CHAPTER 17

PROCESS COSTING

17-16 (25 min.) Equivalent units, zero beginning inventory.

1. Direct materials cost per unit ($750,000 ÷ 10,000) $ 75.00

Conversion cost per unit ($798,000 ÷ 10,000) 79.80
Assembly Department cost per unit $154.80

2a. Solution Exhibit 17-16A calculates the equivalent units of direct materials and conversion
costs in the Assembly Department of Nihon, Inc. in February 2009.
Solution Exhibit 17-16B computes equivalent unit costs.

2b. Direct materials cost per unit $ 75

Conversion cost per unit 84
Assembly Department cost per unit $159

3. The difference in the Assembly Department cost per unit calculated in requirements 1 and
2 arises because the costs incurred in January and February are the same but fewer equivalent
units of work are done in February relative to January. In January, all 10,000 units introduced are
fully completed resulting in 10,000 equivalent units of work done with respect to direct materials
and conversion costs. In February, of the 10,000 units introduced, 10,000 equivalent units of
work is done with respect to direct materials but only 9,500 equivalent units of work is done with
respect to conversion costs. The Assembly Department cost per unit is, therefore, higher.

SOLUTION EXHIBIT 17-16A

Steps 1 and 2: Summarize Output in Physical Units and Compute Output in Equivalent Units;
Assembly Department of Nihon, Inc. for February 2009.

(Step 2)
(Step 1) Equivalent Units
Physical Direct Conversion
Flow of Production Units Materials Costs
Work in process, beginning (given) 0
Started during current period (given) 10,000
To account for 10,000
Completed and transferred out
during current period 9,000 9,000 9,000
Work in process, ending* (given) 1,000
1,000  100%; 1,000  50% 1,000 500
Accounted for 10,000
Work done in current period 10,000 9,500

*Degree of completion in this department: direct materials, 100%; conversion costs, 50%.

17-1
SOLUTION EXHIBIT 17-16B
Compute Cost per Equivalent Unit,
Assembly Department of Nihon, Inc. for February 2009.

Total
Production Direct Conversion
Costs Materials Costs
(Step 3) Costs added during February $1,548,000 $750,000 $798,000
Divide by equivalent units of work done
in current period (Solution Exhibit 17-l6A)  10,000  9,500
Cost per equivalent unit $ 75 $ 84

17-17 (20 min.) Journal entries (continuation of 17-16).

1. Work in Process––Assembly 750,000

Accounts Payable 750,000
To record $750,000 of direct materials
purchased and used in production during
February 2009
2. Work in Process––Assembly 798,000
Various accounts 798,000
To record $798,000 of conversion costs
for February 2009; examples include energy,
manufacturing supplies, all manufacturing
labor, and plant depreciation
3. Work in Process––Testing 1,431,000
Work in Process––Assembly 1,431,000
To record 9,000 units completed and
transferred from Assembly to Testing
during February 2009 at
$159  9,000 units = $1,431,000

Postings to the Work in Process––Assembly account follow.

Work in Process –– Assembly Department

Beginning inventory, Feb. 1 0 3. Transferred out to
1. Direct materials 750,000 Work in Process––Testing 1,431,000
2. Conversion costs 798,000
Ending inventory, Feb. 28 117,000

17-2
17-18 (25 min.) Zero beginning inventory, materials introduced in middle of process.

1. Solution Exhibit 17-18A shows equivalent units of work done in the current period of
Chemical P, 50,000; Chemical Q, 35,000; Conversion costs, 45,000.

2. Solution Exhibit 17-18B summarizes the total Mixing Department costs for July 2009,
calculates cost per equivalent unit of work done in the current period for Chemical P, Chemical
Q, and Conversion costs, and assigns these costs to units completed (and transferred out) and to
units in ending work in process.

SOLUTION EXHIBIT 17-18A

Steps 1 and 2: Summarize Output in Physical Units and Compute Output in Equivalent Units;
Mixing Department of Roary Chemicals for July 2009.

(Step 1) (Step 2)
Equivalent Units
Physical Conversion
Flow of Production Units Chemical P Chemical Q Costs
Work in process, beginning (given) 0
Started during current period (given) 50,000
To account for 50,000
Completed and transferred out
during current period 35,000 35,000 35,000 35,000
Work in process, ending* (given) 15,000
15,000  100%; 15,000  0%;
15,000  66 2/3% 15,000 0 10,000
Accounted for 50,000
Work done in current period only 50,000 35,000 45,000

*Degree of completion in this department: Chemical P, 100%; Chemical Q, 0%; conversion costs, 66 2/3%.

17-3
SOLUTION EXHIBIT 17-18B
Steps 3, 4, and 5: Summarize Total Costs to Account For, Compute Cost per Equivalent Unit,
and Assign Total Costs to Units Completed and to Units in Ending Work in Process;
Mixing Department of Roary Chemicals for July 2009.
Total
Production Conversion
Costs Chemical P Chemical Q Costs
(Step 3) Costs added during July $455,000 $250,000 $70,000 $135,000
Total costs to account for $455,000 $250,000 $70,000 $135,000

(Step 4) Costs added in current period $250,000 $70,000 $135,000

Divide by equivalent units of work
done in current period
(Solution Exhibit 17-l8A)  50,000 35,000  45,000
Cost per equivalent unit $ 5 $ 2 $ 3

(Step 5) Assignment of costs:

Completed and transferred out
(35,000 units) $350,000 (35,000*  $5) + (35,000*  $2) + (35,000*  $3)
Work in process, ending
(15,000 units) 105,000 (15,000†  $5) + (0†  $2) + (10,000†  $3)
Total costs accounted for $455,000 $250,000 + $70,000 + $135,000

*Equivalent units completed and transferred out from Solution Exhibit 17-18A, Step 2.
†
Equivalent units in ending work in process from Solution Exhibit 17-18A, Step 2.

17-19 (15 min.) Weighted-average method, equivalent units.

Under the weighted-average method, equivalent units are calculated as the equivalent units of
work done to date. Solution Exhibit 17-19 shows equivalent units of work done to date for the
Assembly Division of Fenton Watches, Inc., for direct materials and conversion costs.

SOLUTION EXHIBIT 17-19

Steps 1 and 2: Summarize Output in Physical Units and Compute Output in Equivalent Units;
Weighted-Average Method of Process Costing, Assembly Division of Fenton Watches, Inc., for
May 2009.
(Step 2)
(Step 1) Equivalent Units
Physical Direct Conversion
Flow of Production Units Materials Costs
Work in process beginning (given) 80
Started during current period (given) 500
To account for 580
Completed and transferred out during current period 460 460 460
Work in process, ending* (120  60%; 120  30%) 120 72 36
Accounted for 580 ___ ___
Work done to date 532 496

*Degree of completion in this department: direct materials, 60%; conversion costs, 30%.

17-4
17-20 (20 min.) Weighted-average method, assigning costs (continuation of 17-19).

Solution Exhibit 17-20 summarizes total costs to account for, calculates cost per equivalent unit
of work done to date in the Assembly Division of Fenton Watches, Inc., and assigns costs to
units completed and to units in ending work-in-process inventory.

SOLUTION EXHIBIT 17-20

Steps 3, 4, and 5: Summarize Total Costs to Account For, Compute Cost per Equivalent Unit,
and Assign Total Costs to Units Completed and to Units in Ending Work in Process;
Weighted-Average Method of Process Costing, Assembly Division of Fenton Watches, Inc., for
May 2009.

