Equivalent units and related costs; cost of production report; entries

Instructions

Chart of Accounts

Cost of Production Report

Journal

Final Questions

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Instructions

White Diamond Flour Company manufactures flour by a series of three processes, beginning with wheat grain being introduced in the Milling Department. From the Milling Department, the materials pass through the Sifting and Packaging departments, emerging as packaged refined flour.

The balance in the account Work in Process-Sifting Department was as follows on July 1:

The following costs were charged to Work in Process-Sifting Department during July:

During July, 15,200 units of flour were completed. Work in Process-Sifting Department on July 31 was 1,300 units, 4/5 completed.

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Chart of Accounts

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Cost of Production Report

1. Prepare a cost of production report for the Sifting Department for July. If an amount is zero, enter "0". Round your cost per unit answers to the nearest cent and final answers to the nearest dollar amount.

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Journal

2. Journalize the entries for costs transferred from Milling to Sifting and the costs transferred from Sifting to Packaging. Refer to the Chart of Accounts for correct wording of account titles. Use the date July 31 for all journal entries.

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JOURNAL

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Final Questions

3. Determine the increase or decrease in the cost per equivalent unit from June to July for direct materials and conversion costs. Round your answers to the nearest cent.

4. The cost of production report may be used as the basis for allocating product costs between     and   . The report can also be used to control costs by holding each department head responsible for the units entering production and the costs incurred in the department. Any differences in unit product costs from one month to another, such as those in part (3), can be studied carefully and any significant differences investigated.

(Cost of Trade Credit) Calculate the effective cost of the following trade credit terms
where payment is made on the net due date.
a. 3/10, net 30
b. 2/15, net 45
c. 3/15, net 60
d. 3/15, net 60

1. Do cost of debt and cost of equity increase monotonically when more debt is taken? Why?

2. Does WACC increase monotonically when more debt is taken? Why?

Total estimated cost of trip $45,500

Assuming that your estimated total cost will grow by 2.5% per year (due to inflation), demonstrate how you would compute the expected future cost of your dream vacation Suppose that you can invest money every month into a fee-free mutual fund and that this fund is expected to have a 10% nominal annual rate of return. Using your estimated future cost (including inflation) as future value, determine the amount of money you must save each month for the next 10 years (i.e., 120 months) to achieve your goal. Then, determine the monthly amount you must save if you delay your trip for an additional 5 years (that is, you will take the trip 15 years from today = 180 months) instead of 10 years from today. (Note: Be sure to add the 5 additional years of inflation to the estimated future cost.) Write an explanation for your calculations so the reader is completely clear on how you derived your required monthly deposits.

Please show formula, do not excel use formatting

5. A Cobb-Douglas production function will yield a cost function that has constant Marginal Cost a. True b. False ______

6. The MC of a firm will intersect the ATC at the minimum point of MC a. True b. False _____

7. For a cost-minimizing firm, it can continue to operate even if profits are negative. a. True b. False _____

8. What cost concept do you use to determine whether a firm will shut down? a. Marginal Cost b. Average Variable Cost c. Average Total Cost

Display and explain the average variable cost curve.

Display and explain marginal revenue, marginal cost and profit maximization.

Cost Information and FIFO

Gunnison Company had the following equivalent units schedule and cost information for its Sewing Department for the month of December:

Required:

1. Calculate the unit cost for December, using the FIFO method.
$  per equivalent unit

2. Calculate the cost of goods transferred out, calculate the cost of EWIP, and reconcile the costs assigned with the costs to account for.

3. What if you were asked for the unit cost from the month of November?

Calculate November's unit cost.
$  per equivalent unit

Cost Information and the Weighted Average Method

Morrison Company had the equivalent units schedule and cost information for its Sewing Department for the month of December, as shown below.

Required:

1. Calculate the unit cost for December, using the weighted average method. Do NOT round interim calculations and, if required, round your answer to the nearest cent.
$  per equivalent unit

2. Calculate the cost of goods transferred out, calculate the cost of EWIP, and reconcile the costs assigned with the costs to account for.

Cost of goods transferred out:

Reconciliation
Cost to account for:

3. What if you were asked to show that the weighted average unit cost for materials is the blend of the November unit materials cost and the December unit materials cost? The November unit materials cost is $3.47 ($66,000/19,000), and the December unit materials cost is $12.95 ($570,000/44,000). The equivalent units in BWIP are 19,000, and the FIFO equivalent units are 44,000. Calculate the weighted average unit materials cost using weights defined as the proportion of total units completed from each source (BWIP output and current output). Do NOT round interim calculations and, if required, round your answer to the nearest cent.
$  per unit

1. Entries for Costs in a Job Order Cost System

   Munson Co. uses a job order cost system. The following data summarize the operations related to production for July:

   1. Materials purchased on account, $732,780
   2. Materials requisitioned, $615,540, of which $80,020 was for general factory use
   3. Factory labor used, $754,760, of which $143,400 was indirect
   4. Other costs incurred on account for factory overhead, $175,870; selling expenses, $271,130; and administrative expenses, $161,210
   5. Prepaid expenses expired for factory overhead, $33,710; for selling expenses, $28,580; and for administrative expenses, $20,520
   6. Depreciation of office building was $98,190; of office equipment, $49,830; and of factory equipment, $33,710
   7. Factory overhead costs applied to jobs, $417,680
   8. Jobs completed, $967,270
   9. Cost of goods sold, $937,960

   Required:

   Journalize the entries to record the summarized operations. For a compound transaction, if an amount box does not require an entry, leave it blank.

   a. Materials purchased on account, $732,780.

   Entry	Description	Debit	Credit
   a.

   b. Materials requisitioned, $615,540, of which $80,020 was for general factory use.

   Entry	Description	Debit	Credit
   b.

   c. Factory labor used, $754,760, of which $143,400 was indirect.

   Entry	Description	Debit	Credit
   c.

   d. Other costs incurred on account for factory overhead, $175,870; selling expenses, $271,130; and administrative expenses, $161,210.

   Entry	Description	Debit	Credit
   d.

   e. Prepaid expenses expired for factory overhead, $33,710; for selling expenses, $28,580; and for administrative expenses, $20,520.

   Entry	Description	Debit	Credit
   e.

   f. Depreciation of office building was $98,190; of office equipment, $49,830; and of factory equipment, $33,710.

   Entry	Description	Debit	Credit
   f.

   g. Factory overhead costs applied to jobs, $417,680.

   Entry	Description	Debit	Credit
   g.

   h. Jobs completed, $967,270.

   Entry	Description	Debit	Credit
   h.

   i. Cost of goods sold, $937,960.

   Entry	Description	Debit	Credit
   i.