CHAPTER 10 - AVERAGE AND FIFO COSTING TRUE OR FALSE 1. TRUE 2. TRUE 3. TRUE 4. FALSE 5. TRUE 6. TRUE 7. FALSE 8. TRUE 9. TRUE 10. TRUE
MULTIPLE CHOICE - THEORY 1. B 11. C 2. A 12. C 3. A 13. C 4. B 14. C 5. A 15. D 6. C 7. A 8. A 9. D 10. A
Problem 1 1) FIFO Units in process, beg. Units started
6,000 42,000 48,000 Units completed & transferred (40,000) IP beg. 6,000 Started & completed 34,000 Units in process, end 8,000 48,000 2) AVERAGE Units in process, beg. 6,000 Units started 42,000 48,000 Units completed Units IP end
40,000 8,000 48,000
80% 4,800 70% 4,200 100% 34,000 100% 34,000 10% 800 15% 1,200 39,600 39,400
100% 40,000 10% 800 40,800
100% 15%
40,000 1,200 41,200
Problem 2
1) FIFO Units in process, beg. Units started
5,000 35,000 40,000 Units completed & transferred (30,000) IP beg. 6,000 Started & completed 24,000 Units in process, end 10,000 40,000
85% 5,100 75% 4,500 100% 24,000 100% 24,000 20% 2,000 30% 3,000 31,100 31,500
PAGE 2 2) AVERAGE Units in process, beg. Units started
5,000 35,000 40,000
Units completed Units IP end
30,000 10,000 48,000
Problem 3 1) Units in process beg. Units started
100% 30,000 20% 2,000 32,000
100% 30%
300 2,000 2.300
Units comp. & transf. (1,700) IP beg. Started & completed Units in process, end
300 1,400 600 2,300
40% 100% 40%
120 1,400 240 1,760
70% 100% 20%
2) Unit cost -
540 Materials 3,714/1760 Conversion 2,258/1730 6,512
= =
2.110227 1.305202 3.415429
3) Cost of units transferred out From IP beg. Cost last month Cost added Mat. ( 120 x 2.110227) Conversion ( 210 x 1.305202) From units started & completed (1,400 x 3.415429)
540 253 274
4) Cost of ending inventory Materials (240 x 2.110227) Conversion ( 120 x 1.305202)
Problem 4 1) FIFO Units in process, beg Units started Units Completed ( 17,000) IP beg. Started & completed Units in process, end
30,000 3,000 33,000
1,067 4,782 5,849 507 156 663
8,000 14,000 22,000 8,000 9,000 5,000 22,000
70% 5,600 100% 9,000 80% 4,000 18,600
70% 100% 40%
5,600 9,000 2,000 16,600
210 1,400 120 1,730
Page 3 Unit cost
48,240 126,852/18,000 219,120/16,600 394,212
Materials Conversion
Completed & transf. IP beg. Cost labor month Cost added (5,600 x 20.02) Started & completed ( 9,000 x 20.02)
= 6.82 = 13.20 20.02
48,240 112,112
160,352 180,180
340,532
IP end Materials ( 4,000 x 6.82) Conversion ( 2,000 x 13.20) 2) AVERAGE Units completed Units IP end
Unit cost
27,280 26,400
17,000 5,000 22,000
53,680 394,212
100% 17,000 100% 17,000 80% 4,000 40% 2,000 21,000 19,000
Materials 16,440 + 126,852 = 6.823428 21,000 Conversion = 31800 + 219,120 = 13.206316 19,000 20.029744
Completed & transferred ( 17,000 x 20.029744) IP end Materials ( 4,000 x 6.823428) Conversion (2000 x 13.206316)
340,506 27,294 26,412
53,706 394,212
Problem 5 – Auto Novelties, Inc. a. Average 1) Units in process beg. 15,000 Units started 250,000 265,000 Units completed & transf. Units in process end
2) Unit cost
245,000 20,000 265,000
Materials
Converion
100% 100%
245,000 20,000 265,000
210,000 + 3,500,000 265,000
100% 245,000 40% 8,000 253,000
= 14.00
60,000 + 1,458,000 = 6.00 253,000 20,00
Page 4 3) 4)
Completed & transf. (245000 x 20) IP ined Materials ( ( 20,000 x 14) Conversion ( 8000 x 6)
b) FIFO 1) Units completed ( 245,000) IP beg Started & completed Units IP beg.
