To download more slides, ebook, solutions and test bank, visit http://downloadslide.blogspot.com CHAPTER JOB ORDER AND PROCESS COSTING QUESTIONS FOR WRITING AND DISCUSSION Job-order costing accumulates costs by jobs, and process costing accumulates costs by processes Job-order costing is suitable for operations that produce custom-made products that receive different doses of manufacturing costs Process costing, on the other hand, is suitable for operations that produce homogeneous products that receive equal doses of manufacturing costs in each process More paperwork is required Labor and materials are assigned to departments in a process-costing system In a job-order costing system, labor and materials must be tracked to each job, requiring time tickets and more use of materials requisitions Additionally, a job-order costing system requires a separate job-order cost sheet for each job Job-order costing is appropriate for many service firms The key factor is that differing amounts of resources must be used for different jobs Examples of service firms that use job-order costing are law firms, accounting firms, dentists, automobile repair, and architectural firms Unless all your jobs (lawns) are the same size and require the same services, you will need to use a job-order costing system At minimum, you will need job-order cost sheets for each customer You will need labor time tickets to record the amount of time spent on each job, both to cost the job and to pay the individual doing the work A materials requisition form may be needed if fertilizer or weed control products are used (alternatively, it may be possible to just list the amount of product used directly on the joborder cost sheet) The more complicated your business becomes (e.g., mowing, trimming, fertilizing, trimming shrubbery, and planting shrubs and trees), the more source documents will be needed to keep track of time, materials, and use of capital equipment (e.g., trimmers and brushhogs) The cost of a job is often strongly related to the price charged Logically enough, the higher the cost of the job, the higher the price charged to the customer This relation- 145 ship makes sense not only to the business but also to the customer By comparing the cost of the individual job with the price charged, the firm can determine the profit attributable to each job Then, the firm can decide whether the profit is sufficient to continue offering the product or service under the current terms Materials requisition forms serve as the source documents for posting materials usage and costs to individual jobs Time or work tickets serve a similar function for labor Predetermined overhead rates are used to allocate overhead to jobs In sequential processing, products pass through a series of processes, one after another (i.e., in a given sequence) In parallel processing, products pass through two or more different sequences at the same time, merging eventually at the final process Equivalent units are the number of whole units that could have been produced, given the amount of materials, labor, and overhead used Equivalent units are the measure of a period’s output, a necessary input for the computation of unit costs in a process-costing system In calculating this period’s unit cost, the weighted average method treats prior-period output and costs carried over to the current period as belonging to the current period The FIFO method excludes any costs and output carried over from this period’s unit cost computation 10 If the per-unit cost of the prior period is the same as the per-unit cost of the current period, there will be no difference between the results of the weighted average and FIFO methods Additionally, if no beginning workin-process inventory exists, both the FIFO and weighted average methods give the same results 11 Separate equivalent units must be calculated for materials and conversion costs 12 Transferred-in units represent partially completed units and are clearly a material for the To download more slides, ebook, solutions and test bank, visit http://downloadslide.blogspot.com receiving department To complete the product (or further process it), additional materials and conversion costs are added by the receiving department 13 The work-in-process account of the receiving department is debited, and the