Problem 21-3A Thakin Industries Inc. manufactures dorm furniture in separate processes. In each process, materials are entered at the beginning, and conversion costs are incurred uniformly. Production and cost data for the first process in making two products in two different manufacturing plants are as follows. Cutting Department Production Data—July Plant 1 T12-Tables Plant 2 C10-Chairs Work in process units, July 1 0 0 Units started into production 21,800 17,440 Work in process units, July 31 3,270 545 Work in process percent complete 60 80 Cost Data—July Work in process, July 1 $0 $0 Materials 414,200 313,920 Labor 255,496 119,900 Overhead 113,360 114,232 Total $783,056 $548,052 For each plant compute the physical units of production. T12 Tables C10 Chairs Units to be accounted for Link to Text Link to Text For each plant compute equivalent units of production for materials and for conversion costs. Materials Conversion Costs T12 Tables C10 Chairs Link to Text Link to Text For each plant determine the unit costs of production. (Round unit costs to 2 decimal places, e.g. 5.25.) Materials Conversion Costs Total Costs Unit costs-T12 Tables $ $ $ Unit costs-C10 Chairs $ $ $ Link to Text Link to Text For each plant show the assignment of costs to units transferred out and in process. T12 Tables Costs accounted for: Transferred out $ Work in process Materials $ Conversion costs Total costs $ C10 Chairs Costs accounted for: Transferred out $ Work in process Materials $ Conversion costs Total costs $ Link to Text Link to Text Prepare the production cost report for Plant 1 for July 2017. THAKIN INDUSTRIES INC. Cutting Department—Plant 1 Production Cost Report For the Month Ended July 31, 2017 Equivalent Units Quantities Physical Units Materials Conversion Costs Units to be accounted for Work in process, July 1 Started into production Total units Units accounted for Transferred out Work in process, July 31 Total units Costs Materials Conversion Costs Total Unit costs Total Costs $ $ $ Equivalent units Unit costs $ $ $ Costs to be accounted for Work in process, July 1 $ Started into production Total costs $ Cost Reconciliation Schedule Costs accounted for Transferred out $ Work in process, July 31 Materials $ Conversion costs Total costs $ Link to Text Link to Text Question Attempts: Unlimited Save for later Submit Answer

1. Perpetual Inventory Using A method of inventory costing based on the assumption that the most recent merchandise inventory costs should be charged against revenue.LIFO

   Beginning inventory, purchases, and sales data for prepaid cell phones for May are as follows:

   Inventory		Purchases		Sales
   May 1	2,900 units at $32	May 10	1,450 units at $34	May 12	2,030 units
   		May 20	1,305 units at $36	May 14	1,740 units
   				May 31	870 units

   a. Assuming that the perpetual inventory system is used, costing by the LIFO method, determine the cost of merchandise sold for each sale and the inventory balance after each sale, presenting the data in the form illustrated in Exhibit 4. Under LIFO, if units are in inventory at two different costs, enter the units with the HIGHER unit cost first in the Cost of Merchandise Sold Unit Cost column and LOWER unit cost first in the Inventory Unit Cost column.

   Schedule of Cost of Merchandise Sold
   LIFO Method
   Prepaid Cell Phones
   Date	Quantity Purchased	Purchases Unit Cost	Purchases Total Cost	Quantity Sold	Cost of Merchandise Sold Unit Cost	Cost of Merchandise Sold Total Cost	Inventory Quantity	Inventory Unit Cost	Inventory Total Cost
   May 1								$	$
   May 10		$	$
   May 12					$	$
   May 14
   May 20
   May 31
   May 31	Balances					$			$

   b. Based upon the preceding data, would you expect the inventory to be higher or lower using the The method of inventory costing based on the assumption that the costs of merchandise sold should be charged against revenue in the order in which the costs were incurred.first-in, first-out method?
   

   • Higher
   • Lower

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Cooperative San José of southern Sonora state in Mexico makes a unique syrup using cane sugar and local herbs. The syrup is sold in small bottles and is prized as a flavoring for drinks and for use in desserts. The bottles are sold for $12 each. The first stage in the production process is carried out in the Mixing Department, which removes foreign matter from the raw materials and mixes them in the proper proportions in large vats. The company uses the weighted-average method in its process costing system.

A hastily prepared report for the Mixing Department for April appears below:

Management would like some additional information about Cooperative San José’s operations.

Required:

1. What were the Mixing Department's equivalent units of production for materials and conversion for April?

2. What were the Mixing Department's cost per equivalent unit for materials and conversion for April? The beginning inventory consisted of the following costs: materials, $10,244; and conversion cost, $6,188. The costs added during the month consisted of: materials, $73,084; and conversion cost, $45,559.

3. How many of the units transferred out of the Mixing Department in April were started and completed during that month?

4. The manager of the Mixing Department stated, “Materials prices jumped from about $1.80 per unit in March to $2.30 per unit in April, but due to good cost control I was able to hold our materials cost to less than $2.30 per unit for the month.” Should this manager be rewarded for good cost control?

