to Department
Beginning inventory:
Materials .....................................................................................
Labor...........................................................................................
Factory overhead.......................................................................
Total cost in beginning inventor........................................
Cost added during current period:
Materials .....................................................................................
Labor...........................................................................................
Factory overhead.......................................................................
Total cost added during current period............................
Total cost charged to department ..................................................

Cost Accounted for as Follows
Transferred to Assembly Department ...
Work in Process, ending inventory:
Materials ............................................
Labor ..................................................
Factory overhead ..............................
Total cost accounted for.........................

Units

650
150
150
150

Overhead

60%

Total
Cost
$ 5,365
530
795
$6,690
$26,035
8,350
12,525
$46,910
$53,600

Quantity
200
600
800
650
150
800
Equivalent
Units*


785
740
740

$40.00
12.00
18.00

$ 40.00
12.00
18.00
$ 70.00

%
Complete Unit Cost
100%
$70.00
90%
60%
60%

Unit
Cost**

Total Cost
$45,500
$5,400
1,080
1,620


8,100
$53,600

*Total number of equivalent units required in the cost accounted for section determined as follows:

Equivalent units transferred out .....
Equivalent units in ending inventory
Total equivalent units .......................

Materials
650
135
785

Labor
650
90
740

Overhead
650
90
740

** Total cost (i.e., the cost in beginning inventory plus the cost added during the current period)
divided by the total number of equivalent units required in the cost accounted for section


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Chapter 6

6-17

P6-1 (Continued)
Meninquez Cabinet Company
Assembly Department
Cost of Production Report
For August
Quantity Schedule
Beginning inventory................................
Received from Cutting Department.......
Transferred to Finished Goods ..............
Ending inventory .....................................

Materials

Labor

Overhead

40%

20%

20%

Cost Charged to Department
Beginning inventory:

Cost from preceding department ...........................................
Materials ....................................................................................
Labor...........................................................................................
Factory overhead.......................................................................
Total cost in beginning inventory ....................................
Cost added during current period:
Cost from preceding department.............................................
Materials ....................................................................................
Labor...........................................................................................
Factory overhead.......................................................................
Total cost added during current period .........................
Total cost charged to department ..................................................

Total
Cost
$ 17,410
3,451
3,611
3,611
$ 28,083
$ 45,500
14,273
20,989
20,989
$101,751
$129,834

Quantity
250
650

900
800
100
900
Equivalent
Units*

900
840
820
820

Unit
Cost**

$ 69.90
21.10
30.00
30.00
$151.00


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6-18

Chapter 6

P6-1 (Concluded)


Cost Accounted for as Follows
Transferred to Finished Goods ..............
Work in Process, ending inventory:
Cost from preceding department ....
Materials ............................................
Labor ..................................................
Factory overhead ..............................
Total cost accounted for ........................

Units
800
100
100
100
100

%
Complete Unit Cost
100%
$151.00
100%
40%
20%
20%

$69.90
21.10
30.00
30.00


Total Cost
$120,800
$6,990
844
600
600

9,034
$129,834

*Total number of equivalent units required in the cost accounted for section determined as follows:

Equivalent units transferred out .....
Equivalent units in ending inventory
Total equivalent units .......................

Prior Dept.
Cost
Materials
800
800
100
40
900
840

Labor
800
20
820


Overhead
800
20
820

** Total cost (i.e., the cost in beginning inventory plus the cost added during the current period)
divided by the total number of equivalent units required in the cost accounted for section

(2)

Work in Process—Cutting Department ......................
Work in Process—Assembly Department ..................
Materials ..............................................................

26,035
14,273

Work in Process—Cutting Department ......................
Work in Process—Assembly Department ..................
Payroll ..................................................................

8,350
20,989

Work in Process—Cutting Department ......................
Work in Process—Assembly Department ..................
Applied Factory Overhead..................................

12,525

20,989

Work in Process—Assembly Department ..................
Work in Process—Cutting Department .............

45,500

Finished Goods Inventory ...........................................
Work in Process—Assembly Department ........

120,800

40,308

29,339

33,514
45,500
120,800


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Chapter 6

P6-2
(1)

6-19


Rimirez Tool Corporation
Casting Department
Cost of Production Report
For December

Quantity Schedule

Materials

Labor

Overhead

Beginning inventory................................
Started in process this period ..............
Transferred to Finishing Department ....
Ending inventory .....................................

1,000
8,000
9,000
100%

80%

Cost Charged to Department
Beginning inventory:
Materials .....................................................................................
Labor...........................................................................................
Factory overhead.......................................................................

Total cost in beginning inventory......................................
Cost added during current period:
Materials .....................................................................................
Labor...........................................................................................
Factory overhead.......................................................................
Total cost added during current period............................
Total cost charged to department ..................................................

Cost Accounted for as Follows
Transferred to Finishing Department ....
Work in Process, ending inventory:
Materials ............................................
Labor ..................................................
Factory overhead ..............................
Total cost accounted for ........................