work-inprocess account of the transferring department is credited The finished goods account is debited, and the work-in-process account of the final department is credited upon completion of the product 14 The first step is the preparation of a physical flow schedule This schedule identifies the physical units that must be accounted for and provides an accounting The second step is the equivalent unit schedule This schedule computes the equivalent whole output for the period The schedule’s computations rely on information from the physical flow schedule The next step is computation of the unit cost To compute the unit cost, the manufacturing costs of the period for the process are divided by the period’s output The output is obtained from the equivalent unit schedule The fourth step 146 uses the unit cost to value goods transferred out and those remaining in work in process The final step checks to see if the costs assigned in step equal the total costs to account for 15 The weighted average method uses the same unit cost for all goods transferred out The FIFO method divides goods transferred out into two categories: units started and completed and units from beginning work in process The period’s unit cost is used to value goods started and completed The cost of goods transferred out from beginning work in process is obtained by (1) assigning them all costs carried over from the prior period and (2) using the current period’s unit cost to value the equivalent units completed this period 16 Service firms generally not have work-inprocess inventories, and so equivalent units of production are not needed An important factor in process costing for services is determining just what constitutes a unit of output To download more slides, ebook, solutions and test bank, visit http://downloadslide.blogspot.com EXERCISES 6–1 Job-Order a b c d e f g h i j k l m n o Paint manufacturing Auto manufacturing Toy manufacturing Custom cabinet making Airplane manufacturing Personal computer assembly Furniture making Custom furniture making Dental services Hospital services Paper manufacturing Auto repair Architectural services Landscape design services Light bulb manufacturing Process X X X X X X X X X X X X X X X 6–2 Auto manufacturing: A job-order example might be Rolls Royce, in which the cars are made to order A process-costing example might be Ford Motor Company Dental services: A job-order example might be a local, full-service dentist A process-costing example might be a denturist (someone who makes only dentures) Auto repair: A job-order example might be a local mechanic or the service department of an automobile dealership A process-costing example might be a shop that is dedicated to oil changes Costume making: A job-order example might be a local seamstress who will make the costumes for children in a junior high school play A processcosting example might be a firm dedicated to the manufacture of dance costumes that are sold nationwide The designs are preset 147 To download more slides, ebook, solutions and test bank, visit http://downloadslide.blogspot.com 6–3 Beginning balance Direct materials Direct labor Applied overhead Total cost Job #614 $10,200 4,200 1,800 1,080 $17,280 Job #615 $ 9,670 9,500 4,000 2,400 $25,570 Job #616 $ 1,000 150 90 $1,240 Job #617 $ 3,150 800 480 $4,430 Ending balance in Work in Process = Job #614 + Job #616 + Job #617 = $17,280 + $1,240 + $4,430 = $22,950 Cost of Goods Sold = Job #615 = $25,570 Price of Job #615 = $25,570 + (0.4)($25,570) = $35,798 6–4 Overhead applied in October: Job #265: 0.75 × $15,000 = $11,250 Job #266: 0.75 × $12,000 = $9,000 Job #267: 0.75 × $1,900 = $1,425 Job #268: 0.75 × $7,000 = $5,250 Beginning balance Direct materials Direct labor Applied overhead Total cost Job #265 $30,330 13,000 15,000 11,250 $69,580 Job #266 $62,170 7,000 12,000 9,000 $90,170 Job #267 $ 3,500 1,900 1,425 $6,825 Job #268 $ 4,750 7,000 5,250 $17,000 Ending balance in Work in Process = Job #266 + Job #267 + Job #268 = $90,170 + $6,825 + $17,000 = $113,995 Cost of Goods Sold = Job #265 = $69,580 Price of Job #265 = $69,580 + (0.30)($69,580) = $90,454 148 To download more slides, ebook, solutions and test bank, visit http://downloadslide.blogspot.com 6–5 Direct materials Direct labor (50 hours × $10) Overhead (50 hours × $4) Total cost Units Unit cost $ 