Cooperative San José of southern Sonora state in Mexico makes a unique syrup using cane sugar and local herbs. The syrup is sold in small bottles and is prized as a flavoring for drinks and for use in desserts. The bottles are sold for $12 each. The first stage in the production process is carried out in the Mixing Department, which removes foreign matter from the raw materials and mixes them in the proper proportions in large vats. The company uses the weighted-average method in its process costing system.

A hastily prepared report for the Mixing Department for April appears below:

Management would like some additional information about Cooperative San José’s operations.

Required:

1. What were the Mixing Department's equivalent units of production for materials and conversion for April?

2. What were the Mixing Department's cost per equivalent unit for materials and conversion for April? The beginning inventory consisted of the following costs: materials, $23,460; and conversion cost, $12,305. The costs added during the month consisted of: materials, $83,164; and conversion cost, $46,648.

3. How many of the units transferred out of the Mixing Department in April were started and completed during that month?

4. The manager of the Mixing Department stated, “Materials prices jumped from about $1.80 per unit in March to $2.30 per unit in April, but due to good cost control I was able to hold our materials cost to less than $2.30 per unit for the month.” Should this manager be rewarded for good cost control?

Equivalent Units and Related Costs; Cost of Production Report; Entries Wilmington Chemical Company manufactures specialty chemicals by a series of three processes, all materials being introduced in the Distilling Department. From the Distilling Department, the materials pass through the Reaction and Filling departments, emerging as finished chemicals. The balance in the account Work in Process—Filling was as follows on December 1, 2016: Work in Process—Filling Department (3,800 units, 70% completed): Direct materials (3,800 x $16.3) $61,940 Conversion (3,800 x 70% x $10.6) 28,196 $90,136 The following costs were charged to Work in Process—Filling during December: Direct materials transferred from Reaction Department: 49,000 units at $16 a unit $784,000 Direct labor 262,380 Factory overhead 252,100 During December, 48,600 units of specialty chemicals were completed. Work in Process—Filling Department on December 31 was 4,200 units, 30% completed.

Required:

1. Prepare a cost of production report for the Filling Department for December. If an amount is zero, enter "0". If required, round your cost per equivalent unit answers to two decimal places.

Wilmington Chemical Company Cost of Production Report-Filling Department For the Month Ended December 31, 2016 Unit Information Units charged to production: Inventory in process, December 1 Received from Reaction Department Total units accounted for by the Filling Department Units to be assigned costs: Equivalent Units Whole Units Direct Materials Conversion Inventory in process, December 1 Started and completed in December Transferred to finished goods in December Inventory in process, December 31 Total units to be assigned costs Cost Information Costs per equivalent unit: Direct Materials Conversion Total costs for December in Filling Department $ $ Total equivalent units Cost per equivalent unit $ $ Costs charged to production: Direct Materials Conversion Total Inventory in process, December 1 $ Costs incurred in December Total costs accounted for by the Filling Department $ Cost allocated to completed and partially completed units: Inventory in process, December 1 balance $ To complete inventory in process, December 1 $ Cost of completed December 1 work in process $ Started and completed in December $ Transferred to finished goods in December $ Inventory in process, December 31 Total costs assigned by the Filling Department $

2. Journalize the entries for (1) costs transferred from Reaction to Filling and (2) the cost transferred from Filling to Finished Goods. (1) Work in Process-Filling Department Work in Process-Reaction Department (2) Finished Goods Work in Process-Filling Department

3. Determine the increase or decrease in the cost per equivalent unit from November to December for direct materials and conversion costs. If required, round your answers to two decimal places. Increase or Decrease Amount Change in direct materials cost per equivalent unit Decrease $ Change in conversion cost per equivalent unit Increase $

4. The cost of production report may be used as the basis for allocating product costs between Work in Process and Finished Goods . 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. Feedback

Equivalent Units and Related Costs; Cost of Production Report; Entries

Dover Chemical Company manufactures specialty chemicals by a series of three processes, all materials being introduced in the Distilling Department. From the Distilling Department, the materials pass through the Reaction and Filling departments, emerging as finished chemicals.

The balance in the account Work in Process—Filling was as follows on January 1:

The following costs were charged to Work in Process—Filling during January:

During January, 56,300 units of specialty chemicals were completed. Work in Process—Filling Department on January 31 was 4,900 units, 90% completed.

Required:

1. Prepare a cost of production report for the Filling Department for January. If an amount is zero, enter "0". If required, round your cost per equivalent unit answers to two decimal places.

2. Journalize the entries for (1) costs transferred from Reaction to Filling and (2) the cost transferred from Filling to Finished Goods.

3. Determine the increase or decrease in the cost per equivalent unit from November to January for direct materials and conversion costs. If required, round your answers to two decimal places.

4. The cost of production report may be used as the basis for allocating product costs between (A or B)_______ and (A or B)_______ . 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.

A. Direct Materials

B. Work in Process