Chapter 16: Problem Set B

Here’s a detailed guide on how to approach each of these problems involving weighted average and FIFO process costing methods. This will help you compute equivalent units, costs per equivalent unit, assign costs, and prepare necessary journal entries. Problem 16-1B 1. Compute Equivalent Units of Production (EUP): o Direct Materials: Since materials are added at the beginning of the process, EUP for direct materials is equal to the total units started. o Conversion: For conversion, calculate EUP based on the units transferred out and the percentage completion of ending WIP. 2. Cost per Equivalent Unit: o Direct Materials: Divide the total direct material costs by EUP for direct materials. o Conversion: Divide the total conversion costs by EUP for conversion. 3. Assign Costs: o Units Transferred Out: EUP × cost per equivalent unit for both direct materials and conversion. o Ending Work in Process: EUP for ending WIP × cost per equivalent unit. 4. Memo to Plant Manager: o Discuss the financial impact of the error in completion percentage for conversion costs on net income and inventory valuation, explaining that a higher percentage of completion would increase the costs assigned to units in WIP and decrease costs transferred out. Problem 16-2B (Mixing Department Production Cost Report) 1. Mixing Department’s Production Cost Report: o Prepare the report detailing the calculation of EUP, cost per equivalent unit for direct materials and conversion costs, and the assignment of total costs to units transferred out and in ending inventory. 2. Journal Entry: o Debit Work in Process—Baking and credit Work in Process— Mixing for the cost of completed units transferred. Problem 16-3B (Cutting Department Production Cost Report) 1. Cutting Department’s Production Cost Report: o Calculate EUP for both direct materials and conversion costs. o Compute the cost per equivalent unit for both and allocate costs accordingly. 2. Journal Entry: o Transfer costs by debiting Work in Process—Assembly and crediting Work in Process—Cutting. Problem 16-4BA (FIFO Production Cost Report) 1. Cutting Department’s Production Cost Report (FIFO): o Calculate EUP for both direct materials and conversion. o Determine cost per EUP for both direct materials and conversion costs, considering FIFO methodology. o Round costs per EUP to three decimal places. 2. Journal Entry: o Debit Work in Process—Assembly and credit Work in Process— Cutting for the transferred costs. Problem 16-5B (Production Cost Flow and Journal Entries) 1. Compute Production Costs Transferred: o Determine production costs transferred from Mixing to Blending and then from Blending to finished goods. o Use the total production costs in each department, subtracting ending inventory to find amounts transferred out. 2. March 31 Journal Entries: o Record transactions for raw materials purchases, labor costs, overhead applied, and transfers between departments. Include entries for sales and COGS. o Example: Debit Raw Materials Inventory and credit Accounts Payable for purchases. Problem 16-6BA (Cost per Equivalent Unit) 1. Compute EUP for Direct Materials and Conversion: o Calculate the equivalent units for direct materials and conversion based on provided data. 2. Cost per Equivalent Unit: Determine costs per unit for direct materials and conversion by dividing total costs by EUP. 3. Assign Costs: o Allocate costs to units transferred out and remaining WIP based on calculated costs per equivalent unit. o Problem 16-7BA (Cutting Department for Organic Juice) 1. Compute EUP for Direct Materials and Conversion: o Use the percentage of completion for WIP to calculate equivalent units. 2. Cost per Equivalent Unit: o Calculate costs for direct materials and conversion based on total costs divided by EUP. 3. Assign Costs: o Allocate to units transferred out and units in ending WIP at period-end based on calculated costs per equivalent unit. These guidelines will help you systematically approach each problem, ensuring you cover all necessary calculations and entries. If you need specific examples or computations for any part, feel free to ask!