3,400 500 200 $ 4,100 ÷ 10 $ 410 Price per home = 1.5 × $410 = $615 Jordan would need to prepare a simple form that included columns for the date, the beginning time, the ending time, the total number of hours worked, and the job name (or number) She could have a separate page for each day This would be especially helpful if she hired other employees from time to time to work on jobs 6–6 Ending balance in Work in Process = Job #902 + Job #906 + Job #908 + Job #909 = $400 + $750 + $700 + $905 = $2,755 Ending balance in Finished Goods = Job #901 + Job #903 + Job #905 + Job #910 = $650 + $550 + $860 + $803 = $2,863 Cost of Goods Sold = Job #904 + Job #907 = $695 + $180 = $875 149 To download more slides, ebook, solutions and test bank, visit http://downloadslide.blogspot.com 6–7 1 Balance, 7/1 Direct materials Direct labor Applied overhead: Power1 Material handling2 Purchasing3 Total cost Job #70 $ 25,000 12,900 20,000 Job #71 $ 9,900 6,500 Job #72 $ 35,350 13,000 500 1,250 400 $ 60,050 400 250 1,600 $18,650 2,400 5,000 400 $ 56,150 Job#70:$2 per mh × 250 Job#71:$2 per mh × 200 Job#72:$2 per mh × 1,200 Job#70:$25 per move × 50 moves Job#71:$25 per move × 10 moves Job#72:$25 per move × 200 moves Job#70: $40 per PO × 10 PO’s Job#71:$40 per PO × 40 PO’s Job#72: $40 per PO × 10 PO’s Ending balance in Work in Process = Job #72 = $56,150 Ending balance in Finished Goods = Job #71 = $18,650 Cost of Goods Sold = Job #70 = $60,050 6–8 Bosserman Company Income Statement For the Month Ended July 31, 20XX Sales ($60,050 × 1.40) Cost of goods sold Gross margin Selling expenses (0.10 × $84,070 + $4,100) Administrative expenses Operating income 150 $ 84,070 60,050 $ 24,020 12,507 3,900 $ 7,613 To download more slides, ebook, solutions and test bank, visit http://downloadslide.blogspot.com 6–9 Applied overhead = Direct labor cost × Overhead rate $140,000= $80,000 × Overhead rate Overhead rate= 1.75 or 175% of direct labor cost $140,000 138,500 $ 1,500 Direct materials Direct labor Overhead applied Applied overhead Actual overhead Overapplied overhead $ 40,000 80,000 140,000 $ 260,000 17,000 (32,000) $ 245,000 Add: Beginning work in process Less: Ending work in process Cost of goods manufactured Overhead Control Cost of Goods Sold 1,500 1,500 Adjusted cost of goods sold: $ 210,000 (1,500) $ 208,500 Direct materials ($32,000 – $10,000 – $17,500) Direct labor (1,000 × $10) Overhead applied (175% × $10,000) Ending work in process 151 $ 4,500 10,000 17,500 $ 32,000 To download more slides, ebook, solutions and test bank, visit http://downloadslide.blogspot.com 6–10 Overhead rate = $180,000/20,000 = $9 per DLH Direct materials Direct labor Applied overhead Total cost $ 4,140 4,000 3,600* $ 11,740 *$3,600 = $9 × ($4,000/$10) Overhead Control Lease Payable Accumulated Depreciation Wages Payable Utilities Payable Other Payables 189,300 Work in Process ($9 × 21,000) Overhead Control 189,000 Actual overhead Applied overhead Underapplied overhead $189,300 189,000 $ 300 Normal cost of goods sold Add: Underapplied overhead Adjusted cost of goods sold $740,000 300 $740,300 5,000 20,000 101,300 18,000 45,000 189,000 6–11 Cutting Department $5,400 150 750 Direct materials Direct labor Applied overhead Transferred-in cost: From cutting From sewing Total manufacturing cost Sewing Department $ 900 1,800 3,600 Packaging Department $ 225 900 900 6,300 $6,300 $12,600 a Transferred from Cutting to Sewing $6,300 b Transferred from Sewing to Packaging $12,600 c Transferred from Packaging to Finished Goods $14,625 152 12,600 $14,625 To download more slides, ebook, solutions and test bank, visit http://downloadslide.blogspot.com Unit cost = $14,625/600 = $24.38* per pair *Rounded 6–12 Equivalent unit, Ending work in process = 300 × 0.20 = 60 Equivalent units in Total = 60 + 600 = 660 6–13 Physical flow schedule: Units in beginning work in process Units started during the period Total units to account for 14,000 40,000 54,000 Units transferred out Units in ending work in process Total units accounted for 45,500 8,500 54,000 Equivalent units of production: Units completed Add: Units in ending work in process: (8,500 × 100%) (8,500 × 25%) Equivalent units of output 153 Materials 45,500 Conversion 45,500 8,500 54,000 2,125 47,625 To download more slides, ebook, solutions and test bank, visit http://downloadslide.blogspot.com 