Chapter 14 Exercises

Step-by-Step Exercises

First, calculate total units, how they started, and how they ended up.

Question 1

Jovi Corporation began work on 2,000 units in August. Normal spoilage is 10% of good units. Altogether, 250 units were spoiled. Work in process was as follows:

Calculate total units, how they started, and how they ended up.

Question 2

Sheng Company normally experiences a spoilage rate of 5% in their Assembly department. This month, 1,000 units were spoiled and 9,000 units were transferred to the next department. Work on 1,200 of those units started in the prior period. This period, work started on 12,800 units.

Calculate total units, how they started, and how they ended up.

Question 3

Jergis and Daughters produces goods in three departments: Cutting, Assembly, and Packaging. This period, 4,000 units were transferred from Cutting to Assembly, and 4,500 were transferred from Assembly to Packaging. The Assembly department worked on a total of 5,000 units, 200 of which ended up spoiled. Normal spoilage in the Assembly department is 2% of good output.

Calculate total units, how they started, and how they ended up for Assembly.

Next, calculate equivalent units for each kind of cost.

Question 4

Sharma Corporation adds direct materials at the beginning of their single production process. Conversion costs are applied evenly throughout the production process. Beginning work-in-process inventory was 40% complete, and ending work-in-process inventory was 70% complete. Units worked on were as follows:

Calculate equivalent units for each applicable cost.

Question 5

Bobbly Corporation manufactures goods in two departments: Molding and Assembly. All materials are added in the Molding department; the Assembly department just assembles the parts, with work done evenly throughout the production process. Beginning work-in-process inventory for Assembly was 25% complete, and ending work-in-process inventory was 60% complete. Units worked on were as follows:

Calculate equivalent units for each applicable cost.

Question 6

Willow Company manufactures goods in three departments: Mixing, Baking, and Packaging. In the Baking department, 40% of direct materials are added at the beginning of the process, and the rest are added halfway through the process. Conversion costs are incurred evenly throughout the process. Beginning work-in-process inventory for Baking was 30% complete, and ending work-in-process inventory was 25% complete. Units worked on were as follows:

Calculate equivalent units for each applicable cost.

Next, calculate cost per equivalent unit.

Question 7

The Assembly department of Moly Corporation had prior period costs of $50,000 ($30,000 in direct materials, $10,000 in conversion costs, and $10,000 in transferred-in costs). During the period, $100,000 was spent on direct materials, and $300,000 was spent on conversion costs. Goods that were transferred into the department had cost the previous department $200,000 to manufacture. Total equivalent units were as follows:

Calculate cost per equivalent unit.

Question 8

In June, the Finishing department of Carbin Company had ending work-in-process inventory worth $400,000 ($100,000 in transferred-in costs, $180,000 in direct materials costs, and $120,000 in conversion costs). Goods costing $1,000,000 to previous departments were transferred to the department during July, when $500,000 in direct materials and $420,000 in conversion costs were added. Total equivalent units for July were as follows:

Calculate cost per equivalent unit.

Question 9

Production begins in the Mixing department at Josephson, Inc., which spent $5,000 on direct materials and $1,000 on conversion costs last period for goods they are finishing this period. During this period, the Mixing department incurred $20,000 in direct materials costs and $19,000 in conversion costs. Total equivalent units were as follows:

Next, Calculate cost per equivalent unit.

Finally, find the value of units completed and transferred out, ending work-in-process inventory, and the loss caused by abnormal spoilage.

Question 10

Equivalent units, beginning work-in-process inventory costs, and cost per EU were as follows for the Assembly department:

Calculate the value of units completed and transferred out, ending work-in-process inventory, and the loss caused by abnormal spoilage.

Question 11

Equivalent units, beginning work-in-process inventory costs, and cost per EU were as follows for the Cutting department:

Calculate the value of units completed and transferred out, ending work-in-process inventory, and the loss caused by abnormal spoilage.

