Chapter 16: Problem Set A

Here’s a breakdown of how to approach each problem set, using the weighted average or FIFO process costing methods to calculate costs and prepare journal entries. Problem 16-1A 1. Compute Equivalent Units of Production (EUP): o Direct materials: Since materials are added at the beginning, use total units started. o Conversion: For units in ending WIP, use the percentage of completion. 2. Cost per Equivalent Unit (EUP): o Divide total costs (beginning inventory + costs added this period) by EUP for direct materials and conversion. 3. Assign Costs: o Units transferred out = EUP × cost per EUP. o Units in ending WIP = EUP for ending WIP × cost per EUP. Problem 16-2A (Production Cost Report for Cutting Department) 1. Cutting Department’s Production Cost Report: o EUP calculation: Separate for direct materials (100% added at the start) and conversion costs (applied throughout). o Cost per EUP: Divide total costs by EUP. o Assign Costs: Split costs between units transferred out and ending WIP inventory. 2. Journal Entry: o Debit Work in Process—Assembly and credit Work in Process— Cutting for the cost of units transferred. Problem 16-3A (Production Cost Report for Forming Department) 1. Forming Department’s Production Cost Report: o Use weighted average to calculate EUP, cost per EUP, and assigned costs to transferred units and ending WIP. 2. Journal Entry: o Debit Work in Process—Assembly and credit Work in Process— Forming. Problem 16-4AA (FIFO Cost Report for Forming Department) 1. Forming Department’s Production Cost Report (FIFO): o FIFO considers only current period costs. Separate costs for beginning WIP and newly started units, compute EUP, cost per EUP, and assign costs accordingly. 2. Journal Entry: o Transfer costs with a debit to Work in Process—Assembly and credit to Work in Process—Forming. Problem 16-5A (Production Cost Flow and Journal Entries) 1. Compute Transferred Production Costs: o For Cutting to Stitching and Stitching to finished goods, use EUP to calculate total production costs, then subtract ending inventory costs to determine amounts transferred. 2. Journal Entries for May Activities: o Purchases, materials, and labor: Debit respective inventory or expense accounts and credit Accounts Payable or Wages Payable. o Overhead and transfers: Apply based on the predetermined rate, then record transfers between departments. o Sales and Cost of Goods Sold: Debit Cost of Goods Sold and credit Finished Goods Inventory, then record revenue for sales. Problem 16-6AA (FIFO Costing for Cutting Department) 1. Compute EUP (FIFO): o Direct materials: Units started this period and completed. o Conversion: Units in beginning WIP completed + started and completed units. 2. Cost per EUP (FIFO): o Calculate separately for beginning inventory and costs incurred this period, then assign based on EUP. 3. Assign Costs: o Use FIFO to assign costs to units transferred and units in ending WIP. Problem 16-7AA (FIFO Costing for Roasting Department) 1. Compute EUP (FIFO): Separate for direct materials and conversion, considering the beginning inventory and units completed within the period. 2. Cost per EUP (FIFO): o Divide costs added this period by EUP to calculate unit costs. 3. Assign Costs: o Allocate to units transferred and ending WIP using calculated cost per EUP. o These steps will allow you to accurately compute equivalent units, unit costs, and journal entries, covering each costing requirement. Let me know if you’d like to see a specific example worked out for any of these!