6–14 Cost of ending work in process: Materials ($1.30 × 0) Conversion ($0.50 × 4,800) Total cost $ 2,400 $2,400 Cost of goods transferred out: $1.80 × 45,000 = $81,000 Physical flow schedule: Units to account for: Units in beginning WIP ? Units started ? Total units 53,000 Units accounted for: Units completed Units in ending WIP Total units 45,000 8,000 53,000 The schedule of equivalent units using the weighted average method does not give sufficient information to reconstruct the complete physical flow schedule Units in beginning work in process are embedded in units completed 154 To download more slides, ebook, solutions and test bank, visit http://downloadslide.blogspot.com 6–34 Grace Sauces, Inc Mixing Department Production Report For the First Quarter 20XX (Weighted Average Method) Unit Information Units to account for: Units in beginning WIP Units started Units to account for Units accounted for: Units transferred out Units in ending WIP Units accounted for 144,000 180,000 324,000 Units completed Units in ending WIP Total units accounted for 292,500 31,500 324,000 Equivalent Units Transferred In Materials Conversion 292,500 292,500 292,500 31,500 31,500 6,300 324,000 324,000 298,800 Cost Information Costs to account for: Transferred In Beginning WIP $ 45,600 Incurred during quarter 230,400 Total costs to account for $276,000 ÷ Equivalent units Cost per equivalent unit 324,000 $ 0.852 Costs accounted for: Goods transferred out (292,500 × $1.27) Ending work in process: Transferred in (31,500 × $0.852) Materials (31,500 × $0.12) Conversion (6,300 × $0.291) Total costs accounted for *Difference due to rounding 174 Materials $ 6,432 33,500 $ 39,932 324,000 $ 0.12 Transferred Out $370,421 — — — $370,421 Conversion Total $ 14,400 $ 66,432 72,640 336,540 $ 87,040 $402,972 298,800 $ 0.291 EWIP — $26,838 3,780 1,835 $32,453 $ 1.27 Total $370,421 26,838 3,780 1,835 $402,874* To download more slides, ebook, solutions and test bank, visit http://downloadslide.blogspot.com 6–35 Department A a Physical flow schedule: Units in beginning WIP Units started in November Total units to account for 5,000 25,000 30,000 Units completed and transferred out: Started and completed From beginning WIP Units in ending WIP Total units accounted for 23,000 5,000 2,000 30,000 Costs charged to the department: Beginning WIP Incurred during November Total costs Materials $10,000 57,800 $67,800 Conversion $ 6,900 95,220 $102,120 Total $ 16,900 153,020 $169,920 b Equivalent unit calculation: Units completed Add: Equivalent units in ending WIP Total equivalent units Materials 28,000 2,000 30,000 c Unit cost calculation: Unit cost = Unit material cost + Unit conversion cost = $67,800/30,000 + $102,120/29,600 = $2.26 + $3.45 = $5.71 175 Conversion 28,000 1,600 29,600 To download more slides, ebook, solutions and test bank, visit http://downloadslide.blogspot.com 6–35 Continued d and e Cost reconciliation: Total costs accounted for: Goods transferred out (28,000 × $5.71) Costs in ending WIP: Materials (2,000 × $2.26) Conversion (1,600 × $3.45) Total costs accounted for $159,880 $4,520 5,520 Costs to account for: Beginning work in process Costs incurred during November Total costs to account for 10,040 $169,920 $ 16,900 153,020 $169,920 Journal entries: Work in Process—Dept A Materials Inventory 57,800 Work in Process—Dept A Conversion Costs—Dept A 95,220 Work in Process—Dept B Work in Process—Dept A 159,880 57,800 95,220* 159,880 *When conversion costs are not broken into labor and overhead components, a control account for conversion costs is used Some firms now combine overhead and direct labor costs into one category This practice is developing because direct labor is becoming a small percentage of total manufacturing costs 176 To download more slides, ebook, solutions and test bank, visit http://downloadslide.blogspot.com 6–35 Continued Department B a Physical flow schedule: Units in beginning WIP Units started in November (transferred in) Total units to account for 8,000 28,000 36,000 Units completed and transferred out: Started and completed From beginning WIP Units in ending WIP Total units accounted for 25,000 8,000 3,000 36,000 Costs charged to the department: Beginning WIP Incurred in Nov Total costs Materials $ 37,950 $37,950 Conversion $ 16,800 128,100 $144,900 Transferred In $ 45,320 