Question
In: Accounting
Sweet Corporation is in the dairy business. Products go through two production departments (A first, then...
Sweet Corporation is in the dairy business. Products go through two production departments (A first, then B). Data from those departments for October 2020 are presented below.
Complete the four steps necessary to prepare a production cost
report.
Department A
Department B
Beginning work in process
Beginning work in process
Number of units
1,000
200
% complete for materials
100%
% complete for transferred-in
100%
% complete for conversion
60%
30%
Total materials cost
$24,000
-0-
Total conversion cost
$30,000
$40,000
Total transferred-in costs
$15,000
Department A
Department B
Ending work in process
Ending work in process
Number of units
600
300
% complete for materials
100%
% complete for transferred-in
100%
% complete for conversion
30%
40%
Sweet Corporation started 2,600 units of product during the month
in department A. Costs incurred in department A for October 2020
totalled $64,000 for material and $132,000 for conversion.
Additionally, department B incurred conversion costs in October
2020 of $600,000. Department B adds no materials to the
product.
Instructions
a. Journalize the transfer of goods from department A to department B during October 2020. Sweet Corporation accounts for its costs using the weighted-average method.
$226,163
b. Prepare a production cost report for department B for October
2020.
Total cost of units completed: $833,123 (Weygandt, 12/2017, pp.
159-160) Weygandt, J. J., Kimmel, P. D., Kieso, D. E., Aly, I. M.
(2017). Managerial Accounting: Tools for Business Decision-Making,
Canadian Edition, 5th Edition. [[VitalSource Bookshelf version]].
Retrieved from vbk://9781119403999 Always check citation for
accuracy before use.
Solutions
Expert Solution
a.
| Accounts | Debit | Credit |
| Work in Process - Department B | 218625 | |
| Work in Process - Department A | 218625 | |
| [2900*75.38] |
b.
| PhysicalUnits | Transferred in | Conversion costs | |
| Units to be accounted for | |||
| Work in process, beginning | 200 | ||
| Transferred in | 3000 | ||
| Total units | 3200 | ||
| Units accounted for | |||
| Transferred out | 2900 | 2900 | 2900 |
| Work in process, ending | 300 | 300 | 120 |
| Total units | 3200 | 3200 | 3020 |
| Transferred in | Conversion Cost | Total | |
| Costs | |||
| Unit costs | |||
| Total costs | 233625 | 640,000 | 873,625 |
| Equivalent units | 3200 | 3020 | |
| Unit costs | 73.0078125 | 211.9205298 | 284.9283423 |
| Costs to be accounted for | |||
| Work in process, beginning | 55000 | ||
| Transferred in | 218625 | ||
| Started into production | 600,000 | ||
| Total costs | 873625 |
| Cost Reconciliation Schedule | |||
| Costs accounted for | |||
| Transferred out (2,900 × $284.92) | 826292.1927 | ||
| Work in process, ending | |||
| Transferred in (300 × $73.0078) | 21902 | ||
| Conversion costs (120 × $211.9205) | 25430.46358 | ||
| Total costs | 873625 |
Workings:
| Physical units | Materials | Conversion | ||
| Beginning WIP in Dept B | 200 | |||
| Transferred in from Dept A | 3000 | |||
| 3200 | ||||
| Department B | ||||
| Completed and transferred out | 2900 | 2900 | 2900 | |
| Ending work in process | 300 | 300 | 120 | |
| 3200 | 3200 | 3020 | ||
| Transferred in | Material | Conversion | ||
| Beginning WIP | 24000 | 30,000 | ||
| Costs added during the month | 64000 | 132000 | ||
| 88000 | 162000 | |||
| Equivalent units | 3600 | 3180 | ||
| Cost per equi. Unit | 24.44444444 | 50.94339623 | 75.38784067 | |
| Transferred in | Material | Conversion | ||
| Beginning WIP | 15000 | 40000 | ||
| Costs added during the month | 218625 | 600,000 | ||
| 233625 | 640000 | |||
| Equivalent units | 3200 | 3020 | ||
| Cost per equi. Unit | 73.0078125 | 211.9205298 | 284.9283423 |
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