Question

Standard-costing with beginning and ending work in process. Paquita’s Pearls Company (PPC) is a manufacturer of knock off jewelry. Paquita attends Fashion Week in New York City every September and February to gauge the latest fashion trends in jewelry. She then makes trendy jewelry at a fraction of the cost of those designers who participate in Fashion Week. This Fall’s biggest item is triple-stranded pearl necklaces. Because of her large volume, Paquita uses process costing to account for her production. In October, she had started some of the triple strands. She continued to work on those in November Costs and output figures are as follows:

1. Compute equivalent units for direct materials and conversion costs. Show physical units in the first column of your schedule.

2. Compute the total standard costs of pearls transferred out in November and the total standard costs of the November 30 inventory of work in process.

3. Compute the total November variances for direct materials and conversion costs.

Answer 1

Weighted-average and standard-costing method.

 

1.         

Solution Exhibit 17-41A computes the equivalent units of work done in November 2010 by Paquita’s Pearls Company for direct materials and conversion costs.

 

2. and 3.          

Solution Exhibit 17-41B summarizes total costs of the Paquita’s Pearls Company for November 30, 2010 and, using the standard cost per equivalent unit for direct materials and conversion costs, assigns these costs to units completed and transferred out and to units in ending work in process. The exhibit also summarizes the cost variances for direct materials and conversion costs for November 2010.

 

SOLUTION EXHIBIT 17-41A

Steps 1 and 2: Summarize Output in Physical Units and Compute Output in Equivalent Units;

Standard Costing Method of Process Costing,

Paquita’s Pearls Company for the month ended November 30, 2010.

 

SOLUTION EXHIBIT 17-41B

Steps 3, 4, and 5: Summarize Total Costs to Account For, Compute Cost per Equivalent Unit, and Assign Total Costs to Units Completed and to Units in Ending Work in Process;

Standard-Costing Method of Process Costing,

Paquita’s Pearls Company for the month ended November 30, 2010.

 

*Equivalent units to complete beginning work in process from Solution Exhibit 17-41A, Step 2.

†Equivalent units started and completed from Solution Exhibit 17-41A, Step 2.

#Equivalent units in ending work in process from Solution Exhibit 17-41A, Step 2.

Solution Exhibit 17-41A computes the equivalent units of work done in November 2010 by Paquita’s Pearls Company for direct materials and conversion costs.