Total
Production Direct Conversion
Costs Materials Costs
(Step 3) Work in process, beginning (given) $ 584,400 $ 493,360 $ 91,040
Costs added in current period (given) 4,612,000 3,220,000 1,392,000
Total costs to account for $5,196,400 $3,713,360 $1,483,040

(Step 4) Costs incurred to date $3,713,360 $1,483,040

Divide by equivalent units of work done to date
(Solution Exhibit 17-19)  532  496
Cost per equivalent unit of work done to date $ 6,980 $ 2,990

(Step 5) Assignment of costs:

Completed and transferred out (460 units) $4,586,200 (460*  $6,980) + (460*  $2,990)
Work in process, ending (120 units) 610,200 (72†  $6,980) + (36†  $2,990)
Total costs accounted for $5,196,400 $3,713,360 + $1,483,040

*
Equivalent units completed and transferred out from Solution Exhibit 17-19, Step 2.
†
Equivalent units in work in process, ending from Solution Exhibit 17-19, Step 2.

17-5
17-21 (15 min.) FIFO method, equivalent units.

Under the FIFO method, equivalent units are calculated as the equivalent units of work done in
the current period only. Solution Exhibit 17-21 shows equivalent units of work done in May
2009 in the Assembly Division of Fenton Watches, Inc., for direct materials and conversion
costs.

SOLUTION EXHIBIT 17-21

Steps 1 and 2: Summarize Output in Physical Units and Compute Output in Equivalent Units;
FIFO Method of Process Costing, Assembly Division of Fenton Watches, Inc., for May 2009.

(Step 2)
(Step 1) Equivalent Units
Physical Direct Conversion
Flow of Production Units Materials Costs
Work in process, beginning (given) 80 (work done before current period)
Started during current period (given) 500
To account for 580
Completed and transferred out during current
period:
From beginning work in process§ 80
80  (100%  90%); 80  (100%  40%) 8 48
†
Started and completed 380
380  100%, 380  100% 380 380
Work in process, ending* (given) 120
120  60%; 120  30% ___ 72 36
Accounted for 580
Work done in current period only 460 464
§
Degree of completion in this department: direct materials, 90%; conversion costs, 40%.
†
460 physical units completed and transferred out minus 80 physical units completed and transferred out from
beginning work-in-process inventory.
*Degree of completion in this department: direct materials, 60%; conversion costs, 30%.

17-6
17-22 (20 min.) FIFO method, assigning costs (continuation of 17-21).

Solution Exhibit 17-22 summarizes total costs to account for, calculates cost per equivalent unit
of work done in May 2009 in the Assembly Division of Fenton Watches, Inc., and assigns total
costs to units completed and to units in ending work-in-process inventory.

SOLUTION EXHIBIT 17-22

Steps 3, 4, and 5: Summarize Total Costs to Account For, Compute Cost per Equivalent Unit,
and Assign Total Costs to Units Completed and to Units in Ending Work in Process;
FIFO Method of Process Costing, Assembly Division of Fenton Watches, Inc., for May 2009.

Total
Production Direct Conversion
Costs Materials Costs
(Step 3) Work in process, beginning (given) $ 584,400 $ 493,360 $ 91,040
Costs added in current period (given) 4,612,000 3,220,000 1,392,000
Total costs to account for $5,196,400 $1,483,040
$3,713,360

(Step 4) Costs added in current period $3,220,000 $1,392,000

Divide by equivalent units of work done in  460  464
current period (Solution Exhibit 17-21)
Cost per equiv. unit of work done in current period $ 7,000 $ 3,000

(Step 5) Assignment of costs:

Completed and transferred out (460 units):
Work in process, beginning (80 units) $ 584,400 $493,360 + $91,040
Costs added to beginning work in process
in current period 200,000 (8*  $7,000) + (48*  $3,000)
Total from beginning inventory 784,400
Started and completed (380 units) 3,800,000 (380†  $7,000) + (380†  $3,000)
Total costs of units completed and
transferred out 4,584,400
Work in process, ending (120 units) 612,000 (72#  $7,000) + (36#  $3,000)
Total costs accounted for $5,196,400 $3,713,360 + $1,483,040

*
Equivalent units used to complete beginning work in process from Solution Exhibit 17-21, Step 2.
†
Equivalent units started and completed from Solution Exhibit 17-21, Step 2.
#
Equivalent units in work in process, ending from Solution Exhibit 17-21, Step 2.

17-7
17-23 (20-25 min.) Standard-costing method, assigning costs.

1.

SOLUTION EXHIBIT 17-23A

Steps 1 and 2: Summarize Output in Physical Units and Compute Output in Equivalent Units;
Standard Costing Method of Process Costing for Bucky’s Boxes for July 2010
(Step 2)
(Step 1) Equivalent Units
Physical Direct Conversion
Flow of Production Units Materials Costs
Work in process, beginning (given) 185,000 (work done before current period)
Started during current period (given) 465,000
To account for 650,000
Completed and transferred out during current period:
From beginning work in process§ 185,000
185,000  (100%  100%); 185,000  (100% – 25%) 0 138,750
†
Started and completed 327,000
327,000  100%, 327,000  100% 327,000 327,000
Work in process, ending* (given) 138,000
138,000  100%; 138,000  80% _______ 138,000 110,400
Accounted for 650,000 _______ _______
Work done in current period only 465,000 576,150
§
Degree of completion in this department: direct materials, 100%; conversion costs, 25%.
†
512,000 physical units completed and transferred out minus 185,000 physical units completed and transferred out
from beginning work-in-process inventory.
*Degree of completion in this department: direct materials, 100%; conversion costs, 80%.

17-8
2.

SOLUTION EXHIBIT 17-23B

Steps 3, 4, and 5: Summarize Total Costs to Account For, Compute Cost per Equivalent Unit,
and Assign Total Costs to Units Completed and to Units in Ending Work in Process;
Standard Costing Method of Process Costing for Bucky’s Boxes for July 2010

Total
Production Direct Conversion
Costs Materials Costs
(Step 3) Work in process, beginning (given) $ 337,625 $240,500 + $ 97,125
Costs added in current period at standard costs 1,814,415 (465,000  $1.30) + (576,150  $2.10)
Total costs to account for $2,152,040 $845,000 + $1,307,040

(Step 4) Standard cost per equivalent unit (given) $ 1.30 $ 2.10

(Step 5) Assignment of costs at standard costs:

Completed and transferred out (512,000 units):
Work in process, beginning (185,000 units) $ 337,625 $240,500 + $97,125
Costs added to beg. work in process in current period 291,375 (0*  $1.30) + (138,750*  $2.10)
Total from beginning inventory 629,000
Started and completed (327,000 units) 1,111,800 (327,000†  $1.30) + (327,000†  $2.10)
Total costs of units transferred out 1,740,800
Work in process, ending (138,000 units) 411,240 (138,000#  $1.30) + (110,400#  $2.10)
Total costs accounted for $2,152,040 $845,000 + $1,307,040
Summary of variances for current performance: $604,500 $1,209,915
Costs added in current period at standard costs (see Step 3 above) 607,500 1,207,415
Actual costs incurred (given) $ 3,000 U $ 2,500 F
Variance

*Equivalent units to complete beginning work in process from Solution Exhibit 17-23A, Step 2.
†
Equivalent units started and completed from Solution Exhibit 17-23A, Step 2.
#
Equivalent units in ending work in process from Solution Exhibit 17-23A, Step 2.

17-9
17-24 (25 min.) Weighted-average method, assigning costs.

1. & 2.

Solution Exhibit 17-24A shows equivalent units of work done to date for Bio Doc Corporation
for direct materials and conversion costs.

Solution Exhibit 17-24B summarizes total costs to account for, calculates the cost per equivalent
unit of work done to date for direct materials and conversion costs, and assigns these costs to
units completed and transferred out and to units in ending work-in-process inventory.

SOLUTION EXHIBIT 17-24A

Steps 1 and 2: Summarize Output in Physical Units and Compute Output in Equivalent Units;
Weighted-Average Method of Process Costing, Bio Doc Corporation for July 2008.

