P6-2 P6-9
P6-11 Week 6 Problems
P6-2:On December 1,
Stone Mountain Production Company had a work in process inventory of 1,200 units
that were complete as to materials and 50% complete as to labor and overhead.
December 1 costs follow:
Materials.........$6,000
Labor..............2,000
Overhead.........2,000
During December the
following transactions occurred:
a. Purchased materials
costing $50,000 on account.
b. Placed direct materials
costing $49,000 into production.
c. Incurred production
wages totaling $50,500.
d. Incurred overhead costs
for December:
Depreciation..........$20,000
Utilities.................28,000
(cash payment)
Salaries.................11,000
(cash payment)
Supplies..................2,000
(from inventory)
e. Applied overhead to
work in process at a predetermined rate of 125% of direct labor cost.
f. Completed and
transferred 10,000 units to Finished Goods. (Hint: You should first compute equivalent
units and unit costs.)
Stone Mountain uses an
average cost system. The ending inventory of work in process consisted of 1,000
units that were completed as to materials and 25% complete as to labor and
overhead.
Prepare the journal
entries to record the above information for the month of December.
P6-9:Mt. Orab Manufacturing
Company uses a process cost system. Its manufacturing operation is carried on
in two departments: Machining and Finishing. The Machining Department uses the
average cost method and the Finishing Department uses the FIFO cost method.
Materials are added in both departments at the beginning of operation, but the
added materials do not increase the number of units being processed. Units are
lost in the Manufacturing Department throughout the production process, and
inspection occurs at the end of the process. The lost units have no scrap value
and are considered to be normal loss.
Production statistics for July show the
following data:
Machining Finishing
Units in process, July 1 (all
material
40% of labor and overhead)………………………………. 20,000
Units in process, July 1 (all
material
80% of labor and overhead)……………………………….
40,000
Units started in
production……………………………………
140,000
Units completed and
transferred………………………….
100,000
Units transferred from
Machining………………………..
100,000
Units completed and transferred
to
Finished goods…………………………………………………… 100,000
Units in process, July 31 (all
material,
60% of labor and overhead)……………………………… 40,000
Units in process, July 31 (all
material,
40% of labor and overhead)………………………………
40,000
Units lost in
production……………………………………….. 20,000
Production Costs
Machining Finishing
Work in process, July 1:
Materials…………………………………………………………. $40,000 $110,000
Labor……………………………………………………………24,000 60,000
Factory overhead……………………………………………. 8,000 40,000
Costs in Machining
Department…………………….. 240,000
Costs incurred during month:
Materials…………………………………………………………280,000 240,000
Labor……………………………………………………………180,000 160,000
Materials…………………………………………………………60,000 80,000
Required:
Prepare a cost of
production summary for each department. (Round to three decimal places.)
P6-11Mega
Oil Company transports crude oil to its refinery where it is processed into
main products gasoline, kerosene, and diesel fuel, and by product base oil. The
base oil is sold at the split-off for $500,000 of annual revenue, and the joint
processing cost to the get the crude oil to split-off are $5,000,000.
Additional information includes:
Product
Barrels
produced Cost of
Split-off Selling Price Per
Barrel
Gasoline
500,000
$2,000,000
$25
Kerosene
100,000
500,000
30
Diesel
fuel
250,000
1,000,0000
20
Determine the allocation of joint
costs, using the relative sales value method, (Hint: Reduce the amount of the
joint costs to be allocated by the amount of the by-product Revenue)
TUTORIAL PREVIEW
Problem 6-2
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Journal Entries
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a.
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Materials
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50,000
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Accounts Payable
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50,000
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b.
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Work in Process
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9,000
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Materials
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49,000
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