159,880 $205,200 Total $ 62,120 325,930 $388,050 b Equivalent unit calculation: Materials Units completed 33,000 Add: Equivalent units in EWIP Total equivalent units 33,000 Conversion 33,000 1,500 34,500 Transferred In 33,000 3,000 36,000 c Unit cost calculation: Unit cost = Unit material cost + Unit conversion cost + Unit transferred in cost = ($37,950/33,000) + ($144,900/34,500) + ($205,200/36,000) = $1.15 + $4.20 + $5.70 = $11.05 177 To download more slides, ebook, solutions and test bank, visit http://downloadslide.blogspot.com 6–35 Concluded d and e Cost reconciliation: Total costs accounted for: Goods transferred out (33,000 × $11.05) Costs in ending WIP: Materials Conversion (1,500 × $4.20) Transferred in (3,000 × $5.70) Total costs in ending WIP Total costs accounted for $364,650 $ 6,300 17,100 23,400 $388,050 Costs to account for: Beginning work in process Costs incurred during November Total costs to account for $ 62,120 325,930 $388,050 Journal entries for Department B: Work in Process—Dept B Work in Process—Dept A 159,880 Work in Process—Dept B Materials Inventory 37,950 Work in Process—Dept B Conversion Costs—Dept B 128,100 Finished Goods Work in Process—Dept B 364,650 159,880 37,950 128,100* 364,650 *Because conversion costs are not broken into labor and overhead components, a control account for conversion costs is used Some firms are now combining overhead and direct labor costs into one category This practice is developing because direct labor is becoming a small percentage of total manufacturing costs 178 To download more slides, ebook, solutions and test bank, visit http://downloadslide.blogspot.com 6–36 Department A a Physical flow schedule: Units in beginning WIP Units started in November Total units to account for 5,000 25,000 30,000 Units completed and transferred out: Started and completed From beginning WIP Units in ending WIP Total units accounted for 23,000 5,000 2,000 30,000 Costs charged to the department: Materials $10,000 57,800 $67,800 Beginning WIP Incurred during November Total costs Conversion $ 6,900 95,220 $102,120 Total $ 16,900 153,020 $169,920 b Equivalent unit calculation: Units started and completed Equivalent units in beginning WIP Equivalent units in ending WIP Total equivalent units Materials 23,000 — 2,000 25,000 c Unit cost calculation: Unit cost = Unit material cost + Unit conversion cost = ($57,800/25,000) + ($95,220/27,600) = $2.312 + $3.45 = $5.762 179 Conversion 23,000 3,000 1,600 27,600 To download more slides, ebook, solutions and test bank, visit http://downloadslide.blogspot.com 6–36 Continued d and e Cost reconciliation: Cost of units started and completed (23,000 × $5.762) Cost of units in beginning WIP: Prior-period costs Current cost to finish units (3,000 × $3.45) Total cost of units transferred out Costs in ending WIP: Materials (2,000 × $2.312) Conversion (1,600 × $3.45) Total costs in ending WIP Total costs accounted for $132,526 16,900 10,350 $159,776 $4,624 5,520 10,144 $169,920 Costs to account for: Beginning WIP Costs incurred Total costs to account for $ 16,900 153,020 $169,920 Journal entries: Work in Process—Dept A Materials Inventory 57,800 Work in Process—Dept A Conversion Costs—Dept A 95,220 Work in Process—Dept A Work in Process—Dept A 159,776 57,800 95,220* 159,776 *Because conversion costs are not broken into labor and overhead components, a control account for conversion costs is used Some firms are now combining overhead and direct labor costs into one category This practice is developing because direct labor is becoming a small percentage of total manufacturing costs 180 To download more slides, ebook, solutions and test bank, visit http://downloadslide.blogspot.com 6–36 Continued Department B a Physical flow schedule: Units in beginning WIP Units started in November (transferred in) Total units to account for 8,000 28,000 36,000 Units completed and transferred out: Started and completed From beginning WIP Units in ending WIP Total units accounted for 25,000 8,000 3,000 36,000 Costs charged to the department: Transferred Materials Beginning WIP $ Incurred during Nov 37,950 Total costs $37,950 Conversion $ 16,800 128,100 $144,900 In $ 45,320 159,776 $205,096 Total $ 62,120 325,826 $387,946 b Equivalent unit calculation: Materials 25,000 8,000 33,000 Units started and completed Equivalent units