Question

4

The Duerr Company manufactures a single product. All raw materials used are traceable to specific units of product. Current information for the Duerr Company follows:

Beginning raw materials inventory	$	11,000
Ending raw materials inventory		14,000
Raw material purchases		88,000
Beginning work in process inventory		23,000
Ending work in process inventory		33,000
Direct labor		113,000
Total factory overhead		88,000
Beginning finished goods inventory		63,000
Ending finished goods inventory		43,000

The company's cost of raw materials used, cost of goods manufactured and cost of goods sold is:

18Richards Corporation uses the FIFO method of process costing. The following information is available for October in its Fabricating Department:

Units:
Beginning Inventory: 88,000 units, 70% complete as to materials and 20% complete as to conversion.
Units started and completed: 258,000.
Units completed and transferred out: 346,000.
Ending Inventory: 34,000 units, 40% complete as to materials and 15% complete as to conversion.

Costs:
Costs in beginning Work in Process - Direct Materials: $45,200.
Costs in beginning Work in Process - Conversion: $87,700.
Costs incurred in October - Direct Materials: $710,740.
Costs incurred in October - Conversion: $1,044,530.

Calculate the cost per equivalent unit of conversion.

26.

Angle Max Industries produces a product which goes through two operations, Assembly and Finishing, before it is ready to be shipped. Next year’s expected costs and activities are shown below.

	Assembly			Finishing
Direct labor hours		150,000	DLH		145,000	DLH
Machine hours		350,000	MH		78,750	MH
Overhead costs	$	350,000		$	507,500

Assume that the Assembly Department allocates overhead based on machine hours, and the Finishing Department allocates overhead based on direct labor hours. How much total overhead will be assigned to a product that requires 1 direct labor hour and 3.0 machine hours in the Assembly Department, and 3.6 direct labor hours and 0.5 machine hours in the Finishing Department?

27.

Angle Max Industries produces a product which goes through two operations, Assembly and Finishing, before it is ready to be shipped. Next year’s expected costs and activities are shown below.

	Assembly			Finishing
Direct labor hours		150,000	DLH		145,000	DLH
Machine hours		350,000	MH		78,750	MH
Overhead costs	$	350,000		$	507,500

Assume that the Assembly Department allocates overhead using a plantwide overhead rate based on machine hours. How much total overhead will be assigned to a product that requires 1 direct labor hour and 3.00 machine hours in the Assembly Department, and 3.60 direct labor hours and 0.5 machine hours in the Finishing Department?

Answer 1

4)
a)	Cost of Raw Materials Used
	Beginning Raw Materials Inventory				$   11,000.00
Add:	Purchase				$   88,000.00
	Raw Materials available				$   99,000.00
Less:	Ending Raw Materials Inventory				$   14,000.00
	Cost of Raw Materials Used				$   85,000.00
b)	Cost of goods manufactured
	Cost of Raw Materials Used				$   85,000.00
	Direct labor				$ 113,000.00
	Total factory overhead				$   88,000.00
					$ 286,000.00
Add:	Beginning WIP				$   23,000.00
Less:	Ending WIP				$   33,000.00
	Cost of Goods Manufactured				$ 276,000.00
c)	Cost of goods sold
	Beginning finished goods inventory				$   63,000.00
Add:	Cost of Goods Manufactured				$ 276,000.00
	Ending finished goods inventory				$   43,000.00
	Cost of Goods sold				$ 296,000.00

18)
		Total	Conversion
	Particulars	Units	%	Units
	Transfer to next process:
	From O/p WIP	88000	80%	70400
	From Current Intro	258000	100%	258000
	Closing WIP	34000	15%	5100
		380000		333500

Statement of cost per equivalent production
Element of costs	Units	Costs	Cost/eq. units
Conversion	333500	$ 1,044,530.00	$      3.13

26)
	Computation of OH rates
	Particulars			Assembly	Finishing
	Overhead costs			$ 350,000.00	$ 507,500.00
	Machine hours			350000
	Labor hours				145000
	Rates			$             1.00	$             3.50
	Allocation of OH
	Particulars			Amount
	Assembly Dept.		(3 x $ 1)	$             3.00
	Finishing Dept.		(3.6 x $ 3.5)	$           12.60
				$           15.60

27)	Predetermined plantwide OH rate			=	($ 350000 + $ 507500) / (350000 + 78750)
				=	$             2.00
	Allocation of OH		(3.5 x $ 2)	=	$             7.00