2)Unit cost:
15,000 230,000 20,000 265,000
Materials 3,500,000/250,000 Conversion 1,458000/243,000
4,900,000 280,000 48,000
328,000 5,228,000
1/3 5,000 100% 230,000 100% 230,000 100% 20,000 40% 8,000 250,000 243,000 = =
14.00 6.00 20.00
3) Completed& transferred From IP beg. Cost last month 270,000 Cost added ( 5,000 x 6) 30,000 From started & completed ( 230,000 x 20)
300,000 4,600,000 4,900,000
4) IP end Materials ( 20,000 x 14) Conversion (8,000 x 6)
Problem 6 - Ellery Company A) AVERAGE 1) Units IP beg. Units started
15,500 36,000 51,500 48,000 3,500 51,500
Units completed Units IP ed
2)
Unit cost
280,000 48,000
100% 100%
48,000 3,500 51,500
Materials 7,800 + 54,000 51,500 Conversion 20,150 + 79,000 49,575
3)
Completed & transferred ( 48,000 x 3.20)
4)
IP end Materials ( 3,500 x 1.20) Conversion ( 1,575) x 2.00)
100% 45%
=
1.20
=
2.00 3,20
328,000 5,228,000
48,000 1,575 49,575
153,600
4,200 3,150
7,350 160,950
Page 5 B) FIFO 1) Units IP beg Units started
15,500 36,000 51,500
Units completed (48,000) IP beg. Started & completed Units IP end
2)
Unit cost
15,500 32,500 3,500 51,500
IP beg. 27,950 Materials 54,000/36000 Conversion 79,000/39,500 160,950
3) Completed & transferred IP beg. Cost last month Cost added ( 5,425 x 2) Started & completed ( 32,500 x 3.50)
= =
Units completed Units IP end Units lost – normal
Unit cost Cost from preceding dept.
35% 5,425 100% 32,500 45% 1,575 39,500
1.50 2.00 3.50
27,950 10,850 113,750
4) IP end Materials ( 3,500 x 1.50) Conversion ( 1,575 x 2)
Problem 7 - GDL Company A) AVERAGE Units IP beg Units received
32,500 3,500 36,000
100% 100%
5,250 3,150
152,550
8,400 160,950
10,000 40,000 50,000 35,000 10,000 5,000 50,000
100% 100%
35,000 10,000 ______ 45,000
100% 50%
40,000 + 140,000 50,000 – 5,000
=
4.00
Materials
20,000 + 70,000 45,000
=
2.00
Labor
39,000 + 162,500 40,000
= 5.0375
Overhead
42,000 + 130,000 40,000
= 4.30 _____ 15.3375
35,000 5,000 ______ 40,000
Page 6 Problem 7 – continuation Completed & transferred ( 35,000 x 15.3375)
536,812.50
IP end Cost from prec. Dept ( 10,000 x 4) Materials ( 10,000 x 2) Labor ( 5,000 x 5.0375) Overhead ( 5,000 x 4.30)
B)FIFO Units IP beg. Units received
40,000.00 20,000.00 25,187.50 21,500.00 106,687.50
10,000 40,000 50,000
Units completed ( 35,000) IP beg. 10,000 Started & completed 25,000 100% Units IP end 10,000 100% Units lost 5,000 50,000 Unit cost IP beg. From preceding dept. Materials Labor Overhead
1/4 2.500 100% 25,000 1/2 5,000 ______ 32,500
141,000 140,000/40,000 – 5,000 70,000/35,000 162,500/32,500 130,000/32,500 643,500
Completed & transferred *35000) IP beg Cost last month Cost added ( 2.500 x 9) Received & completed ( 25,000 x 15)
IP end Cost from preceding dept. Materials Labor Overhead
25,000 10,000 ______ 35,000
( 10,000 x 4) (10,000 x 2) ( 5,000 x 5) ( 5,000 x 4)
= = = =
4.00 2.00 5.00 4.00 15.00
141,000 22,500 375,000 538,500
40,000 20,000 25,000 20,000 105,000
Page 8 - Janice Manufacturing Co. Units in process, beg. Units received from preceding dept.
