CONNECTICUT COMPANY

. manufactures a product called Glob. It makes Glob in one department and uses a process costing system for tracking and assigning of product costs. Glob is a liquid that has no particular purpose I just made it up for this problem.

Heres how it works: They use a big machine called a Glob-O-Tron. The manufacture of Glob requires one raw material, Gunk. It is made by the vat. Basically, Gunk is slowly poured in and, simultaneously, while it is being poured, the Glob-O-Tron starts to spin. This happens for exactly 20 hours. At the 20-hour mark, the last drop of Gunk is poured in, and the Glob-O-Tron stops spinning and the Glob is completed. In other words, all of the materials and conversion are done simultaneously and at the exact same rate (we call this uniform inputs).

Case One:

At the beginning of January 2016, there was no work in process. During the period, the company started production of 85,000 lbs. of Glob. Production costs for the month (materials and conversion costs) totaled $160,024. There was no ending inventory either. All the Glob produced was finished.

In all computations, round your interim calculations to FOUR decimal places AND use these rounded numbers in ALL subsequent computations. Round your final answers to the NEAREST DOLLAR.

Questions:

1. How many physical pounds of Glob were actually completed?
2. What was the manufacturing cost per lb. (that is, per unit) of Glob?
3. What was the Cost of Goods Manufactured for January? What was the dollar value of the ending work in process at January 31?

Case Two:

Same as case one, except, they didnt finish all the Glob they started. There were 12,000 lbs. of Glob still in process at the end of January. This unfinished Glob was 70% complete at that point.

Questions:

1. How many physical pounds of Glob were actually completed?
2. How many whole lbs. worth of Glob were produced during January? (equivalent units)
3. NOW what was the manufacturing cost per lb. (the cost per unit) of Glob?
4. What was the Cost of Goods Manufactured for January? What was the dollar value of the ending work in process at January 31?

Case Three:

Same as case two, except, now, instead of having NO work in process at the beginning of January (the end of December 2011), they actually had 20,000 pounds which were still in process and were, in fact, 25% complete. (In other words, they started with 20,000 and started 85,000 new lbs. as per above). Manufacturing costs on these 20,000 lbs. of beginning work in process totaled $42,776. Remember, these costs were incurred in December, not the current month. ($160,024 is still incurred in the current month.)

Questions:

1. How many physical pounds of Glob were actually completed?

1. How many of these were from beginning WIP?
2. How many were actually started AND completed in the current period?

2. How many whole lbs. worth of Glob were produced during January? (equivalent units)
3. NOW what was the manufacturing cost per lb. (the cost per unit) of Glob?
4. What was the Cost of Goods Manufactured for January? What was the dollar value of the ending work in process at January 31?

Case Four:

For these three cases, we assumed that the Gunk was put in evenly all throughout the 20-hour period where the Gunk was being mixed. What if this was NOT the case? What if, instead, all of the Gunk was dumped into the vat at the beginning, and THEN it was mixed for 20 hours? Would that change your answers above? WHY or WHY NOT?

Re-compute the answers to case 3 using this assumption and the following additional information about the costs of the beginning inventory (and the current period costs of $160,024). All other information remains unchanged. That is, the beginning WIP was 20,000 lbs. that were 25% complete as to conversion, and 85,000 lbs were started into production in January. 12,000 lbs. remained unfinished at the end of January that were 70% complete as to conversion.

Costs:	Materials	Conversion	Total
Beginning work in process	$ 10,000	$ 32,776	$ 42,776
Costs incurred in January	30,000	130,024	160,024
	$ 40,000	$ 162,800	$ 202,800