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2-04 GEORGIA (Process Cost Intro)

The document describes a company that manufactures a product called Glob using a process costing system. It provides information on 4 cases: the first calculates per unit cost and cost of goods for a period where all production was completed, the second accounts for unfinished goods, the third includes beginning work in process, and the fourth examines if frontloading raw material inputs would change the answers.

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40 views

2-04 GEORGIA (Process Cost Intro)

The document describes a company that manufactures a product called Glob using a process costing system. It provides information on 4 cases: the first calculates per unit cost and cost of goods for a period where all production was completed, the second accounts for unfinished goods, the third includes beginning work in process, and the fourth examines if frontloading raw material inputs would change the answers.

Uploaded by

manthan212
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as DOCX, PDF, TXT or read online on Scribd
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GEORGIA COMPANY

GEORGIA 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-OTron 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 2015, 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?
a. How many of these were from beginning WIP?
b. 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:
Beginning work in process
Costs incurred in January

Materials
$ 10,000
30,000
$ 40,000

Conversion
32,776
130,024
$ 162,800
$

Total
$ 42,776
160,024
$ 202,800

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