Ch 3

Problem A The following data refer to a production center of Sipp-Fizz, a soft drink bottler:

Work in process inventory, August 1, 4,000 units including costs of:

Direct materials $12,000

Direct labor $6,120

Manufacturing overhead applied $ 8,000

Units started in August12,500 units

Costs incurred in August:

Direct materials $ 36,000

Direct labor $ 48,000

Manufacturing overhead applied $ 60,000

The beginning inventory was 100% complete for materials and 50% complete for conversion costs. The ending inventory on August 31 consisted of 6,000 units (100% complete for materials, 70% complete for conversion costs meaning direct labor and overhead).

Required:

a.Prepare the journal entries to record the costs incurred in August.

b.Show the physical flow of units.

c.Calculate the equivalent units of production for materials, direct labor, and overhead costs using the weighted average method.

Problem D A bottling company bottles soft drinks using a process cost system. Following are cost and production data for the mixing department for June:

Work in Process, June 1:56,000 units (65% complete for materials, 80% complete for conversion)

Direct material cost $11,620

Conversion cost $16,240

Added during June:133,000 units

Direct material cost $29,960

Conversion cost $41,720

Work in Process, June 30:63,000 units

(100% complete for materials, 30% complete for conversion)

Prepare a production cost report for the month ended June 30 using the weighted average method.Provide the journal entry to record transferring completed units to finished goods.

Critical Thinking:Explain why we use equivalent units in Process Costing.