Question 12

Equivalent units, beginning work-in-process inventory costs, and cost per EU were as follows for the Finishing department, which had no spoilage this period:

Calculate the value of units completed and transferred out, ending work-in-process inventory, and the loss caused by abnormal spoilage.

Complete Problems

Question 13

Mercury Manufacturing has three production departments that work on units in the following order: Molding, Assembly, and then Finishing. The Molding department began the month of June with 3,000 units in work-in-process inventory (20% complete) and began work on an additional 15,000 units during the month. At the end of the month, 4,000 units were in work-in-process inventory (40% complete), and 450 units had to be thrown out because they were spoiled. Spoilage is normally 3% of good output. In the Molding department, all direct materials are added at the beginning of the process, and conversion costs are applied evenly throughout the process. The value of beginning work-in-process inventory was $15,240, $9,000 of which was direct materials cost. During the period, $72,000 in direct materials costs and $51,480 in conversion costs were added.

Find the value of units completed and transferred out, ending work-in-process inventory, and the loss caused by abnormal spoilage for the Molding department.

Question 14

In July, the Assembly department of Mercury Manufacturing began the month with 1,200 units in work-in-process inventory (75% complete). During the month, 14,000 units were transferred in, with costs of $114,000 attached to them from the Molding department. During the month, 14,200 units were completed and transferred out, and 800 were spoiled. Spoilage is normally 5% of good output. Ending work-in-process was 30% complete. In the Assembly department, all direct materials are added when the product is 50% complete, and conversion costs are applied evenly throughout the process. The value of beginning work-in-process inventory was $18,880 ($7,600 in costs transferred from Molding, $3,750 in direct materials costs, and $7,530 in conversion costs). During July, $15,000 in direct materials costs and $33,885 in conversion costs were incurred in the Assembly department.

Find the value of units completed and transferred out, ending work-in-process inventory, and the loss caused by abnormal spoilage for the Assembly department.

Question 15

The Finishing department at Mercury Manufacturing applies a high polish to all units and packages them. Thus, the only material added is the packaging, which is added at the very end of the process. Conversion costs are incurred evenly throughout the process. In August, the Finishing department had 2,000 units in beginning work-in-process inventory (50% complete, costing $8,500 in transferred-in costs, $1,450 in direct materials costs, and $16,250 in conversion costs), and 2,500 units in ending work-in-process inventory (70% complete). During August, 15,000 units were transferred from Assembly, with $195,500 in costs attached to them. The Finishing department spent $5,800 on direct materials and $130,000 on conversion costs in August. Two hundred units were spoiled during the month; the Finishing department has a normal spoilage rate of 1% of good units.

Find the value of units completed and transferred out, ending work-in-process inventory, and the loss caused by abnormal spoilage for the Finishing department.

Question 16

Lovelace Co. manufactures computer chips in four steps: Wafer Processing, Die Preparation, Integrated Circuit Packaging, and Integrated Circuit Testing. In the Integrated Circuit Packaging process, individual silicon dies are mounted onto substrates, bonded, and encapsulated to prepare them for use in electronic devices. Direct materials include substrates, bonding wires, and encapsulation plastics.

In March, the company’s Integrated Circuit Packaging department began the month with 2,000 units in beginning work-in-process inventory. These units were 60% complete with respect to conversion costs. During the month, the department started an additional 10,000 units into production. By the end of the month, 9,500 units had been completed and transferred to the next department. The ending work-in-process inventory consisted of 2,300 units, which were 100% complete with respect to materials and 40% complete with respect to conversion. Lovelace Co. considers 3% of good units completed to be a normal level of spoilage.

The cost of the beginning work-in-process inventory included $5,000 in transferred-in costs, $2,800 in direct materials, and $3,420 in conversion costs. During March, the department incurred an additional $25,000 in transferred-in costs, $14,000 in direct materials costs, and $19,000 in conversion costs.