(Step 2)
(Step 1) Equivalent Units
Physical Direct Conversion
Flow of Production Units Materials Costs
Work in process, beginning (given) 12,500
Started during current period (given) 50,000
To account for 62,500
Completed and transferred out
during current period 42,500 42,500 42,500
Work in process, ending* (given) 20,000
20,000  100%; 20,000  50% 20,000 10,000
Accounted for 62,500
Work done to date 62,500 52,500

*Degree of completion: direct materials, 100%; conversion costs, 50%.

17-10
SOLUTION EXHIBIT 17-24B
Steps 3, 4, and 5: Summarize Total Costs to Account For, Compute Cost per Equivalent Unit,
and Assign Total Costs to Units Completed and to Units in Ending Work in Process;
Weighted-Average Method of Process Costing, Bio Doc Corporation for July 2008.

Total
Production Direct Conversion
Costs Materials Costs
(Step 3) Work in process, beginning (given) $162,500 $ 75,000 $ 87,500
Costs added in current period (given) 813 ,750 350,000 463,750
Total costs to account for $976,250 $425,000 $551,250

(Step 4) Costs incurred to date $425,000 $551,250

Divide by equivalent units of work done to
date (Solution Exhibit 17-24A)  62,500  52,500
Cost per equivalent unit of work done to date $ 6.80 $ 10.50

(Step 5) Assignment of costs:

Completed and transferred out (42,500 units) $735,250 (42,500*  $6.80) + (42,500*  $10.50)
Work in process, ending (20,000 units) 241,000 (20,000†  $6.80) + (10,000†  $10.50)
Total costs accounted for $976,250 $425,000 + $551,250

*Equivalent units completed and transferred out (given).

†
Equivalent units in ending work in process (given).

17-11
17-25 (30 min.) FIFO method, assigning costs.

1. & 2. Solution Exhibit 17-25A calculates the equivalent units of work done in the current
period. Solution Exhibit 17-25B summarizes total costs to account for, calculates the cost per
equivalent unit of work done in the current period for direct materials and conversion costs, and
assigns these costs to units completed and transferred out and to units in ending work-in-process
inventory.

SOLUTION EXHIBIT 17-25A

Steps 1 and 2: Summarize Output in Physical Units and Compute Output in Equivalent Units;
FIFO Method of Process Costing, Bio Doc Corporation for July 2008.
(Step 2)
(Step 1) Equivalent Units
Physical Direct Conversion
Flow of Production Units Materials Costs
Work in process, beginning (given) 12,500 (work done before current period)
Started during current period (given) 50,000
To account for 62,500
Completed and transferred out during current period:
From beginning work in process§ 12,500
12,500  (100%  100%); 12,500  (100% – 70%) 0 3,750
†
Started and completed 30,000
30,000  100%, 30,000  100% 30,000 30,000
Work in process, ending* (given) 20,000
20,000  100%; 20,000  50% 20,000 10,000
Accounted for 62,500
Work done in current period only 50,000 43,750
§
Degree of completion in this department: direct materials, 100%; conversion costs, 70%.
†
42,500 physical units completed and transferred out minus 12,500 physical units completed and transferred out
from beginning work-in-process inventory.
*Degree of completion in this department: direct materials, 100%; conversion costs, 50%.

17-12
SOLUTION EXHIBIT 17-25B
Steps 3, 4, and 5: Summarize Total Costs to Account For, Compute Cost per Equivalent Unit, and Assign Total Costs to Units
Completed and to Units in Ending Work in Process;
FIFO Method of Process Costing, Bio Doc Corporation for July 2008.

Total
Production Direct Conversion
Costs Materials Costs
(Step 3) Work in process, beginning (given) $162,500 $ 75,000 $ 87,500
Costs added in current period (given) 813,750 350,000 463,750
Total costs to account for $976,250 $425,000 $551,250
(Step 4) Costs added in current period $350,000 $463,750
Divide by equivalent units of work done in
current period (Solution Exhibit 17-25A)  50,000  43,750
Cost per equivalent unit of work done in current period $ 7 $ 10.60
(Step 5) Assignment of costs:
Completed and transferred out (42,500 units):
Work in process, beginning (12,500 units) $162,500 $75,000 + $87,500
Cost added to beginning work in process in current period 39,750 (0  $7) + (3,750*  $10.60)
*

Total from beginning inventory 202,250

Started and completed (30,000 units) 528,000 (30,000†  $7) + (30,000†  $10.60)
Total costs of units completed and transferred out 730,250
Work in process, ending (20,000 units) 246,000 (20,000#  $7) + (10,000#  $10.60)
Total costs accounted for $976,250 $425,000 + $551,250

*Equivalent units used to complete beginning work in process from Solution Exhibit 17-25A, Step 2.
†
Equivalent units started and completed from Solution Exhibit 17-25A, Step 2.
#
Equivalent units in ending work in process from Solution Exhibit 17-25A, Step 2.

17-13
17-26 (30 min.) Standard-costing method, assigning costs.

1. The calculations of equivalent units for direct materials and conversion costs are identical
to the calculations of equivalent units under the FIFO method. Solution Exhibit 17-25A shows
the equivalent unit calculations for standard costing and computes the equivalent units of work
done in July 2008. Solution Exhibit 17-26 uses the standard costs (direct materials, $6.60;
conversion costs, $10.40) to summarize total costs to account for, and to assign these costs to
units completed and transferred out and to units in ending work-in-process inventory.

2. Solution Exhibit 17-26 shows the direct materials and conversion costs variances for

Direct materials $20,000 U

Conversion costs $8,750 U

SOLUTION EXHIBIT 17-26

Steps 3, 4, and 5: Summarize Total Costs to Account For, Compute Cost per Equivalent Unit,
and Assign Total Costs to Units Completed and to Units in Ending Work in Process;
Standard Costing Method of Process Costing, Bio Doc Corporation for July 2008.

Total
Production Direct Conversion
Costs Materials Costs
(Step 3) Work in process, beginning (given) $173,500 (12,500  $6.60) + (8,750  $10.40)
Costs added in current period at standard costs 785,000 (50,000  $6.60) + (43,750  $10.40)
Total costs to account for $958,500 $412,500 + $546,000

(Step 4) Standard cost per equivalent unit (given) $ 6.60 $ 10.40

(Step 5) Assignment of costs at standard costs:
Completed and transferred out (42,500 units):
Work in process, beginning (12,500 units) $173,500 (12,500  $6.60) + (8,750  $10.40)
Costs added to beg. work in process in current period 39,000 (0*  $6.60) + (3,750*  $10.40)
Total from beginning inventory 212,500
Started and completed (30,000 units) 510,000 (30,000†  $6.60) + (30,000†  $10.40)
Total costs of units transferred out 722,500
Work in process, ending (20,000 units) 236,000 (20,000#  $6.60) + (10,000#  $10.40)
Total costs accounted for $958,500 $412,500 + $546,000
Summary of variances for current performance:
Costs added in current period at standard costs (see Step 3 above) $330,000 $455,000
Actual costs incurred (given) 350,000 463,750
Variance $ 20,000 U $ 8,750 U

*Equivalent units to complete beginning work in process from Solution Exhibit 17-25A, Step 2.
†
Equivalent units started and completed from Solution Exhibit 17-25A, Step 2.
#
Equivalent units in ending work in process from Solution Exhibit 17-25A, Step 2.

17-14
17-27 (35–40 min.) Transferred-in costs, weighted-average method.

1, 2. & 3. Solution Exhibit 17-27A calculates the equivalent units of work done to date.
Solution Exhibit 17-27B summarizes total costs to account for, calculates the cost per equivalent
unit of work done to date for transferred-in costs, direct materials, and conversion costs, and
assigns these costs to units completed and transferred out and to units in ending work-in-process
inventory.