in BWIP Equivalent units in EWIP Total equivalent units Conversion 25,000 4,000 1,500 30,500 Transferred In 25,000 3,000 28,000 c Unit cost calculation: Unit cost = Unit material cost + Unit conversion cost + Unit transferred in cost = $37,950/33,000 + $128,100/30,500 + $159,776/28,000 = $1.15 + $4.20 + $5.706 = $11.056 181 To download more slides, ebook, solutions and test bank, visit http://downloadslide.blogspot.com 6–36 Concluded d and e Cost reconciliation: Cost of units started and completed (25,000 × $11.056) Cost of units in beginning WIP: Prior-period costs Current cost to finish units: Materials (8,000 × $1.15) Conversion (4,000 × $4.20) Total costs of goods transferred out Costs in ending WIP: Conversion (1,500 × $4.20) $ 6,300 Transferred in (3,000 × $5.706) 17,118 Total costs in ending WIP Total costs accounted for Costs to account for: Beginning work in process Costs incurred during November Total costs to account for $276,400 62,120 9,200 16,800 $364,520 23,418 $387,938* $ 62,120 325,826 $387,946* *Difference due to rounding Journal entries for Department B: Work in Process—Dept B Work in Process—Dept A 159,776 Work in Process—Dept B Materials Inventory 37,950 Work in Process—Dept B Conversion Costs—Dept B 128,100 Finished Goods Work in Process—Dept B 364,520 159,776 37,950 128,100* 364,520 *As before, a control account for conversion cost is used to combine overhead and direct labor cost into one category 182 To download more slides, ebook, solutions and test bank, visit http://downloadslide.blogspot.com 6–37 a Molding Units to account for: Beginning WIP Started 500 1,000 1,500 Units accounted for: Transferred out Ending WIP 1,300 200 1,500 b Assembly Units to account for: Beginning WIP Started 1,300 1,300 Units accounted for: Transferred out Ending WIP 900 400 1,300 c Packaging Units to account for: Beginning WIP Started 150 900 1,050 Units accounted for: Transferred out Ending WIP 1,050 1,050 Equivalent units: Trans out EWIP Molding Mat Conv 1,300 1,300 200 40 1,500 1,340 Unit prior department cost Unit materials cost Unit conversion cost Total unit cost Assembly Tr In Mat Conv 900 900 900 400 160 160 1,300 1,060 1,060 Molding — $ 5.00 6.50 $11.50 Assembly $11.50 0.46 1.10 $13.06 Molding: Unit materials cost: ($2,500 + $5,000)/1,500 = $5.00 Unit conversion cost: ($1,050 + $7,660)/1,340 = $6.50 183 Packaging Tr In Mat Conv 1,050 1,050 1,050 0 1,050 1,050 1,050 Packaging $13.06 2.65 3.05 $18.76 To download more slides, ebook, solutions and test bank, visit http://downloadslide.blogspot.com 6–37 Concluded Assembly: Unit transferred-in cost: (0 + $14,950)/1,300 = $11.50 Unit materials cost: (0 + $487.60)/1,060 = $0.46 Unit conversion cost: (0 + $1,166)/1,060 = $1.10 Packaging: Unit transferred-in cost: ($1,959 + $11,754)/1,050 = $13.06 Unit materials cost: ($375 + $2,407.50)/1,050 = $2.65 Unit conversion cost: ($225 + $2,977.50)/1,050 = $3.05 Molding: Transferred out: (1,300 × $11.50) = $14,950 Ending WIP: (200 × $5) + (40 × $6.50) = $1,260 Assembly: Transferred out: (900 × $13.06) = $11,754 Ending WIP: (400 × $11.50) + (160 × $1.56) = $4,849.60 Packaging: Transferred out: (1,050 × $18.76) = $19,698 Ending WIP: Costs to account for: Molding Assembly Packaging Costs accounted for: Molding Assembly Packaging BWIP $3,550.00 0.00 2,559.00 + Current $12,660.00 16,603.60 17,139.00 = Total $16,210.00 16,603.60 19,698.00 Trans Out $14,950.00 11,754.00 19,698.00 + EWIP $1,260.00 4,849.60 0.00 = Total $16,210.00 16,603.60 19,698.00 184 To download more slides, ebook, solutions and test bank, visit http://downloadslide.blogspot.com 6–38 Equivalent units: Molding Mat Conv Started and completed BWIP EWIP 800 200 1,000 800 350 40 1,190 Assembly Tr In Mat Conv 900 400 1,300 Molding: Unit materials cost: Unit conversion cost: Total unit cost 900 160 1,060 Packaging Tr In Mat Conv 900 160 1,060 900 0 900 $5,000/1,000 $7,660/1,190 = = $ 5.000 6.437 $11.437 Assembly: Unit transferred-in cost: Unit materials cost: Unit conversion cost: Total unit cost $14,950/1,300 $487.60/1,060 $1,166/1,060 = = = $11.500 0.460 1.100 $13.060 Packaging: Unit transferred-in cost: Unit materials cost: Unit conversion cost: Total unit cost $11,754/900 $2,407.50/900 $2,977.50/975 = = = $13.060 2.675 3.054 $18.789 Molding: Transferred out: Started and completed (800 × $11.437) Prior-period cost