Find the value of units completed and transferred out, ending work-in-process inventory, and the loss caused by abnormal spoilage for the Integrated Circuit Packaging department.

Question 17

Ezersky, Inc. is a small company that manufactures high-quality jigsaw puzzles, known for their intricate cuts and vibrant imagery. The production process consists of four sequential departments: Printing, Mounting, Die Cutting, and Packaging. In the Die Cutting department, mounted puzzle sheets are cut into interlocking pieces using custom steel die presses. Some direct materials, including alignment guides and protective coatings (60% of materials), are added at the start of the process, while reinforcement layers and packaging inserts (40% of materials) are added at the end of the process to improve durability and support final packaging. At the end of April, work-in-process inventory was 70% complete. Direct materials used during the period cost $27,180, while conversion costs were $34,800. The following occurred in April:

• Units in beginning WIP: 1,800 units (30% complete) with transferred in costs of $6,480, direct materials costs of $3,420, and conversion costs of $4,800 attached
• Units started during April: 12,000, with costs of $43,200 attached by the printing and mounting department
• Units completed and transferred out: 11,000
• Spoiled units: 500
• Normal spoilage rate: 3%

Question 18

Segado, Inc. mass-produces goods in three processes. In the second process, direct materials are added at the beginning, conversion costs are incurred evenly throughout the process, and the normal spoilage rate is 5%. This period, the 90,000 units transferred into the second process had costs of $450,000 attached to them from the first process. The 20,000 units in beginning work-in-process inventory (30% complete) were worth $280,000 ($100,000 in transferred-in costs, $120,000 in conversion costs, and $60,000 in direct materials costs). During the period, the second process cost $303,000 for direct materials and $402,720 for conversion. At the end of the period, 85,000 units had been transferred on to the third process, and 22,000 units from process 2 were only 40% complete.

Find the value of units completed and transferred out, ending work-in-process inventory, and the loss caused by abnormal spoilage for the second process.

Assignment Problem

Note: Check figures are not provided for assignment problems so your instructor may use them for homework.

Question 19

Albutte, Inc. has two departments: Production and Finishing. In the Finishing department, direct materials are added at the beginning of the process, and conversion costs are incurred evenly throughout the process. The Finishing department began December with 2,000 units in work-in-process inventory that were 40% complete and were valued at $10,000 ($8,000 in transferred-in costs, $500 in direct materials, and $1,500 in conversion costs). During December, the Finishing department incurred $5,500 in direct materials costs and $12,500 in conversion costs. Eighteen thousand units costing $72,000 in the Production department were transferred into Finishing during the month. Fifteen thousand units were finished during December, 500 of which were spoiled (spoilage is normally 3% of good units). All unfinished units were 50% complete.

Find the value of units completed and transferred out, ending work-in-process inventory, and the loss caused by abnormal spoilage for the Finishing department.

Challenge Problem

Question 20

Mitsi Corporation has three production departments, which reported the following:

Find the value of units completed and transferred out, ending work-in-process inventory, and the loss caused by abnormal spoilage for each department in April, May, and June.

Pre-Assessment Problem

Use this problem to check whether you are fully prepared for the assessment. Work the problem under assessment conditions – don’t use any notes or other materials!

Question 21

Venus, Inc. mass-produces goods in three processes. In the first process, direct materials are added 20% of the way through the process, conversion costs are incurred evenly throughout the process, and the normal spoilage rate is 5%. This period, 100,000 units were started in the first process. The 25,000 units in beginning work-in-process inventory (40% complete) were worth $100,000 ($50,000 in conversion costs and $50,000 in direct materials costs). During the period, the first process cost $130,000 for direct materials and $150,000 for conversion. At the end of the period, 90,000 units had been transferred on to the second process, and 28,000 units from process 1 were only 15% complete.

Find the cost per equivalent unit for transferred-in costs, direct materials, and conversion costs, as well as the value of good units completed and transferred out, the value of abnormal spoilage, and the value of ending work-in-process inventory.