Handcraft is a manufacturer of picture frames for large retailers. Every picture frame passes through two departments: the assembly department and the finishing department. This problem focuses on the assembly department. The process-costing system at

McKnightMcKnight

has a single direct-cost category (direct materials) and a single indirect-cost category (conversion costs). Direct materials are added when the assembly department process is 10% complete. Conversion costs are added evenly during the assembly department's process.

McKnightMcKnight

uses the weighted-average method of process costing. Consider the following data for the assembly department in April

20172017:Requirement 1. Summarize total assembly department costs for April

20172017,

and assign total costs to units completed (and transferred out) and to units in ending work in process.

Begin by calculating the physical units and equivalent units.

		Equivalent Units
	Physical	Direct	Conversion
Flow of Production	Units	Materials	Costs
Work in process, beginning
Started during current period
To account for
Completed and transferred out during current period
Work in process, ending
Accounted for
Equivalent units of work done to date

Now summarize the total costs to account for.

		Total	Direct	Conversion
		Production Costs	Materials	Costs
Total costs to account for

Next calculate cost per equivalent unit for direct materials and conversion costs.

		Direct	Conversion
		Materials	Costs
Divide by
Cost per equivalent unit

Finally assign total costs to units completed (and transferred out) and to units in ending work in process.

		Total	Direct	Conversion
		Production Costs	Materials	Costs
Completed and transferred out
Work in process, ending
Total costs accounted for

Requirement 2. What issues should a manager focus on when reviewing the equivalent units calculation?

To show better performance, a department supervisor might report a

higher

lower

degree of completion resulting in

overstated

understated

cost per equivalent unit and

overstated

understated

operating income. In other words, estimates of degree of completion can help

controlling the production cost.

increase the produciton efficiency resulsting in less waste.

to smooth earnings from one period to the next.

To encourage cost savings,

To encourage increased productivity,

To guard against the possibility of bias,

managers should ask supervisors specific questions about the process they followed. Top management should always emphasize

obtaining the correct answer, regardless of how it affects reported performance.

achieving the highest reported performance regardless of the method used.

This emphasis drives

ethical actions

teamwork

throughout the organization.

Requirement:

1.	Summarize total assembly department costs for April 20172017, and assign them to units completed (and transferred out) and to units in ending work in process.
2.	What issues should a manager focus on when reviewing the equivalent units calculation?

	Physical Units	Direct	Conversion
	(Frames)	Materials	Costs

Work in process, April 1 Superscript aApril 1a	7070	$ 2 comma 040$2,040	$ 560$560
Started during April 20172017	480480
Completed during April 20172017	440440
Work in process, April 30 Superscript bApril 30b	110110
Total costs added during April 20172017		$ 17 comma 760$17,760	$ 8 comma 680$8,680

Superscript aaDegree

of completion: direct materials, 100%; conversion costs, 40%.

Superscript bbDegree

of completion: direct materials,

100100%;

conversion costs,

2020%.

MacLean Handcraft is a manufacturer of picture frames for large retailers. Every picture frame passes through two departments: the assembly department and the finishing department. This problem focuses on the assembly department. The process costing system at MacLean has a single direct-cost category (direct materials) and a single indirect-cost category (conversion costs). Direct materials are added when the assembly department process is 10% complete. Conversion costs are added evenly during the assembly department's process. MacLean uses the weighted average method of process costing. Consider the following data for the assembly department in April 2017: (Click the icon to view the data.) Read the requiruments Requirement 1. Summarize total assembly department costs for April 2017, and assign total costs to units completed (and transferred out) and to units in ending work in process. Begin by calculating the physical units and equivalent units. Equivalent Units Physical Units Direct Materials Conversion Costs Flow of Production Work in process, beginning Started during current period To account for Completed and transferred out during current period Work in process, ending Accounted for Equivalent units of work done to date Now summarize the total costs to account for. Total Production Costs Direct Materials Conversion Costs Choose from any list or enter any number in the input fields and then continue to the next question. Now summarize the total costs to account for. Total Direct Conversion Production Costs Materials Costs Total costs to account for Next calculate cost per equivalent unit for direct materials and conversion costs. Direct Conversion Materials Costs Divide by Cost per equivalent unit Finally assign total costs to units completed (and transferred out) and to units in ending work in process. Total Direct Conversion Production Costs Materials Costs Direct Conversion Materials Costs Divide by Cost per equivalent unit Finally assign total costs to units completed (and transferred out) and to units in ending work in process. Total Direct Conversion Production Costs Materials Costs Completed and transferred out Work in process, ending Total costs accounted for Requirement 2. What issues should a manager focus on when reviewing the equivalent units calculation? To show better performance, a department supervisor might report a help degree of completion resulting in cost per equivalent unit and v operating income. In other words, estimates of degree of completion can V managers should ask supervisors specific questions about the process they followed. Top management should always emphasize This emphasis drives throughout the organization. Choose from any list or enter any number in the input fields and then continue to the next question. UUI19 LII UJUCILIUN UPUI LIICIILU PIUUUUU. IVIUULUU UUUU LIIC VVCIYLCUUveluyC UUUU PILUUUTUULIL19. UITJIUCIICIUNU VIIy uuu TULLII UJUCITI U PULITICIIL III III 2UTI. n to view the data.) ments. Direct Conversion Data Table Requirements ent unit 90 al costs to units 1. Summarize total assembly department costs for April 2017, and assign them to units completed (and transferred out) and to units in ending work in process. 2. What issues should a manager focus on when reviewing the equivalent units calculation? Physical Units Direct Conversion (Frames) Materials Costs Work in process, April 10 $1,155 $1,307 Started during April 2017 515 Completed during April 2017 465 Work in process, April 30" 140 Total costs added during April 2017 $16,995 $10,189 a Degree of completion: direct materials, 100%; conversion costs, 40%. "Degree of completion: direct materials, 100%; conversion costs, 10%. Print Done ransferred out ending inted for Print Done What issues should a manager focus on when reviewing the equivalent units calculation? erformance, a department supervisor might report a | v degree of completion resulting in V cost per equivalent unit and v operating income. In other words, estimates of degree of comple V managers should ask supervisors specific questions about the process they followed. Top management should always empha