Process Costing with Beginning Inventories: Part II
Exercise 18.9 is an extension of Exercise 18.8.
Myer’s Treats uses one gallon of mix for each cake produced by the Baking Department. On August 1, the Baking Department had 600 cakes in process. These units were 100 percent complete with respect to batter transferred in from the Mixing Department during July, but only 80 percent complete with respect to direct (frosting) materials, and 40 percent complete with respect to conversion. Costs applied to these units carried forward from July totaled $5,880. Costs incurred by the Baking Department during August included $34,185 of direct materials and $67,860 of conversion. The ending inventory in the Baking Department on August 31 consisted of 500 cakes in process. These units were 100 percent complete with respect to batter transferred in from the Mixing Department, but only 75 percent complete with respect to direct (frosting) materials, and 10 percent complete with respect to conversion.
a. Compute how many cakes were started in the Baking Department during August.
b. Prepare a schedule showing: (1) cakes transferred out of the Baking Department in August, and (2) cakes started and completed by the Baking Department in August.
c. Compute the equivalent units of input resources for the Baking Department in August.
d. Compute the cost per equivalent unit of input resource for the Baking Department in August.
e. Prepare the summary journal entry required to transfer the cost of baked cakes from the Baking Department’s Work in Process Inventory to the company’s Finished Goods Inventory in August.
f. Compute the total cost assigned to the Baking Department’s ending inventory in process on August 31.
Exercise 18.8
Process Costing with Beginning Inventories: Part I
Myer’s Treats makes institutional cakes. Finished cakes must pass through two departments: Mixing and Baking. Vats of cake batter are processed in the Mixing Department and then transferred to the Baking Department, where individual cakes are baked, cooled, and frosted. There were 500 gallons of partially mixed batter in the Mixing Department’s inventory on August 1. The batter was 100 percent complete with respect to direct materials, but only 30 percent complete with respect to conversion. Manufacturing costs assigned to the inventory carried forward from July totaled $1,800. During August, the Mixing Department started 11,500 new gallons of batter. August direct materials costs in the Mixing Department totaled $34,500, and conversion costs totaled $22,800. Ending inventory on August 31 consisted of 600 partially mixed gallons of batter. These units were 100 percent complete with respect to direct materials, but only 25 percent complete with respect to conversion.
a. Prepare a schedule showing: (1) gallons of mix transferred from the Mixing Department to the Baking Department in August, and (2) gallons of mix started and completed by the Mixing Department in August.
b. Compute the equivalent units of input resources for the Mixing Department in August.
c. Compute the cost per equivalent unit of input resource for the Mixing Department in August.
d. Prepare the summary journal entry required to transfer the cost of fully mixed batter from the Mixing Department to the Baking Department in August.
e. Compute the total cost assigned to the Mixing Department’s ending inventory on August 31.
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