Units comp. & transf. 8,000 IP beg. Received & completed Units in process, end
2,000 9,000 11,000
2,000 6,000 3,000 11,000
Cost – IP beg. Cost from precedig dept. Cost added in the dept Materials Labor Overhead
50% 100% 1/3
10,250 36,000 4,000 8,000 6,000 18,000 64,250
Total costs to be accounted from Costs accounted for as follows: Cost of units completed & transf. IP beg. Cost added ( 1,000 x 2.25) Cost & transf. (6,000 x 6.25)
10,250 2,250
1,000 6,000 1,000 8,000
P 4.00 .50 1.00 .75 . 2,25 6.25
12,500 37,500
50,000
IP end Cost from preceding (3,000 x 4.00) M, L, O ( 1,000 x 2.25) Total costs as accounted for
12,000 2,250
14,250 64,250
Problem 9 – Norman Corporation AVERAGE METHOD Units IP beg. Units started
1,000 9,000 10,000
Units completed & transferred Units IP end Units lost – abnormal
8,000 100% 8,000 1,500 100% 1,500 500 100% 500 10,000 10,000
100% 8,000 75% 1,125 100% 500 9,625
Cost to be accounted for Materials Labor Overhead
Cost IP beg 2,520 1,540 2,800 6,860
Cost added 72,480 21,560 43,450 137,490
Unit cost 7.50 2.40 5.00 14.90
100% 8,000 50% 750 100% 500 9,250
Page 3 Cost accounted for as following Completed & transferred ( 8,000 x 14.90) Factory Overhead ( 500 x 14.90) In process, end Materials (1,500 x 7.50) Labor ( 1,125 x 2.40) Overhead ( 750 x 5.00) Total costs as accounted for
119,200 7,450 11,250 2,700 3,750
17,700 144,350
Problem 9 - Norman Corporation FIFO METHOD Units completed & transferred IP beg. Started & completed Units IP end Units lost – abnormal
Cost to be accounted for Cost IP beg. Cost added Materials Labor Overhead
1,000 40% 400 65% 650 75% 750 7,000 100% 7,000 100% 7,000 100% 7,000 1,500 100% 1,500 75% 1,125 50% 750 500 100% 500 100% 500 100% 500 10,000 9,400 9,275 9,000
6,860 72,480 21,560 43,450 137,490 144,350
Total costs to be accounted Costs accounted for as follows: Completed & transferred IP beg. Cost – last month 6,860 Cost added M ( 400 x 7.710638) 3,084 L ( 650 x 2.324528) 1,511 O ( 750 x 4.827778) 3,621 Started & comp.(7,000 x 14.862944) 104,041___ Factory overhead control ( 500 x 14.862944) In Process, end Materuaks ( 1,500 x 7.710638) 11,566 Labor ( 1,125 x 2.324528) 2,615 Overhead ( 750 x 4.827778) 3,620
7.710638 2.324528 4.827778 14,862944 14,862944
119,117 7,432
17,801 144,350
Problem 10 1) Units IP beg Units received Units completed Units IP end 2)
Unit cost Transferred in
5,000 20,000 25,000 21,000 4,000 25,000
100% 21,000 ______ 21,000
17,750 + 104,000 25,000
100% 30%
=
4.87
21,000 1,200 22,200
Materials
0
+ 23,100 21,000
=
1.10
Conversion
7,250 + 38,400 22,200
=
2.056306 8.026306
3) Completed ( 21,000 x 8.026306 ) 4) IP end Prec. Dept. cost (4,000 x 4.87) Materials Conversion ( 1,200 x 2.056306)
168,552 19,480 2,468 21,948
Problem 11 – Nofat Company 1) Units IP beg. 600 Units received 3,900 4,500 Units completed 4,100 Units IP end 400 4,500 2) Units cost From preceding department
Material A
100% 4,100 100% 400 4,500
Material B
100%
9,090 + 67,410 = 4,500
Conversion
4,100 190% _____ 30% 4,100 17,00
Material A
4,000 + 21,200 4,500
=
5.60
Material B
0 + 16,400 4,100
=
4.00
Conversion
1,340 + 17,650 = 4,220
3) Completed ( 4,500 x31.10) 4) IP end Cost from precede dept. ( 400 x 17.00) Material A ( 4.00 x 5.60) Conversion ( 120 x 4.50)
4,100 120 4,220
4.50 ______ 31.10 139,950 6,800 2,240 540 9,580
Page 10 Problem 12 – Cross Company Units started
10,500
Units completed Units IP end Lost units - normal
7,000 3,000 500 10,500
Unit cost:
Materials Labor Overhead
100% 100% 100%
7,000 3,000 500 10,500
52,500/10,500 = 39,770/10,100 = 31,525/10,100 =
1. Completed and transferred Share in cost of lost units
100% 90% 80%
5.00 3.9376237 3.1212871 12.0589108
7,000 x 12.0589108
2, In process, end Materials 3,000 x 5 Labor 2,700 x 3.93762 47 Overhead 2,700 x 3.12129871 Share in cost of lost units
Cost of lost Materials Labor Overhead Total
500 x 5.00 = 400 x 3.93762 = 400 x 3.12129 =
7,000 2,700 400 10,100
2,500 1,575 1,249 5,324
=
84,412 3,788 88,200
= = = =
15,000 10,632 8,427 1,536 35,595
Allocation to C&T IP end 7/10 1,750 3/10 750 70/97 1,137 27/97 438 70/97 901 27/97 348 3,788 1,536
Problem 13 - Alonzo Manufacturing Cost – IP beg. Current cost Total costs Divided by equivalent prod. Unit cost 1.
