Accounting Examples

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ACCT302 COST ACCOUNTING FINAL EXAM EXAMPLES

Demonstration Problem 1
Asani Corp. manufactures an electronic unit that plays a wide variety of video games on a television set. The units are entirely assembled in one production department. All manufacturing costs are incurred at a uniform rate throughout the production process. The following information is available for the month ended March:

|Beginning inventory of Work in Process | |$154,000 | |Manufacturing costs incurred during March: | | | | | | Direct Materials | |$360,000 | | | | Direct Labor | |90,000 | | | | Manufacturing Overhead | |135,000 | |585,000 | |Total costs to be accounted for | | | |$739,000 |

The beginning inventory of Work in Process consisted of 3,000 units, each of 80% complete as of the beginning of March. In addition to completing these units, the department started and completed another 7,000 units during March. And, also started work on an additional 2,000 units which were 70% complete at month-end.

Questions:
a- Compute the equivalent full units of production during March. b- Calculate total completed units during March.
c- Prepare a process cost summary for the Production Department covering the month of March d- Show the allocation of costs charged to department and calculate: 1) Ending Balance of Work in Process Inventory Account 2) Unit Cost

3) Cost of Finished Goods Manufactured

Solution to Demonstration Problem

a- Computation of Equivalent Full Units – Manufacturing Costs

| | | | |PORTION | |EQUIVALENT | | | |UNITS | |COMPLETED | |FULL UNITS | | | | | |IN MARCH | |PRODUCED | | | | | | | | | |Units in process at the beginning of March | |3,000 | |20% | |600 | |Units started and completed during March | |7,000 | |100% | |7,000 | |Units in process at the end of March | |2,000 | |70% | |1,400 | |Equivalent full units of production during March | |9,000 |

b- Total completed units during March: 3.000 + 7.000 = 10.000 units

c - ASANI CORP. Process Cost Summary – Production Department
Month Ended March 31

| | |TOTAL |/ |EQUIVALENT |= |UNIT | | | |COSTS | |FULL UNITS | |COSTS | |Costs charged to the department and unit costs: | | | | | | | |Work in process inventory, March 1 | |$ 154,000 | | | | | |Manufacturing costs charged to the department | |...
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