Overview
Instructions:
1.As a group, complete the following activities in good form. Use excel or word only. Provide all supporting calculations to show how you arrived at your numbers
2.Add only the names of group members present at the residency.
3.Submit only one copy of your completed work. DO NOT send your work to me via email.
- Due: No later than Residency Day-1 at 9:00 PM EST. Please note that your professor has the right to change the due date of this assignment.
#A: Schedules of Cost of Goods Manufactured and Cost of Goods Sold; Income Statement
ABC Corporation has provided the following data for the month of December:
Prior December 31 | Current December 31 | |
Purchases of materials | $ 182,500 | |
Direct labor | 122,750 | |
Indirect labor | 48,500 | |
Factory insurance | 8,700 | |
Depreciation—factory | 34,750 | |
Repairs and maintenance—factory | 13,100 | |
Marketing expenses | 146,450 | |
General and administrative expenses | 87,050 | |
Materials inventory | $26,500 | 60,250 |
Work-in-Process inventory | 14,750 | 17,400 |
Finished Goods inventory | 17,700 | 24,400 |
Sales in the current year were $612,000.
Required:
a.Prepare a Schedule of Cost of Goods Manufactured in good form for December.
b.Prepare an Income Statement in good form for December.
c.As a manager, how would you use the information in the schedule of goods manufactured?
Prepare a schedule of cost of goods manufactured for the current year for ABC Company.
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Prepare an income statement for the current year for ABC Company.
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#B: Application of Job Order Costing
ABC firm has the following overhead budget for the year:
Overhead | |
Indirect materials | $ 410,000 |
Indirect labor | 1,765,000 |
Depreciation—Building | 315,000 |
Depreciation—Furniture | 47,000 |
Utilities | 340,000 |
Insurance | 45,000 |
Property taxes | 59,000 |
Other expenses | 157,000 |
Total | $3,138,000 |
The firm estimates total direct labor cost for the year to be $1,961,250. The firm uses direct labor cost as the cost driver to apply overhead to clients.
During January, the firm worked for many clients; data for two of them follow:
Job-1 account | |
Direct labor | $3,600 |
Job-2 account | |
Direct labor | $9,600 |
Required: To earn full or partial marks, show all calculations in good form.
1. Compute the firm’s predetermined overhead rate.
2. Compute the amount of overhead to be charged to the Job-1 and Job-2 accounts using the predetermined overhead rate calculated in requirement 1.
3. Compute total job cost for Job-1 and Job-2 accounts.
4. Under what conditions will it be most appropriate to use job order cost. Be specific and support your comments with appropriate references using APA.
#C: Process Costing using Weighted Average
Abby, Incorporated produces a single model of a popular cell phone in large quantities. A single cell phone moves through two departments, assembly and testing. The manufacturing costs in the assembly department during March follow:
Direct materials | $ 108,000 |
Conversion costs | 98,000 |
$ 206,000 |
The assembly department has no beginning Work-in-Process Inventory. During the month, it started 20,000 cell phones, but only 15,000 were fully completed and transferred to the testing department. All parts had been made and placed in the remaining 5,000 cell phones, but only 50% of the conversion had been completed. The company uses the weighted-average method of process costing to accumulate product costs.
Required: To earn full or partial marks, show all calculations in good form.
1. Compute the equivalent units and costs per equivalent unit for March in the assembly department.
2. Compute the cost of units completed and transferred to the testing department.
3. Compute the cost of the ending Work-in-Process.
4. Under what conditions will process costing be appropriate to use? Support your response with appropriate reference. Use APA.
Production Quantity Information | Equivalent Units | |||
Physical Units | Completion Percentage | Direct Materials | Conversion Costs | |
Input: | ||||
Beginning WIP inventory: | ||||
Direct materials | ||||
Conversion cost | ||||
Units started during March | ||||
Units to account for | ||||
Output: | ||||
Units completed | ||||
Ending WIP inventory: | ||||
Direct materials | ||||
Conversion cost | ||||
Units accounted for | ||||
Equivalent units produced |
Unit Cost Determination | |||
Direct Materials | Conversion | Total | |
Total manufacturing cost (numerator of calculation): | |||
Beginning WIP inventory | |||
Manufacturing costs added in current month | |||
Total cost | |||
Divide by number of equivalent units produced | |||
Cost per equivalent unit |
Cost Assignment | |||
Units Completed | Units in Ending WIP Inventory | Total | |
Goods completed and transferred out (EU × Unit Cost) | |||
Units in ending WIP inventory: | |||
Direct materials component (EU × Unit Cost) | |||
Conversion costs (EU x Unit Cost) | |||
Total manufacturing costs accounted for | |||
Beginning WIP inventory | |||
Manufacturing costs added during the month | |||
Total manufacturing costs to account for |
#D: Process Costing using First-in-First Out (FIFO)
The James Company processes wood pulp for manufacturing various paper products. The company employs a process costing system for its manufacturing operations. All direct materials are added at the beginning of the process, and conversion costs are incurred uniformly throughout the process. This is the company’s production schedule for May:
Tons of Pulp | Percent Completed | ||
Materials | Conversion | ||
Work-in-Process Inventory, May 1 | 5,000 | 100% | 50% |
Started during May | 18,000 | ||
Units to account for | 23,000 | ||
Units from beginning Work-in-Process, which were completed and transferred out during May | 5,000 | ||
Started and completed during May | 10,800 | ||
Work-in-Process Inventory, May 31 | 7,200 | 100% | 50% |
Total units accounted for | 23,000 |
The following cost data are available:
Work-in-Process Inventory, May 1 | |
Direct materials | $ 82,100 |
Conversion | 61,342 |
Costs incurred during May | |
Direct materials | 283,140 |
Conversion | 358,280 |
Required: To earn full or partial marks, show all calculations and tables in good form.
1. Calculate the equivalent units of direct materials and conversion during May. Use the FIFO method.
2. Calculate the cost per equivalent unit for both direct materials and conversion during May. Use the FIFO method.
3. Cost of units completed and transferred out.
4. Cost of ending work-in progress.
5. As a manager, discuss the circumstances when FIFO may be most useful in product costing. Support your response with appropriate reference. Use APA.
Physical Units | Completion Percentage | FIFO Equivalent Units | ||
Direct Materials | Conversion | |||
Beginning WIP | ||||
Direct materials | ||||
Conversion | ||||
Units started | ||||
Total to account for | ||||
Units finished | ||||
Ending WIP | ||||
Direct materials | ||||
Conversion | ||||
Total accounted for | ||||
Total equivalent units |
Determine Total Costs | Total | Direct Materials | Conversion |
Current costs | |||
FIFO cost per EU |
Cost Assigned-FIFO | Units Completed and Transferred Out | Units in Ending WIP Inventory | Total |
Finished goods (15,800 units) | |||
Prior period costs in Beginning WIP | |||
Current cost to complete Beginning WIP | |||
Material (- Equivalent units) | |||
Conversion (2,500 Equivalent units) | |||
Units started and finish (10,800 Equivalent units) | |||
Total | |||
Ending WIP (7,200 units) | |||
Material | |||
Conversion | |||
Total manufacturing costs accounted for |