SOLUTION EXHIBIT 17-27A

Steps 1 and 2: Summarize Output in Physical Units and Compute Output in Equivalent Units
Weighted-Average Method of Process Costing;
Finishing Department of Asaya Clothing for June 2009.

(Step 1) (Step 2)
Equivalent Units
Physical Transferred- Direct Conversion
Flow of Production Units in Costs Materials Costs
Work in process, beginning (given) 75
Transferred in during current period (given) 135
To account for 210
Completed and transferred out
during current period 150 150 150 150
Work in process, ending* (given) 60
60  100%; 60  0%; 60  75% 60 0 45
Accounted for 210
Work done to date 210 150 195

*Degree of completion in this department: transferred-in costs, 100%; direct materials, 0%; conversion costs, 75%.

17-15
SOLUTION EXHIBIT 17-27B
Steps 3, 4, and 5: Summarize Total Costs to Account For, Compute Cost per Equivalent Unit, and Assign Total Costs to Units
Completed and to Units in Ending Work in Process;
Weighted-Average Method of Process Costing,
Finishing Department of Asaya Clothing for June 2009.

Total
Production Transferred-in Direct Conversion
Costs Costs Materials Costs
(Step 3) Work in process, beginning (given) $105,000 $ 75,000 $ 0 $ 30,000
Costs added in current period (given) 258,000 142,500 37,500 78,000
Total costs to account for $363,000 $ 217,500 $37,500 $108,000

(Step 4) Costs incurred to date $ 217,500 $37,500 $108,000

Divide by equivalent units of work done to date
(Solution Exhibit 17-27A) ÷ 210 ÷ 150 ÷ 195
Cost per equivalent unit of work done to date $1,035.71 $ 250 $ 553.85

(Step 5) Assignment of costs:

Completed and transferred out (150 units) $275,934 (150 a  $1,035.71) + (150 a  $250) + (150a  $553.85)
Work in process, ending (60 units): 87,066 (60b  $1,035.71) + (0b  $250) + (45b  $553.85)
Total costs accounted for $363,000 $ 217,500 + $37,500 + $108,000
a
Equivalent units completed and transferred out from Sol. Exhibit 17-27, step 2.
b
Equivalent units in ending work in process from Sol. Exhibit 17-27A, step 2.

17-16
17-28 (35–40 min.) Transferred-in costs, FIFO method.

Solution Exhibit 17-28A calculates the equivalent units of work done in the current period (for
transferred-in costs, direct-materials, and conversion costs) to complete beginning work-in-
process inventory, to start and complete new units, and to produce ending work in process.
Solution Exhibit 17-28B summarizes total costs to account for, calculates the cost per equivalent
unit of work done in the current period for transferred-in costs, direct materials, and conversion
costs, and assigns these costs to units completed and transferred out and to units in ending work-
in-process inventory.

SOLUTION EXHIBIT 17-28A

Steps 1 and 2: Summarize Output in Physical Units and Compute Output in Equivalent Units
FIFO Method of Process Costing;
Finishing Department of Asaya Clothing for June 2009.

(Step 1) (Step 2)
Equivalent Units
Physical Transferred-in Direct Conversion
Flow of Production Units Costs Materials Costs
Work in process, beginning (given) 75 (work done before current period)
Transferred-in during current period (given) 135
To account for 210
Completed and transferred out during current period:
From beginning work in processa 75
[75  (100% – 100%); 75  (100% – 0%); 75  (100% – 60%)] 0 75 30
Started and completed 75b
(75  100%; 75  100%; 75  100%) 75 75 75
Work in process, endingc (given) 60
(60  100%; 60  0%; 60  75%) ___ 60 0 45
Accounted for 210 ___ ___ ___
Work done in current period only 135 150 150

aDegree of completion in this department: Transferred-in costs, 100%; direct materials, 0%; conversion costs, 60%.
b150 physical units completed and transferred out minus 75 physical units completed and transferred out from beginning
work-in-process inventory.
cDegree of completion in this department: transferred-in costs, 100%; direct materials, 0%; conversion costs, 75%.

17-17
SOLUTION EXHIBIT 17-28B
Steps 3, 4, and 5: Summarize Total Costs to Account For, Compute Cost per Equivalent Unit, and Assign Total Costs to Units
Completed and to Units in Ending Work in Process;
FIFO Method of Process Costing,
Finishing Department of Asaya Clothing for June 2009.

Total
Production Transferred-in
Costs Costs Direct Materials Conversion Costs
(Step 3) Work in process, beginning (given) $ 90,000 $ 60,000 $ 0 $ 30,000
Costs added in current period (given) 246,300 130,800 37,500 78,000
Total costs to account for $336,300 $190,800 $37,500 $108,000

(Step 4) Costs added in current period $130,800 $37,500 $ 78,000

Divide by equivalent units of work done in current period
(Solution Exhibit 17-28A) ÷ 135 ÷ 150 ÷ 150
Cost per equivalent unit of work done in current period $ 968.89 $ 250 $ 520

(Step 5) Assignment of costs:

Completed and transferred out (150 units)
Work in process, beginning (75 units) $ 90,000 $ 60,000 $ 0 $ 30,000
Costs added to beginning work in process in current period 34,350 (0a  $968.89) + (75a  $250) + (30 a  $520)
Total from beginning inventory 124,350
Started and completed (75 units) 130,416 (75b  $968.89) + (75b  $250) + (75b  $520)
Total costs of units completed and transferred out 254,766
Work in process, ending (60 units): 81,534 (60c  $968.89) + (0c  $250) + (45c  $520)
Total costs accounted for $336,300 $190,800 + $37,500 + $108,000
a
Equivalent units used to complete beginning work in process from Solution Exhibit 17-28A, step 2.
b
Equivalent units started and completed from Solution Exhibit 17-28A, step 2.
c
Equivalent units in ending work in process from Solution Exhibit 17-28A, step 2.

17-18
17-29 (15-20 min.) Standard-costing method.

1. Since there was no additional work needed on the beginning inventory with respect to
materials, the initial mulch must have been 100% complete with respect to materials. For
conversion costs, the work done to complete the opening inventory was 434,250 ÷
965,000 = 45%. Therefore, the unfinished mulch in opening inventory must have been
55% complete with respect to conversion costs.

2. It is clear that the ending WIP is also 100% complete with respect to direct materials
(1,817,000 ÷ 1,817,000), and it is 60% (= 1,090,200 ÷ 1,817,000) complete with regard
to conversion costs.

3. We can first obtain the total standard costs per unit. The number of units started and
completed during August is 845,000, and a total cost of $6,717,750 is attached to them.
The per unit standard cost is therefore ($6,717,750 ÷ 845,000) = $7.95. If x and y
represent the per unit cost for direct materials and conversion costs, respectively, we
therefore know that:

x + y = 7.95

We also know that the ending inventory is costed at $12,192,070 and contains 1,817,000
equivalent units of materials and 1,090,200 equivalent units of conversion costs. This
provides a second equation:

1,817,000 x + 1,090,200 y = 12,192,070.

Solving these equations reveals that the direct materials cost per unit, x, is $4.85, while
the conversion cost per unit, y, is $3.10.

4. Finally, the opening WIP contained 965,000 equivalent units of materials and (965,000-
434,250) = 530,750 equivalent units of conversion costs. Applying the standard costs
computed in step (3), the cost of the opening inventory must have been:

965,000 × $4.85 + 530,750 × $3.10 = $6,325,575.

17-19
17-30 (25 min.) Weighted-average method.

