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CostAcc Exercise Ch04

This document discusses process costing methods used by Euro-Défense to manufacture missiles. It provides data on work in progress and costs for the Assembly Department in October 2007. Students are asked to: 1) Calculate equivalent units and costs per unit for opening and completed work using weighted-average costing. Summarize total costs and assign to completed and closing work in progress units. Prepare journal entries for the Assembly work in progress account. 2) Repeat the above using FIFO costing and explain any differences in costs of completed vs. closing work between the two methods.

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Sha Eem
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32 views2 pages

CostAcc Exercise Ch04

This document discusses process costing methods used by Euro-Défense to manufacture missiles. It provides data on work in progress and costs for the Assembly Department in October 2007. Students are asked to: 1) Calculate equivalent units and costs per unit for opening and completed work using weighted-average costing. Summarize total costs and assign to completed and closing work in progress units. Prepare journal entries for the Assembly work in progress account. 2) Repeat the above using FIFO costing and explain any differences in costs of completed vs. closing work between the two methods.

Uploaded by

Sha Eem
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 PDF, TXT or read online on Scribd
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Chapter 4: Process-Costing Systems

1. Weighted-average process costing.


Euro-Dfense is a manufacturer of military equipment. Its Tourcoing plant
manufactures the Dca-Pite missile under contract to the French
government and friendly countries. All Dca-Pites go through an identical
manufacturing process. Every effort is made to ensure that all Dca-Pites
are identical and meet many demanding performance specifications. The
product-costing system at the Tourcoing plant has a single direct-cost
category (direct materials) and a single indirect-cost category (conversion
costs). Each Dca-Pite passes through two departments the Assembly
Department and the Testing Department. Direct materials are added at the
opening of the process in Assembly. Conversion costs are added evenly
throughout the two departments. When the Assembly Department finishes
work on each Dca-Pite, it is immediately transferred to Testing.
Euro-Dfense uses the weighted-average method of process costing. Data
for the Assembly Department for October 2007 are:

Work in progress, 1 October*


Started during October 2007
Completed during Oct. 2007
Costs added during Oct. 2007

Physical
units
(missiles)
20
80
90
10

Direct
materials

Conversion
costs

460 000

120 000

2 000 000

935 000

*Degree of completion: direct materials ?%; conversion costs 60%.


Degree of completion: direct materials ?%; conversion costs 70%.

Task:

Fachbereich Elektrische
Energietechnik
Prof. Dr. Valerie Wulfhorst
Betriebswirtschaftslehre,
insb. Controlling
Telefon
02921 378-451
Telefax
02921 378-409
E-Mail
[email protected]

Standort Soest
Lbecker Ring 2
59494 Soest

a) For each cost element, calculate equivalent units of work done in


October 2007 in the Assembly Department. Show physical units in the
first column.
b) For each cost element, calculate cost per equivalent unit of opening
work in progress and of work done in October 2007.
c) Summarise the total Assembly Department costs for October 2007 and
assign these costs to units completed (and transferred out) and to units
in closing work in progress using the weighted-average method.
d) Prepare a set of summarised journal entries for all October 2007
transactions affecting Work in Progress Assembly. Set up a T-account
for Work in Progress Assembly and post the entries to it.

Fachhochschule
Sdwestfalen
Sitz: Iserlohn

Hagen
Iserlohn
Meschede
Soest
www.fh-swf.de

Page 1

2. FIFO method (continuation of exercise 1).


Task:
Do exercise 1 using the FIFO method of process costing. Explain any
difference between the cost of work completed and transferred out and
cost of closing work in progress in the Assembly Department under the
weighted-average method and the FIFO method.

Page 2

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