Complete beginning WIP (350 × $6.437) Total transferred out Ending WIP: (200 × $5) + (40 × $6.437) 185 $ 9,149.60 3,550.00 2,252.95 $ 14,952.55 $ 1,257.48 900 0 900 900 75 975 To download more slides, ebook, solutions and test bank, visit http://downloadslide.blogspot.com 6–38 Concluded Assembly: Transferred out: Started and completed (900 × $13.06) Prior-period cost Complete beginning WIP Total transferred out $ 11,754.00 0.00 0.00 $ 11,754.00 Ending WIP: (400 × $11.50) + (160 × $1.56) Packaging: Transferred out: Started and completed (900 × $18.789) Prior period cost Complete beginning WIP (75 × $3.054) Total transferred out $ 16,910.10 2,559.00 229.05 $ 19,698.15 Ending WIP: $ 4,849.60 $ Cost reconciliation: Costs to account for: Molding Assembly Packaging BWIP $3,550.00 0.00 2,559.00 + Current $12,660.00 16,603.60 17,139.00 = Total $16,210.00 16,603.60 19,698.00 Trans Out $14,952.55 11,754.00 19,698.15 + EWIP $1,257.48 4,849.60 0.00 = Total $16,210.03* 16,603.60 19,698.15* Costs accounted for: Molding Assembly Packaging *Difference due to rounding 186 To download more slides, ebook, solutions and test bank, visit http://downloadslide.blogspot.com MANAGERIAL DECISION CASES 6–39 Gary’s proposal requires Donna to falsify the equivalent unit calculation so that income and assets can be inflated and reported incorrectly Falsification of the production report would be a violation of at least two major ethical standards: integrity and objectivity Falsification does not allow the organization to attain its legitimate and ethical objectives Moreover, if Donna agrees to the proposal, she would be taking action that would discredit her profession Finally, Donna has an ethical obligation to communicate information fairly and objectively, disclosing all information that would be needed for the loan officer to fairly assess the merits of the company’s request for a loan Clearly, Donna should not agree to falsify the production report Donna has an obligation to report Gary to a superior only if an actual ethical problem exists If Gary decides that the course of action he is suggesting is not really in his or the company’s best interests, then no ethical problem exists, and no action by Donna is needed If Gary insists on his idea of falsification of the division’s reports, Donna should attempt to resolve the conflict by appealing to Gary’s immediate supervisor (and on up, if necessary, until a satisfactory resolution is achieved) If no satisfactory resolution is possible, then Donna should resign and submit an informative memo to a representative of the organization In this situation, the ethical dilemma is complicated by two factors: Donna’s age and a low likelihood of resolution by appealing to higher-level authorities Donna’s age may make it more difficult to find alternative employment (at least at the same level and pay), and it may mean possible forfeiture of retirement benefits Many students will likely respond that Donna should still resign (assuming that resolution is not likely), recommending the ideal outcome While Donna’s ultimate resignation is the right choice if resolution fails, students should realize that ethical behavior may often carry with it some very significant personal sacrifices It could be argued, however, that the costs of unethical behavior are even greater Another possibility is to encourage Donna to see a lawyer She has the option of fighting back, and at her age (with retirement benefits at stake), a good offense may be her best defense 187 To download more slides, ebook, solutions and test bank, visit http://downloadslide.blogspot.com RESEARCH ASSIGNMENT 6–40 Answers will vary 6–41 Answers will vary 188 ... $54, 560 )/113 ,60 0 $4 .60 $573,040/98,400 $5.82 ($573,040 + $35, 560 )/101 ,60 0 $5.99 EWIP: FIFO: ($4.50 × 21 ,60 0) + ($5.82 × 9 ,60 0) = $153,072 WA: ($4 .60 × 21 ,60 0) + ($5.99 × 9 ,60 0) = $1 56, 864 161 98,400... BWIP ( 16, 000 × 60 %) ( 16, 000 × 20%) 21 ,60 0 113 ,60 0 WA: 9 ,60 0 101 ,60 0 (9 ,60 0) (3,200) Equivalent units (FIFO) Unit cost: FIFO: Conversion 92,000 104,000 $ 468 ,000/104,000 $4.50 ($ 468 ,000 + $54, 560 )/113 ,60 0... Total $ 367 ,800 — $ 367 ,800 — $100,000 100,000 — $ 367 ,800 13, 560 $113, 560 13, 560 $481, 360 160 To download more slides, ebook, solutions and test bank, visit http://downloadslide.blogspot.com 6 22