1. Since direct materials are added at the beginning of the assembly process, the units in this
department must be 100% complete with respect to direct materials. Solution Exhibit 17-30A
shows equivalent units of work done to date:

Direct materials 25,000 equivalent units

Conversion costs 24,250 equivalent units

2. & 3. Solution Exhibit 17-30B summarizes the total Assembly Department costs for October
2009, calculates cost per equivalent unit of work done to date, and assigns these costs to units
completed (and transferred out) and to units in ending work in process using the weighted-
average method.

SOLUTION EXHIBIT 17-30A

Steps 1 and 2: Summarize Output in Physical Units and Compute Output in Equivalent Units;
Weighted-Average Method of Process Costing, Assembly Department of Larsen Company, for
October 2009.

(Step 1) (Step 2)
Equivalent Units
Physical Direct Conversion
Flow of Production Units Materials Costs
Work in process, beginning (given) 5,000
Started during current period (given) 20,000
To account for 25,000
Completed and transferred out
during current period 22,500 22,500 22,500
Work in process, ending* (given) 2,500
2,500  100%; 2,500  70% 2,500 1,750
Accounted for 25,000
Work done to date 25,000 24,250
*Degree of completion in this department: direct materials, 100%; conversion costs, 70%.

17-20
SOLUTION EXHIBIT 17-30B
Steps 3, 4, and 5: Summarize Total Costs to Account For, Compute Cost per Equivalent Unit,
and Assign Total Costs to Units Completed and to Units in Ending Work in Process;
Weighted-Average Method of Process Costing, Assembly Department of Larsen Company,
for October 2009.

Total
Production Direct Conversion
Costs Materials Costs
(Step 3) Work in process, beginning (given) $1,652,750 $1,250,000 $ 402,750
Costs added in current period (given) 6,837,500 4,500,000 2,337,500
Total costs to account for $8,490,250 $5,750,000 $2,740,250

(Step 4) Costs incurred to date $5,750,000 $2,740,250

Divide by equivalent units of work done to date
(Solution Exhibit 17-30A)  25,000  24,250
Cost per equivalent unit of work done to date $ 230 $ 113

(Step 5) Assignment of costs:

Completed and transferred out (22,500 units) $7,717,500 (22,500*  $230) + (22,500*  $113)
Work in process, ending (2,500 units) 772,750 (2,500†  $230) + (1,750†  $113)
Total costs accounted for $8,490,250 $6,150,000 + $2,619,000
*
Equivalent units completed and transferred out from Solution Exhibit 17-30A, Step 2.
†
Equivalent units in work in process, ending from Solution Exhibit 17-30A, Step 2.

17-31 (10 min.) Journal entries (continuation of 17-30).

1. Work in Process––Assembly Department 4,500,000

Accounts Payable 4,500,000
Direct materials purchased and used in
production in October.

2. Work in Process––Assembly Department 2,337,500

Various accounts 2,337,500
Conversion costs incurred in October.

3. Work in Process––Testing Department 7,717,500

Work in Process––Assembly Department 7,717,500
Cost of goods completed and transferred out
in October from the Assembly Department to the Testing Department.

Work in Process––Assembly Department

Beginning inventory, October 1 1,652,750 3. Transferred out to
1. Direct materials 4,500,000 Work in Process–Testing 7,717,500
2. Conversion costs 2,337,500
Ending Inventory, October 31 772,750

17-21
17-32 (20 min.) FIFO method (continuation of 17-30).

1. The equivalent units of work done in the current period in the Assembly Department in
October 2009 for direct materials and conversion costs are shown in Solution Exhibit 17-32A.

2. The cost per equivalent unit of work done in the current period in the Assembly
Department in October 2009 for direct materials and conversion costs is calculated in Solution
Exhibit 17-32B.

3. Solution Exhibit 17-32B summarizes the total Assembly Department costs for October
2009, and assigns these costs to units completed (and transferred out) and units in ending work in
process under the FIFO method.
The cost per equivalent unit of beginning inventory and of work done in the current
period differ:

Beginning Work Done in

Inventory Current Period
Direct materials $250.00 ($1,250,000  5,000 equiv. units) $225.00
Conversion costs 134.25 ($ 402,750  3,000 equiv. units) 110.00
Total cost per unit $384.25 $335.00

Direct Conversion
Materials Costs
Cost per equivalent unit (weighted-average) $230* $113*
Cost per equivalent unit (FIFO) $225** $110**
*
from Solution Exhibit 17-30B
**
from Solution Exhibit 17-32B

The cost per equivalent unit differs between the two methods because each method uses different
costs as the numerator of the calculation. FIFO uses only the costs added during the current
period whereas weighted-average uses the costs from the beginning work-in-process as well as
costs added during the current period. Both methods also use different equivalent units in the
denominator.
The following table summarizes the costs assigned to units completed and those still in
process under the weighted-average and FIFO process-costing methods for our example.

Weighted
Average FIFO
(Solution (Solution
Exhibit 17-30B) Exhibit 17-32B) Difference
Cost of units completed and transferred out $7,717,500 $7,735,250 + $17,750
Work in process, ending 772,750 755,000  $17,750
Total costs accounted for $8,490,250 $8,490,250

17-22
 The FIFO ending inventory is lower than the weighted-average ending inventory by
$17,750. This is because FIFO assumes that all the higher-cost prior-period units in work in
process are the first to be completed and transferred out while ending work in process consists of
only the lower-cost current-period units. The weighted-average method, however, smoothes out
cost per equivalent unit by assuming that more of the lower-cost units are completed and
transferred out, while some of the higher-cost units in beginning work in process are placed in
ending work in process. So, in this case, the weighted-average method results in a lower cost of
units completed and transferred out and a higher ending work-in-process inventory relative to the
FIFO method.

SOLUTION EXHIBIT 17-32A

Steps 1 and 2: Summarize Output in Physical Units and Compute Output in Equivalent Units;
FIFO Method of Process Costing,
Assembly Department of Larsen Company for October 2009.

(Step 1) (Step 2)
Equivalent Units
Physical Direct Conversion
Flow of Production Units Materials Costs
Work in process, beginning (given) 5,000 (work done before current period)
Started during current period (given) 20,000
To account for 25,000
Completed and transferred out during current
period:
From beginning work in process§
5,000  (100%  100%); 5,000  (100%  60%) 5,000 0 2,000
Started and completed
17,500 100%, 17,500  100% 17,000† 17,500 17,500
Work in process, ending* (given) 2,500
2,500  100%; 2,500  70% _____ 2,500 1,750
Accounted for 25,000
______
Work done in current period only 20,000 21,250
§
Degree of completion in this department: direct materials, 100%; conversion costs, 60%.
†
22,500 physical units completed and transferred out minus 5,000 physical units completed and transferred out from
beginning work-in-process inventory.
*Degree of completion in this department: direct materials, 100%; conversion costs, 70%.

17-23
SOLUTION EXHIBIT 17-32B
Steps 3, 4, and 5: Summarize Total Costs to Account For, Compute Cost per Equivalent Unit, and Assign Total Costs to
Units Completed and to Units in Ending Work in Process;
FIFO Method of Process Costing, Assembly Department of Larsen Company for October 2009.

Total
Production Direct Conversion
Costs Materials Costs
(Step 3) Work in process, beginning (given) $1,652,750 $1,250,000 $ 402,750
Costs added in current period (given) 6,837,500 4,500,000 2,337,500
Total costs to account for $8,490,250 $5,750,000 $2,740,250

(Step 4) Costs added in current period $4,500,000 $2,337,500

Divide by equivalent units of work done in
current period (Solution Exhibit 17-32A)  20,000  21,250
Cost per equivalent unit of work done in current period $ 225 $ 110

(Step 5) Assignment of costs:

Completed and transferred out (22,500 units):
Work in process, beginning (5,000 units) $1,652,750 $1,250,000 + $ 402,750
Costs added to beg. work in process in current period 220,000 (0  $225) + (2,000*  $110)
*

Total from beginning inventory 1,872,750

Started and completed (17,500 units) 5,862,500 (17,500†  $225) + (17,500†  $110)
Total costs of units completed & transferred out 7,735,250
Work in process, ending (2,500 units) 755,000 (2,500#  $225) + (1,750#  $110)
Total costs accounted for $8,490,250 $5,750,000 + $2,740,250

*Equivalent units used to complete beginning work in process from Solution Exhibit 17-32A, Step 2.
†Equivalent units started and completed from Solution Exhibit 17-32A, Step 2.
#
Equivalent units in ending work in process from Solution Exhibit 17-32A, Step 2.