Quantity

Units
7,500
1,500
1,500
1,500

80%

7,500
1,500
9,000


Total
Cost
$915
60
90
$ 1,085

Equivalent
Units*

Unit
Cost**

$17,085
4,290
6,435
$27,810
$28,875

9,000
8,700
8,700

$2.00
.50
.75
$3.25

%
Complete Unit Cost

100%
$3.25
100%
80%
80%

$2.00
.50
.75

Total Cost
$24,375
$3,000
600
900

4,500
$28,875

*Total number of equivalent units required in the cost accounted for section determined as follows:

Equivalent units transferred out .............................
Equivalent units in ending inventory......................
Total equivalent units ...............................................

Materials
7,500
1,500
9,000


Labor
7,500
1,200
8,700

Overhead
7,500
1,200
8,700

** Total cost (i.e., the cost in beginning inventory plus the cost added during the current period)
divided by the total number of equivalent units required in the cost accounted for section


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6-20

Chapter 6

P6-2 (Continued)
Rimirez Tool Corporation
Finishing Department
Cost of Production Report
For December
Quantity Schedule

Labor

Overhead


Beginning inventory
Received from Casting Department .........................
Transferred to Finished Goods ................................
Ending inventory ........................................................

Quantity
1,500
7,500
9,000

40%

Cost Charged to Department
Beginning inventory:
Cost from preceding department.............................................
Labor...........................................................................................
Factory overhead ......................................................................
Total cost in beginning inventory......................................
Cost added during current period:
Cost from preceding department.............................................
Labor...........................................................................................
Factory overhead.......................................................................
Total cost added during current period............................
Total cost charged to department ..................................................

50%

7,000
2,000

9,000

Total
Cost
$ 4,785
201
555
$ 5,541

Equivalent
Units*

Unit
Cost**

$24,375
2,919
3,125
$30,419
$35,960

9,000
7,800
8,000

$3.24
.40
.46
$4.10



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Chapter 6

6-21

P6-2 (Concluded)
Cost Accounted for as Follows
Transferred to Finished Goods ..............
Work in Process, ending inventory:
Cost from preceding department ....
Labor ..................................................
Factory overhead ..............................
Total cost accounted for.........................

Units
7,000
2,000
2,000
2,000

%
Complete Unit Cost
100%
$4.10
100%
40%
50%


$3.24
.40
.46

Total Cost
$28,700
$6,480
320
460

7,260
$35,960

*Total number of equivalent units required in the cost accounted for section determined as follows:

Equivalent units transferred out.........................
Equivalent units in ending inventory .................
Total equivalent units .........................................

Prior Dept.
Cost
7,000
2,000
9,000

Labor
7,000
800
7,800


Overhead
7,000
1,000
8,000

** Total cost (i.e., the cost in beginning inventory plus the cost added during the current period)
divided by the total number of equivalent units required in the cost accounted for section

(2)

Work in Process—Casting Department......................
Materials ..............................................................

17,085

Work in Process—Casting Department......................
Work in Process—Finishing Department...................
Payroll ..................................................................

4,290
2,919

Work in Process—Casting Department......................
Work in Process—Finishing Department...................
Applied Factory Overhead..................................

6,435
3,125

Work in Process—Finishing Department...................

Work in Process—Casting Department ............

24,375

Finished Goods Inventory ...........................................
Work in Process—Finishing Department..........

28,700

17,085

7,209

9,560
24,375
28,700


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6-22

P6-3
(1)

Chapter 6

Jetter Engine Corporation
Casting Department
Cost of Production Report

For February

Quantity Schedule
Beginning inventory................................
Started in process this period ...............
Transferred to Assembly Department ...
Ending inventory .....................................

Materials

100%

Labor

80%

Cost Charged to Department
Beginning inventory:
Materials .....................................................................................
Labor...........................................................................................
Factory overhead ......................................................................
Total cost in beginning inventory......................................
Cost added during current period:
Materials .....................................................................................
Labor...........................................................................................
Factory overhead.......................................................................
Total cost added during current period............................
Total cost charged to department ..................................................

Cost Accounted for as Follows

Transferred to Assembly Department ...
Work in Process, ending inventory:
Materials ...........................................
Labor ..................................................
Factory overhead ..............................
Total cost accounted for.........................

Units
2,700
800
800
800

Overhead

90%

Quantity
500
3,000
3,500
2,700
800
3,500

Total
Cost
$ 10,925
338
2,839

$ 14,102

Equivalent
Units*

$146,575
16,362
48,461
$211,398
$225,500

3,500
3,340
3,420

%
Complete Unit Cost
100%
$65.00
100%
80%
90%

$45.00
5.00
15.00

Unit
Cost**


$

45.00
5.00
15.00

$

65.00

Total Cost
$175,500
$36,000
3,200
10,800

50,000
$225,500

*Total number of equivalent units required in the cost accounted for section determined as follows:

Equivalent units transferred out ...............................
Equivalent units in ending inventory........................
Total equivalent units ................................................

