Question

Standard-costing method, assigning costs. Bucky’s Boxes makes boxes for moving. It sells its boxes to Home Depot U-Haul, and major national moving companies. Because of the simple nature of the production process, Bucky uses standard costing. The following information for July 2010 is available.

1. Compute equivalent units for each cost category.

2. Summarize total costs to account for and assign total costs to units completed and transferred a and out and to units in ending work in process.

Answer 1

Standard-costing method, assigning costs.

 

1.

SOLUTION EXHIBIT 17-23A

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

Standard Costing Method of Process Costing for Bucky’s Boxes for July 2010

 

·Degree of completion in this department: direct materials, 100%; conversion costs, 25%.

†512,000 physical units completed and transferred out minus 185,000 physical units completed and transferred out from beginning work-in-process inventory.

*Degree of completion in this department: direct materials, 100%; conversion costs, 80%.

 

2.

SOLUTION EXHIBIT 17-23B

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 for Bucky’s Boxes for July 2010

 

 

*Equivalent units to complete beginning work in process from Solution Exhibit 17-23A, Step 2.

†Equivalent units started and completed from Solution Exhibit 17-23A, Step 2.

#Equivalent units in ending work in process from Solution Exhibit 17-23A, Step 2.