17-24
17-33 (30 min.) Transferred-in costs, weighted-average method (related to 17-30 to 17-32).

1. Transferred-in costs are 100% complete, and direct materials are 0% complete in both
beginning and ending work-in-process inventory. The reason is that transferred-in costs are
always 100% complete as soon as they are transferred in from the Assembly Department to the
Testing Department. Direct materials in beginning or ending work in process for the Testing
Department are 0% complete because direct materials are added only when the testing process is
90% complete and the units in beginning and ending work in process are only 70% and 60%
complete, respectively.

2. Solution Exhibit 17-33A computes the equivalent units of work done to date in the
Testing Department for transferred-in costs, direct materials, and conversion costs.

3. Solution Exhibit 17-33B summarizes total Testing Department costs for October 2009,
calculates the cost per equivalent unit of work done to date in the Testing Department for
transferred-in costs, direct materials, and conversion costs, and assigns these costs to units
completed and transferred out and to units in ending work in process using the weighted-average
method.

4. Journal entries:
a. Work in Process––Testing Department 7,717,500
Work in Process––Assembly Department 7,717,500
Cost of goods completed and transferred out
during October from the Assembly
Department to the Testing Department
b. Finished Goods 23,459,600
Work in Process––Testing Department 23,459,600
Cost of goods completed and transferred out
during October from the Testing Department
to Finished Goods inventory

17-25
SOLUTION EXHIBIT 17-33A
Steps 1 and 2: Summarize Output in Physical Units and Compute Output in Equivalent Units;
Weighted-Average Method of Process Costing,
Testing Department of Larsen Company for October 2009.

(Step 1) (Step 2)
Equivalent Units
Physical Transferred-in Direct Conversion
Flow of Production Units Costs Materials Costs
Work in process, beginning (given) 7,500
Transferred in during current period (given) 22,500
To account for 30,000
Completed and transferred out
during current period 26,300 26,300 26,300 26,300
Work in process, ending* (given) 3,700
3,700  100%; 3,700  0%; 3,700  60% 3,700 0 2,220
Accounted for 30,000
Work done to date 30,000 26,300 28,520

*Degree of completion in this department: transferred-in costs, 100%; direct materials, 0%; conversion costs, 60%.

17-26
SOLUTION EXHIBIT 17-33B
Steps 3, 4, and 5: Summarize Total Costs to Account For, Compute Cost per Equivalent Unit, and Assign Total Costs to Units Completed
and to Units in Ending Work in Process;
Weighted-Average Method of Process Costing,
Testing Department of Larsen Company for October 2009.

Total
Production Transferred Direct Conversion
Costs -in Costs Materials Costs
(Step 3) Work in process, beginning (given) $ 3,767,960 $ 2,932,500 $ 0 $ 835,460
Costs added in current period (given) 21,378,100 7,717,500 9,704,700 3,955,900
Total costs to account for $25,146,060 $10,650,000 $9,704,700 $4,791,360

(Step 4) Costs incurred to date $10,650,000 $9,704,700 $4,791,360

Divide by equivalent units of work done to date
(Solution Exhibit 17-33A)  30,000  26,300  28,520
Equivalent unit costs of work done to date $ 355 $ 369 $ 168

(Step 5) Assignment of costs:

Completed and transferred out (26,300 units) $23,459,600 (26,300*  $355) + (26,300*  $369) + (26,300*  $168)
Work in process, ending (3,700 units) 1,686,460 (3,700†  $355) + (0†  $369) + (2,220†  $168)
Total costs accounted for $25,146,060 $10,429,500 + $9,704,700 + $4,791,360

*Equivalent units completed and transferred out from Solution Exhibit 17-33A, Step 2.
†
Equivalent units in ending work in process from Solution Exhibit 17-33A, Step 2.

17-27
17-34 (30 min.) Transferred-in costs, FIFO method (continuation of 17-33).

1. As explained in Problem 17-33, requirement 1, transferred-in costs are 100% complete

and direct materials are 0% complete in both beginning and ending work-in-process inventory.

2. The equivalent units of work done in October 2009 in the Testing Department for
transferred-in costs, direct materials, and conversion costs are calculated in Solution Exhibit 17-
34A.

3. Solution Exhibit 17-34B summarizes total Testing Department costs for October 2009,
calculates the cost per equivalent unit of work done in October 2009 in the Testing Department
for transferred-in costs, direct materials, and conversion costs, and assigns these costs to units
completed and transferred out and to units in ending work in process using the FIFO method.

4. Journal entries:
a. Work in Process––Testing Department 7,735,250
Work in Process––Assembly Department 7,735,250
Cost of goods completed and transferred out
during October from the Assembly Dept. to
the Testing Dept.

b. Finished Goods 23,463,766

Work in Process––Testing Department 23,463,766
Cost of goods completed and transferred out
during October from the Testing Department
to Finished Goods inventory.

17-28
SOLUTION EXHIBIT 17-34A
Steps 1 and 2: Summarize Output in Physical Units and Compute Output in Equivalent Units;
FIFO Method of Process Costing,
Testing Department of Larsen Company for October 2009.

(Step 2)
(Step 1) Equivalent Units
Physical Transferred- Direct Conversion
Flow of Production Units in Costs Materials Costs
Work in process, beginning (given) 7,500 (work done before current period)
Transferred-in during current period (given) 22,500
To account for 30,000
Completed and transferred out during current
period:
From beginning work in process§ 7,500
7,500  (100%  100%); 7,500  (100%  0%);
7,500  (100%  70%) 0 7,500 2,250
Started and completed 18,800†
18,800  100%; 18,800  100%; 18,800  100% 18,800 18,800 18,800
Work in process, ending* (given) 3,700
3,700  100%; 3,700  0%; 3,700  60% ______ 3,700 0 2,220
Accounted for 30,000 _____ ______
Work done in current period only 22,500 26,300 23,270
§
Degree of completion in this department: Transferred-in costs, 100%; direct materials, 0%; conversion costs, 70%.
†
26,300 physical units completed and transferred out minus 7,500 physical units completed and transferred out from
beginning work-in-process inventory.
*Degree of completion in this department: transferred-in costs, 100%; direct materials, 0%; conversion costs, 60%.

17-29
SOLUTION EXHIBIT 17-34B
Steps 3, 4, and 5: Summarize Total Costs to Account For, Compute Cost per Equivalent Unit, and Assign Total Costs to
Units Completed and to Units in Ending Work in Process;
FIFO Method of Process Costing,
Testing Department of Larsen Company for October 2009.

