Review Exercises

1. (CMA) JC Company uses a process-costing system. A unit of product passes through three departmentsMolding, Assembly, and Finishingbefore it is completed. The following activity took place in the Finishing Department during May:

Units

Work in process, May 1

1,400

Transferred in from the Assembly Department

14,000

Spoilage

700

Completed and transferred out to finished goods inventory

11,200

Direct materials are added at the beginning of the processing in the Finishing Department without changing the number of units processed. Conversion costs are added evenly throughout the process. The work-in-process inventory was 70% complete as to conversion costs on May 1 and 40% complete as to conversion costs on May 31. All spoilage is detected at the inspection point, which occurs at the end of the production process; 560 of the units spoiled are considered normal spoilage.

JC Company uses the weighted-average method. The equivalent unit costs for May are as follows:

Equivalent Unit Cost

Transferred-in costs

$5.00

Direct materials

1.00

Conversion costs

3.00

Total manufacturing cost

$9.00

a. Compute the equivalent units of transferred-in costs, direct materials, and conversion costs.

b. Compute the cost of units completed and transferred from the Finishing Department to finished goods inventory during May.

c. Compute the cost assigned to the Finishing Departments work-in-process inventory on May 31.

d. Compute the cost of abnormal spoilage.

e. Compute the total transferred-in costs of the Finishing Department during May, assuming the transferred-in costs component of the work-in-process inventory of the Finishing Department on May 1 amounted to $6,300.

2. Boucher Company uses a job-costing system. During November, the following costs are incurred on Job 109 to manufacture 200 motors:

Original costs:

Direct materials

$ 6,600

Direct manufacturing labor

8,000

Manufacturing overhead allocated (150% of direct manufacturing labor)

12,000

Total

$26,600

Direct costs of reworking 10 motors:

Direct materials

$1,000

Direct manufacturing labor

1,600

Total

$2,600

a. Prepare the journal entry to record the rework costs, assuming the rework is attributable specifically to Job 109.

b. Compute the cost per finished motor for Job 109, assuming the rework is attributable specifically to this job.

c. Prepare the journal entry to record the rework costs, assuming the rework is common to all jobs.

d. Compute the cost per finished motor for Job 109, assuming the rework is common to all jobs.