# Cost Accounting Chapter 17 Solutions

Pages: 72 (12898 words) Published: July 27, 2013
CHAPTER 17
PROCESS COSTING

17-16 (25 min.) Equivalent units, zero beginning inventory.

1.Direct materials cost per unit (\$750,000 ÷ 10,000)\$ 75.00
Conversion cost per unit (\$798,000 ÷ 10,000) 79.80
Assembly Department cost per unit\$154.80

2a.Solution Exhibit 17-16A calculates the equivalent units of direct materials and conversion costs in the Assembly Department of Nihon, Inc. in February 2009. Solution Exhibit 17-16B computes equivalent unit costs.

2b.Direct materials cost per unit\$ 75
Conversion cost per unit 84
Assembly Department cost per unit\$159

3.The difference in the Assembly Department cost per unit calculated in requirements 1 and 2 arises because the costs incurred in January and February are the same but fewer equivalent units of work are done in February relative to January. In January, all 10,000 units introduced are fully completed resulting in 10,000 equivalent units of work done with respect to direct materials and conversion costs. In February, of the 10,000 units introduced, 10,000 equivalent units of work is done with respect to direct materials but only 9,500 equivalent units of work is done with respect to conversion costs. The Assembly Department cost per unit is, therefore, higher.

SOLUTION EXHIBIT 17-16A

Steps 1 and 2: Summarize Output in Physical Units and Compute Output in Equivalent Units;

Assembly Department of Nihon, Inc. for February 2009.

| | |(Step 2) | | |(Step 1) |Equivalent Units | | |Physical |Direct |Conversion | |Flow of Production |Units |Materials |Costs |

Work in process, beginning (given)0
Started during current period (given)10,000
To account for10,000
Completed and transferred out
during current period9,0009,0009,000
Work in process, ending* (given)1,000
1,000 ( 100%; 1,000 ( 50%1,000500
Accounted for10,000
Work done in current period10,0009,500

*Degree of completion in this department: direct materials, 100%; conversion costs, 50%.

SOLUTION EXHIBIT 17-16B

Compute Cost per Equivalent Unit,
Assembly Department of Nihon, Inc. for February 2009.

| |Total | | | | |Production |Direct |Conversion | | |Costs |Materials |Costs | |(Step 3) Costs added during February |\$1,548,000 |\$750,000 |\$798,000 | | Divide by equivalent units of work done | | | | |in current period (Solution Exhibit 17-l6A) | |( 10,000 |( 9,500 | | Cost per equivalent unit | |\$ 75 |\$ 84 |

17-17(20 min.)Journal entries (continuation of 17-16).

1.Work in Process––Assembly750,000
Accounts Payable750,000
To record \$750,000 of direct materials
purchased and used in production during
February 2009
2.Work in Process––Assembly798,000
Various accounts798,000
To record \$798,000 of conversion costs
for February 2009; examples include energy,
manufacturing supplies, all manufacturing
labor, and...