Total
Production Transferred-in Direct Conversion
Costs Costs Materials Costs
(Step 3) Work in process, beginning (given) $ 3,717,335 $ 2,881,875 $ 0 $ 835,460
Costs added in current period (given) 21,395,850 7,735,250 9,704,700 3,955,900
Total costs to account for $25,113,185 $10,617,125 $9,704,700 $4,791,360

(Step 4) Costs added in current period $ 7,735,250 $9,704,700 $3,955,900

Divide by equivalent units of work done in
current period (Solution Exhibit 17-34A)  22,500  26,300  23,270
Cost per equiv. unit of work done in current period $ 343.79 $ 369.00 $ 170.00

(Step 5) Assignment of costs:

Completed and transferred out (26,300 units):
Work in process, beginning (7,500 units) $ 3,717,335 $2,881,875 + $0 + $835,460
Costs added to beg. work in process in current period 3,150,000 (0*  $343.79) + (7,500*  $369.00) + (2,250*  $170.00)
Total from beginning inventory 6,867,335
Started and completed (18,800 units) 16,596,431 (18,800†  $343.79)+(18,800†  $369.00)+(18,800† $170.00)
Total costs of units completed & transferred out 23,463,766
Work in process, ending (3,700 units) 1,649,419 (3,700#  $343.79) + (0#  $369.00) + (2,220#  $170.00)
Total costs accounted for $25,113,185 $10,617,125 + $9,704,700 + $4,791,360

*Equivalent units used to complete beginning work in process from Solution Exhibit 17-34A, Step 2.
†
Equivalent units started and completed from Solution Exhibit 17-34A, Step 2.
#
Equivalent units in ending work in process from Solution Exhibit 17-34A, Step 2.

17-30
17-35 (25 min.) Weighted-average method.

Solution Exhibit 17-35A shows equivalent units of work done to date of:

Direct materials 625 equivalent units

Conversion costs 525 equivalent units

Note that direct materials are added when the Assembly Department process is 10%
complete. Both the beginning and ending work in process are more than 10% complete and
hence are 100% complete with respect to direct materials.
Solution Exhibit 17-35B summarizes the total Assembly Department costs for April
2009, calculates cost per equivalent unit of work done to date for direct materials and conversion
costs, and assigns these costs to units completed (and transferred out), and to units in ending
work in process using the weighted-average method.

SOLUTION EXHIBIT 17-35A

Steps 1 and 2: Summarize Output in Physical Units and Compute Output in Equivalent Units;
Weighted-Average Method of Process Costing, Assembly Department of Porter Handcraft for
April 2009.

(Step 1) (Step 2)
Equivalent Units
Physical Direct Conversion
Flow of Production Units Materials Costs
Work in process, beginning (given) 75
Started during current period (given) 550
To account for 625
Completed and transferred out
during current period 500 500 500
Work in process, ending* (given) 125
125  100%; 125  20% 125 25
Accounted for 625
Work done to date 625 525
*
Degree of completion in this department: direct materials, 100%; conversion costs, 20%.

17-31
SOLUTION EXHIBIT 17-35B
Steps 3, 4, and 5: Summarize Total Costs to Account For, Compute Cost per Equivalent Unit,
and Assign Total Costs to Units Completed and to Units in Ending Work in Process;
Weighted-Average Method of Process Costing, Assembly Department of Porter, April 2009.

Total
Production Direct Conversion
Costs Materials Costs
(Step 3) Work in process, beginning (given) $ 1,910 $ 1,775 $ 135
Costs added in current period (given) 28,490 17,600 10,890
Total costs to account for $30,400 $19,375 $11,025

(Step 4) Costs incurred to date $19,375 $11,025

Divide by equivalent units of work done to
date (Solution Exhibit 17-35A)  625  525
Cost per equivalent unit of work done to date $ 31 $ 21

(Step 5) Assignment of costs:

Completed and transferred out (500 units) $26,000 (500*  $31) + (500*  $21)
Work in process, ending (125 units) 4,400 (125†  $31) + (25†  $21)
Total costs accounted for $30,400 $19,375 + $11,025
*
Equivalent units completed and transferred out from Solution Exhibit 17-35A, Step 2.
†
Equivalent units in ending work in process from Solution Exhibit 17-35A, Step 2.

17-32
17-36 (5–10 min.) Journal entries (continuation of 17-35).

1. Work in Process–– Assembly Department 17,600

Accounts Payable 17,600
To record direct materials purchased and
used in production during April

2. Work in Process–– Assembly Department 10,890

Various Accounts 10,890
To record Assembly Department conversion
costs for April

3. Work in Process––Finishing Department 26,000

Work in Process–– Assembly Department 26,000
To record cost of goods completed and transferred
out in April from the Assembly Department
to the Finishing Department

Work in Process –– Assembly Department

Beginning inventory, April 1 1,910 3. Transferred out to
1. Direct materials 17,600 Work in Process––Finishing 26,000
2. Conversion costs 10,890
Ending inventory, April 30 4,400

17-33
17-37 (20 min.) FIFO method (continuation of 17-35).

The equivalent units of work done in April 2009 in the Assembly Department for direct materials
and conversion costs are shown in Solution Exhibit 17-37A.

Solution Exhibit 17-37B summarizes the total Assembly Department costs for April 2009,
calculates the cost per equivalent unit of work done in April 2009 in the Assembly Department
for direct materials and conversion costs, and assigns these costs to units completed (and
transferred out) and to units in ending work in process under the FIFO method.

The equivalent units of work done in beginning inventory is: direct materials, 75  100% =
75; and conversion costs 75  40% = 30. The cost per equivalent unit of beginning inventory and
of work done in the current period are:

Work Done in
Current Period
Beginning (Calculated Under
Inventory FIFO Method)
Direct materials $23.67 ($1,775  75) $32
Conversion costs $4.50 ($135  30) $22

The following table summarizes the costs assigned to units completed and those still in
process under the weighted-average and FIFO process-costing methods for our example.

Weighted
Average FIFO
(Solution (Solution
Exhibit 17-35B) Exhibit 17-37B) Difference
Cost of units completed and transferred out $26,000 $25,850 –$150
Work in process, ending 4,400 4,550 +$150
Total costs accounted for $30,400 $30,400

The FIFO ending inventory is higher than the weighted-average ending inventory by $150.
This is because FIFO assumes that all the lower-cost prior-period units in work in process are the
first to be completed and transferred out while ending work in process consists of only the
higher-cost current-period units. The weighted-average method, however, smoothes out cost per
equivalent unit by assuming that more of the higher-cost units are completed and transferred out,
while some of the lower-cost units in beginning work in process are placed in ending work in
process. Hence, in this case, the weighted-average method results in a higher cost of units
completed and transferred out and a lower ending work-in-process inventory relative to the FIFO
method.

17-34
SOLUTION EXHIBIT 17-37A
Steps 1 and 2: Summarize Output in Physical Units and Compute Output in Equivalent Units;
FIFO Method of Process Costing, Assembly Department of Porter Handcraft for April 2009.
(Step 2)
(Step 1) Equivalent Units
Physical Direct Conversion
Flow of Production Units Materials Costs
Work in process, beginning (given) 75 (work done before current period)
Started during current period (given) 550
To account for 625
Completed and transferred out during current period:
From beginning work in process§ 75
75  (100%  100%); 75  (100%  40%) 0 45
Started and completed 425†
425  100%; 425  100% 425 425
Work in process, ending* (given) 125
125  100%; 125  20% 125 25
Accounted for 625
Work done in current period only 550 495
§
Degree of completion in this department: direct materials, 100%; conversion costs, 40%.
†
500 physical units completed and transferred out minus 75 physical units completed and transferred out from
beginning work-in-process inventory.
*Degree of completion in this department: direct materials, 100%; conversion costs, 20%.
SOLUTION EXHIBIT 17-37B
Steps 3, 4, and 5: Summarize Total Costs to Account For, Compute Cost per Equivalent Unit,
and Assign Total Costs to Units Completed and to Units in Ending Work in Process;
FIFO Method of Process Costing, Assembly Department of Porter Handcraft for April 2009.