Completed & transferred
2.
Total costs to be accounted for Less: Cost of units IP end Costs of units completed
Materials P 6,544 281,656 P288,200 262,000 P 1.10 ( 255,200 x 2.50)
Conversion P 16,803 344,817 P 361,620 258,300 P 1,40
Total P 23,347 626,473 P649,820 P
2.50
P 638,000 P 649,820 11,597 P 638,223
Problem 14 - Nicole Mfg. Co. 1) Units IP beg. 12,000 Units received 80,000 Increase in units 4,000 96,000 Units completed Units IP end
Costs – IP beg. Current cost Total costs Divided by EP Unit cost
86,000 10,000 06,000 Transf. In P 11,800 86,120 P 97,920 96,000 P 1.02
100% 100%
86,000 10,000 96,000
Materials P 3,125 21,835 P 24,960 96,000 P 0.26
2)
Completed & transferred ( 86,000 x 2.18)
3)
IP end
100% 2/5
Labor P 1,490 43,510 P45,000 90,000 P 0.50
Overhead P 1,320 34,680 P 36,000 90,000 P 0.40
Total P 17,735 186,145 P203,880 P
2.18
P 187,480
Cost from prec. Dept (10,000 x 1.02) Materials ( 10,000 x 0.26) Labor ( 4,000 x 0.50) Overhead ( 4,00 x 0.40)
Problem 15 1) Units received.
86,000 4,000 90,000
P 10,200 2,600 2,000 1,600 P 16,400
60,000
Units completed 50,000 100% Units IP beg. 9,000 100% Units lost – abnormal 1,000 60,000 Cost from prec. Dept. 212,400 Materials 84,370 Coversion 129,710 426,480 2)
Factory OH
3)
Completed & transf. (50,000 x 7.35)
4)
IP end
50,000 9,000 ______ 59,000 3.54 1.43 2.38 7.35
( 1,000 x 3.54)
Cost from prec. Dept ( 9,000 x 3.54) Materials ( 9,000 x 1.43) Conversion ( 4,500 x 2.38)
100% 50%
50,000 4,500 ______ 54,500
P
3,540 367,500
31,860 12,870 10,710 55.440
Problem 16 – Bewitched Co. 1)
Cost per unit = 122,360/19000 = 6.44 Completed & transferred From IP beg. Cost last month Cost added ( 1,000 x 1.45) Received & completed ( 14,000 x 6.45)
Unit cost Cost from preceding dept. M,L,O Units completed ( 19,000) From IP beg. From units received Units IP end
2)
30,610 1,450 90,300 122.360
110,000/22,000 30,450 /21,000
5,000 1/5 1,000 14,000 100% 14,000 8,000 ¾ 6,000 27,000 21,000
IP end Cost from preceding ( 8,000 x 5) M, L, O ( 6,000 x 1.45)
Problem 17 – Nicole Company Units IP beg. Units received
= 5.00 = 1.45 6,45
40,000 8,700 48,700
1,400 14,000 15,400
Units Completed & transf. Units IP end Units lost – normal Units lost – abnormal
11,200 3,500 560 140 15,400
100% 100% 100% 100%
1)
Completed & transf. ( 11,200 x 9) + (560 x 9)
2)
FOC
3)
IP end Cost from prec dept. ( 3,500 x 5) Materials ( 3,500 x 1) Conversion ( 1,400 x 3)
( 140 x 9)
11,200 3,500 560 140 15,430
100% 11,200 40% 1,400 100% 560 100% 140 13,300 P 105,840 1,250
17,500 3,500 4,200 26,200
Problem 18 - Samahan Inc. 1) Units IP end ( 500 x 50% x 1.32)
P
33,000
2)
Finished goods, end ( 700 x 132)
P
92,400
3)
From FG beg. From units completed – IP beg. From units received and completed Cost of goods sold
600 uittz 1,250 “ 800 “ 2,650
P 76,800 161,000 105600 P 343,400