Materials
2,700
800
3,500


Labor
2,700
640
3,340

Overhead
2,700
720
3,420

** Total cost (i.e., the cost in beginning inventory plus the cost added during the current period)
divided by the total number of equivalent units required in the cost accounted for section


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Chapter 6

6-23

P6-3 (Continued)
Jetter Engine Corporation
Assembly Department
Cost of Production Report
For February
Quantity Schedule
Beginning inventory................................
Received from Casting Department .....
Transferred to Finishing Department ....
Ending inventory .....................................


Materials

70%

Labor

30%

Cost Charged to Department
Beginning inventory:
Cost from preceding department ...........................................
Materials .....................................................................................
Labor ..........................................................................................
Factory overhead ......................................................................
Total cost in beginning inventory....................................
Cost added during current period:
Cost from preceding department.............................................
Materials .....................................................................................
Labor...........................................................................................
Factory overhead.......................................................................
Total cost added during current period............................
Total cost charged to department .................................................

Cost Accounted for as Follows
Transferred to Finishing Department ....
Work in Process, ending inventory
Cost from preceding department ....
Materials ............................................
Labor ..................................................

Factory overhead ..............................
Total cost accounted for.........................

Units
2,900
800
800
800
800

Overhead

30%

Quantity
1,000
2,700
3,700
2,900
800
3,700

Total
Cost
$ 63,150
40,258
12,426
12,426
$128,260


Equivalent
Units*

Unit
Cost**

$175,500
116,480
44,408
44,408
$380,796
$509,056

3,700
3,460
3,140
3,140

$64.50
45.30
18.10
18.10
$146.00

%
Complete Unit Cost
100%
$146.00
100%
70%

30%
30%

$

64.50
45.30
18.10
18.10

Total Cost
$423,400
$51,600
25,368
4,344
4,344

85,656
$509,056

*Total number of equivalent units required in the cost accounted for section determined as follows:

Equivalent units transferred out ............
Equivalent units in ending inventory ....
Total equivalent units..............................

Prior Dept.
Cost
Materials
2,900

2,900
800
560
3,700
3,460

Labor
2,900
240
3,140

Overhead
2,900
240
3,140

** Total cost (i.e., the cost in beginning inventory plus the cost added during the current period)
divided by the total number of equivalent units required in the cost accounted for section


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6-24

Chapter 6

P6-3 (Continued)
Jetter Engine Corporation
Finishing Department
Cost of Production Report

For February
Quantity Schedule
Beginning inventory ...................................................
Received from Assembly Department ......................
Transferred to Finished Goods ................................
Ending inventory.........................................................

Labor

50%

Cost Charged to Department
Beginning inventory:
Cost from preceding department.............................................
Labor...........................................................................................
Factory overhead.......................................................................
Total cost in beginning inventory ...................................
Cost added during current period:
Cost from preceding department.............................................
Labor...........................................................................................
Factory overhead.......................................................................
Total cost added during current period............................
Total cost charged to department .................................................

Cost Accounted for as Follows
Transferred to Finished Goods ..............
Work in Process, ending inventory:
Cost from preceding department ....
Labor ..................................................
Factory overhead ..............................

Total cost accounted for.........................

Units
2,800
400
400
400

Overhead

50%

Quantity
300
2,900
3,200
2,800
400
3,200

Total
Cost
$ 42,840
2,760
4,140
$ 49,740

Equivalent
Units*


$423,400
12,240
18,360
$454,000
$503,740

3,200
3,000
3,000

$ 145.70
5.00
7.50

$ 145.70
5.00
7.50
$ 158.20

%
Complete Unit Cost
100%
$ 158.20
100%
50%
50%

Unit
Cost**


Total Cost
$442,960
$58,280
1,000
1,500

60,780
$503,740

*Total number of equivalent units required in the cost accounted for section determined as follows:

Equivalent units transferred out ...............................
Equivalent units in ending inventory........................
Total equivalent units .................................................

Prior Dept.
Cost
2,800
400
3,200

Labor
2,800
200
3,000

Overhead
2,800
200
3,000


** Total cost (i.e., the cost in beginning inventory plus the cost added during the current period)
divided by the total number of equivalent units required in the cost accounted for section


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Chapter 6

6-25

P6-3 (Concluded)
(2)

Work in Process—Casting Department......................
Work in Process—Assembly Department ..................
Materials ...............................................................

146,575
116,480

Work in Process—Casting Department......................
Work in Process—Assembly Department ..................
Work in Process—Finishing Department...................
Payroll ..................................................................

16,362
44,408
12,240


Work in Process—Casting Department......................
Work in Process—Assembly Department ..................
Work in Process—Finishing Department...................
Applied Factory Overhead..................................

48,461
44,408
18,360

Work in Process—Assembly Department ..................
Work in Process—Casting Department.............

175,500

Work in Process—Finishing Department...................
Work in Process—Assembly Department .........

423,400

Finished Goods inventory ...........................................
Work in Process—Finishing Department..........

442,960

263,055

73,010

111,229
175,500

423,400
442,960