BBUS 2541: Management Accounting 1

TRU Open Learning

Assignment 2 (40 marks; 5%)

Introduction

Assignment 2 covers Chapter 4 of the textbook and should be completed after

Module 4. If you are following the Suggested Schedule, the assignment is due at

the end of Week 5. Be sure you review the relevant course material and the

Assignment Submission Instructions, located under the Assignments link.

Instructions

Question 1 (14 marks)

Living Lighting Ltd. is a manufacturer of lightbulbs and uses a weighted-average

process costing system, with one production department. The following

information has been gathered from an examination of the company?s records:

Work-in-Process, March 1 ? 60,000 units

Direct materials: 100% complete, at a cost of $40,000

Conversion: 40% complete, at a cost of $88,000

Units started during the month 110,000

Units completed during March 100,000

Work-in-process, March 31

Direct materials, 100% complete

Conversion, 20% complete

Costs incurred during March:

Direct materials $300,000

Conversion $710,000

Required:

1. Prepare a production cost report showing: (12 marks)

a. An analysis of the physical flow of units

b. Calculation of equivalent units

2 Assignment 2

TRU Open Learning

c. Computation of unit costs

d. Calculation of costs transferred to finished goods

e. Calculation of ending work-in-process inventory

2. Prepare the journal entry showing the transfer of completed goods. (2 marks)

Question 2 (5 marks)

Pearson Publishing Ltd. uses a weighted-average process costing system.

Direct materials are added at the beginning of the process, and conversion

activity occurs uniformly throughout the process. The following information

pertains to September:

Beginning work-in-process (70% complete) 8,000 units

Goods completed during September 50,000 units

Ending work-in-process (40% complete) 15,000 units

Company records indicate that the cost per equivalent unit is:

Materials: $5.00

Conversion: $15.00

Required:

1. Calculate the cost of goods completed during September (2 marks)

2. Calculate the cost of the ending work-in-process inventory on September

30. (3 marks)

Question 3 (7 marks)

Consider the following companies. Identify whether each would likely use a

process costing system or a job-order costing system.

1. A manufacturer of computer monitors

2. A builder of custom luxury boats

3. A producer of frozen yogurt

4. An automobile repair shop

5. A soft drink manufacturer

6. An architectural firm

7. A manufacturer of custom log homes

BBUS 2541: Management Accounting 3

TRU Open Learning

Question 4 (4 marks)

Fryers Frozen Foods uses a processing costing system. It had a balance in its

Work-in-Process account of $60,000 on January 1. During the year, this account

was charged with direct materials, direct labour, and manufacturing overhead in

the amount of $425,000. The accounting records show that $90,000 of goods

were still in production at year end.

Required:

1. Calculate the amount and complete the journal entry that should be made

on December 31st.

Question 5 (10 marks)

Twin Mountain Manufacturing (2009) Ltd. accumulates costs for its product using

a weighted-average process-costing system. In August, the following information

applies:

Physical Units Equivalent Units

Materials Conversion

Units Completed 130,000 130,000 130,000

Ending work-inprocess

20,000 20,000 15,000

Materials are added at the beginning of the process and conversion activity

occurs uniformly throughout the process. The company used direct materials that

cost $675,000. Conversion costs amounted to $9.50 per unit.

Required:

1. Calculate the direct materials cost per equivalent unit. (2 marks)

2. Calculate the cost of units completed and transferred. (2 marks)

3. Calculate the percentage of conversion work that will be performed in

September on the 20,000 units currently in the ending work-in-process. (2

marks)

4. Consider the 130,000 units completed during August. In all likelihood,

were all these units begun in August? Explain. (4 marks)

BBUS 2541: Management Accounting 1 Assignment 2 (40 marks; 5%) Introduction Assignment 2 covers Chapter 4 of the textbook and should be completed after Module 4. If you are following the Suggested Schedule, the assignment is due at the end of Week 5. Be sure you review the relevant course material and the Assignment Submission Instructions, located under the Assignments link. Instructions Question 1 (14 marks) Living Lighting Ltd. is a manufacturer of lightbulbs and uses a weighted-average process costing system, with one production department. The following information has been gathered from an examination of the company's records: Work-in-Process, March 1 - 60,000 units Direct materials: 100% complete, at a cost of $40,000 Conversion: 40% complete, at a cost of $88,000 Units started during the month 110,000 Units completed during March 100,000 Work-in-process, March 31 Direct materials, 100% complete Conversion, 20% complete Costs incurred during March: Direct materials $300,000 Conversion $710,000 Required: 1. Prepare a production cost report showing: (12 marks) a. An analysis of the physical flow of units b. Calculation of equivalent units TRU Open Learning 2 Assignment 2 c. Computation of unit costs d. Calculation of costs transferred to finished goods e. Calculation of ending work-in-process inventory 2. Prepare the journal entry showing the transfer of completed goods. (2 marks) Question 2 (5 marks) Pearson Publishing Ltd. uses a weighted-average process costing system. Direct materials are added at the beginning of the process, and conversion activity occurs uniformly throughout the process. The following information pertains to September: Beginning work-in-process (70% complete) 8,000 units Goods completed during September 50,000 units Ending work-in-process (40% complete) 15,000 units Company records indicate that the cost per equivalent unit is: Materials: $5.00 Conversion: $15.00 Required: 1. Calculate the cost of goods completed during September (2 marks) 2. Calculate the cost of the ending work-in-process inventory on September 30. (3 marks) Question 3 (7 marks) Consider the following companies. Identify whether each would likely use a process costing system or a job-order costing system. 1. 2. 3. 4. 5. 6. 7. A manufacturer of computer monitors A builder of custom luxury boats A producer of frozen yogurt An automobile repair shop A soft drink manufacturer An architectural firm A manufacturer of custom log homes TRU Open Learning BBUS 2541: Management Accounting 3 Question 4 (4 marks) Fryers Frozen Foods uses a processing costing system. It had a balance in its Work-in-Process account of $60,000 on January 1. During the year, this account was charged with direct materials, direct labour, and manufacturing overhead in the amount of $425,000. The accounting records show that $90,000 of goods were still in production at year end. Required: 1. Calculate the amount and complete the journal entry that should be made on December 31st. Question 5 (10 marks) Twin Mountain Manufacturing (2009) Ltd. accumulates costs for its product using a weighted-average process-costing system. In August, the following information applies: Physical Units Equivalent Units Materials Conversion Units Completed 130,000 130,000 130,000 Ending work-inprocess 20,000 20,000 15,000 Materials are added at the beginning of the process and conversion activity occurs uniformly throughout the process. The company used direct materials that cost $675,000. Conversion costs amounted to $9.50 per unit. Required: 1. Calculate the direct materials cost per equivalent unit. (2 marks) 2. Calculate the cost of units completed and transferred. (2 marks) 3. Calculate the percentage of conversion work that will be performed in September on the 20,000 units currently in the ending work-in-process. (2 marks) 4. Consider the 130,000 units completed during August. In all likelihood, were all these units begun in August? Explain. (4 marks) TRU Open Learning