Or Total available for sale FG beg. 600 units Completed from IP beg. 1,250 Completed from started 1,500 x 132 Total goods available for sale Less: FG Inventory Cost of goods sold Computation of equivalent production Units IP beg. 1,250 Units started 2,000 3,250 Units completed (2,750) IP beg. 1,250 20% Started & completed 1,500 100% Units IP end 500 50% 3,250 Unit cost ( 264000/2000 =
P
76,800 161,000 198,000 435,800 92,400 P 343,400
250 1,500 250 2,000
132.00
Completed & transferred IP beg. Cost last month Cost added ( 250 x 132) Cost of IP beg. upon completion
P 128,000 33.000 P 161,000
Units started & completed ( 1,500 x 132) Problem 19 - Michelle Company Department 1 Actual Materials Conversion Started or received 60,000 Comp. & transf. IP end
45,000 15,000 60,000
45,000 15,000 60,000
45,000 9,000 54,000
P 198,000
Department 2 Actual Materials Conversion 45,000 40,000 5,000 45,000
40,000 5,000 45,000
40,000 4,000 44,000
Costs charged to the dept. Cost from preceding dept. Cost added in the dept. Materials 90,000 Labor 64,800 Overhead 59400 Total added 214,200 Total costs 214,200 Costs accounted for as follows Comp. & transf. ( 45,000 x 3.80) IP beg Cost from prec dept Mat. ( 15,000 x 1.50) 22,500 Labor ( 9,000 x 1.20) 10,800 OH ( 9,000 x 1.10) 9,900 Total costs as accounted for
1,50 1.20 1.10 3.80 3.80 171,000
43,200 214,200
Journal entries 1. Materials Accounts payable
180,000
Work in process – Dept. 1 Work in process – Dept. 2 Materials
90,000 112,500
Payroll
125,600
2.
3.
4.
5.
6.
7.
8.
125,600 64,800 61,600 2,200
Work in process – Dept. 1 Work in process – Dept. 2 Factory OH Applied
59,400 50,600
128,600
110,000
Work in process – Dept. 2 Work in process – Dept. 1
171,000
Finished goods Work in process – Dept. 2
354,000
Accounts receivable Sales
400,000
Cost of goods sold Finished goods 75,000 + (20,000 x 8.85)
252,000
112,500 61,600 50,600 224,700 395,700
2.50 1.40 1.15 5.05 8.85
(5,000 x 3.80) 19,000 (5,000 x 2.50) 12,500 (4,000 x 1.40) 5,600 (4,000 x 1.15) 4,600
202,500
Work in process – Dept. 1 Work in process – Dept. 2 Factory OH Payroll
3.80
(40,000 x 8.85)
180,000
Accrued payroll
171,000
171,000
354,000
400000
252,000
354,000
41,700 395,700
Michelle Company Cost of Goods sold Statement For the month of June, 2008 Direct materials used Materials, June 1 Purchases Total available for use Less: Materials, June 30 Direct labor Factory overhead Total manufacturing costs Less: Work in process, June 30 Cost of goods manufactured Finished goods, June 1 Total goods available for sale Less: Finished goods, June 30 Cost of goods sold
Multiple choice (problems) 1. A 11. B 2. A 12. C 3. D 13 A 4. C 14. C 5. A 15. C 6. A 16 A 7. A 17. A 8. C 18. A 9. D 19. A 10. C 20. A
21. A 22. D 23. C 24. D 25. B 26 A 27. B 28. B 29 C 30. B
P 50,000 180,000 230,000 27,500 P
202,500 126,400 110,000 438,900 84,900 354,000 75,000 429,000 177,000 P 2,52,000
31, C 32. 33. 34. C 35. A