Total
Production Direct Conversion
Costs Materials Costs
(Step 3) Work in process, beginning (given) $ 1,910 $ 1,775 $ 135
Costs added in current period (given) 28,490 17,600 10,890
Total costs to account for $30,400 $19,375 $11,025
(Step 4) Costs added in current period $17,600 $10,890
Divide by equivalent units of work done in
current period (Exhibit 17-37A)  550  495
Cost per equivalent unit of work done in current
period $ 32 $ 22
(Step 5) Assignment of costs:
Completed and transferred out (500 units):
Work in process, beginning (75 units) $ 1,910 $1,775 + $135
Costs added to begin. work in process in
current period 990 (0*  $32) + (45*  $22)
Total from beginning inventory 2,900
Started and completed (425 units) 22,950 (425†  $32) + (425†  $22)
Total costs of units completed & tsfd. out 25,850
Work in process, ending (125 units) 4,550 (125#  $32) + (25#  $22)
Total costs accounted for $30,400 $19,375 + $11,025

*Equivalent units used to complete beginning work in process from Solution Exhibit 17-37A, Step 2.
†Equivalent units started and completed from Solution Exhibit 17-37A, Step 2.
#
Equivalent units in ending work in process from Solution Exhibit 17-37A, Step 2.

17-35
17-38 (30 min.) Transferred-in costs, weighted average.

1. Solution Exhibit 17-38A computes the equivalent units of work done to date in the
Binding Department for transferred-in costs, direct materials, and conversion costs.
Solution Exhibit 17-38B summarizes total Binding Department costs for April 2009,
calculates the cost per equivalent unit of work done to date in the Binding Department for
transferred-in costs, direct materials, and conversion costs, and assigns these costs to units
completed and transferred out and to units in ending work in process using the weighted-average
method.

2. Journal entries:
a. Work in Process–– Binding Department 144,000
Work in Process––Printing Department 144,000
Cost of goods completed and transferred out
during April from the Printing Department
to the Binding Department
b. Finished Goods 249,012
Work in Process–– Binding Department 249,012
Cost of goods completed and transferred out
during April from the Binding Department
to Finished Goods inventory

SOLUTION EXHIBIT 17-38A

Steps 1 and 2: Summarize Output in Physical Units and Compute Output in Equivalent Units;
Weighted-Average Method of Process Costing,
Binding Department of Publish, Inc. for April 2009.

(Step 1) (Step 2)
Equivalent Units
Physical Transferred- Direct Conversion
Flow of Production Units in Costs Materials Costs
Work in process, beginning (given) 900
Transferred-in during current period (given) 2,700
To account for 3,600
Completed and transferred out during current period: 3,000 3,000 3,000 3,000
Work in process, endinga (given) 600
(600  100%; 600  0%; 600  60%) 600 0 360
Accounted for 3,600
Work done to date 3,600 3,000 3,360
a
Degree of completion in this department: transferred-in costs, 100%; direct materials, 0%; conversion costs, 60%.

17-36
SOLUTION EXHIBIT 17-38B
Steps 3, 4, and 5: Summarize Total Costs to Account For, Compute Cost per Equivalent Unit, and Assign Total Costs to
Units Completed and to Units in Ending Work in Process;
Weighted-Average Method of Process Costing,
Binding Department of Publish, Inc. for April 2009.

Total
Production Transferred-in Direct Conversion
Costs Costs Materials Costs
(Step 3) Work in process, beginning (given) $ 47,775 $ 32,775 $ 0 $15,000
Costs added in current period (given) 239,700 144,000 26,700 69,000
Total costs to account for $287,475 $176,775 $26,700 $84,000

(Step 4) Costs incurred to date $176,775 $26,700 $84,000

Divide by equivalent units of work done to date
(Solution Exhibit 17-38A) ÷ 3,600 ÷ 3,000 ÷ 3,360
Cost per equivalent unit of work done to date $ 49.104 $ 8.90 $ 25

(Step 5) Assignment of costs:

Completed and transferred out (3,000 units) $249,012 (3,000a × $49.104) + (3,000a × $8.90) + (3,000a × $25)
Work in process, ending (600 units): 38,463 (600b × $49.104) + (0b × $8.90) + (360b × $25)

Total costs accounted for $287,475 $176,775 + $26,700 + $84,000

a
Equivalent units completed and transferred out from Sol. Exhibit 17-38A, step 2.
b
Equivalent units in ending work in process from Sol. Exhibit 17-38A, step 2.

17-37
17-39 (30 min.) Transferred-in costs, FIFO method (continuation of 17-38).

1. Solution Exhibit 17-39A calculates the equivalent units of work done in April 2009 in the
Binding Department for transferred-in costs, direct materials, and conversion costs.
Solution Exhibit 17-39B summarizes total Binding Department costs for April 2009,
calculates the cost per equivalent unit of work done in April 2009 in the Binding Department for
transferred-in costs, direct materials, and conversion costs, and assigns these costs to units
completed and transferred out and to units in ending work in process using the FIFO method.

Journal entries:
a. Work in Process–– Binding Department 141,750
Work in Process––Printing Department 141,750
Cost of goods completed and transferred out
during April from the Printing Department to
the Binding Department.

b. Finished Goods 240,525

Work in Process–– Binding Department 240,525
Cost of goods completed and transferred out
during April from the Binding Department
to Finished Goods inventory.

2. The equivalent units of work done in beginning inventory is: Transferred-in costs, 900 
100% = 900; direct materials, 900  0% = 0; and conversion costs, 900  40% = 360. The cost
per equivalent unit of beginning inventory and of work done in the current period are:

Beginning Work Done in

Inventory Current Period
Transferred-in costs (weighted average) $36.42 ($32,775  900) $53.33 ($144,000  2,700)
Transferred-in costs (FIFO) $30.95 ($27,855  900) $52.50 ($141,750  2,700)
Direct materials — $ 8.90
Conversion costs $41.67 ($15,000  360) $23.00

The following table summarizes the costs assigned to units completed and those still in
process under the weighted-average and FIFO process-costing methods for the Binding
Department.

Weighted
Average FIFO
(Solution (Solution
Exhibit 17-38B) Exhibit 17-39B) Difference
Cost of units completed and transferred out $249,012 $240,525 –$8,487
Work in process, ending 38,463 39,780 +$1,317
Total costs accounted for $287,475 $280,305

17-38
 The FIFO ending inventory is higher than the weighted-average ending inventory by
$1,317. This is because FIFO assumes that all the lower-cost prior-period units in work in
process (resulting from the lower transferred-in costs in beginning inventory) are the first to be
completed and transferred out while ending work in process consists of only the higher-cost
current-period units. The weighted-average method, however, smoothes out cost per equivalent
unit by assuming that more of the higher-cost units are completed and transferred out, while
some of the lower-cost units in beginning work in process are placed in ending work in process.
Hence, in this case, the weighted-average method results in a higher cost of units completed and
transferred out and a lower ending work-in-process inventory relative to FIFO. Note that the
difference in cost of units completed and transferred out (–$8,487) does not fully offset the
difference in ending work-in-process inventory (+$1,317). This is because the FIFO and
weighted-average methods result in different values for transferred-in costs with respect to both
beginning inventory and costs transferred in during the period.

SOLUTION EXHIBIT 17-39A

Steps 1 and 2: Summarize Output in Physical Units and Compute Output in Equivalent Units;
FIFO Method of Process Costing,
Binding Department of Publish, Inc. for April 2009.

(Step 1) (Step 2)
Equivalent Units
Physical Transferred-in Direct Conversion
Flow of Production Units Costs Materials Costs
Work in process, beginning (given) 900 (work done before current period)
Transferred-in during current period (given) 2,700
To account for 3,600
Completed and transferred out during current period:
From beginning work in processa 900
[900  (100% – 100%); 900  (100% – 0%); 900  (100% – 40%)] 0 900 540
Started and completed 2,100b
(2,100  100%; 2,100  100%; 2,100  100%) 2,100 2,100 2,100
Work in process, endingc (given) 600
(600  100%; 600 x 0%; 600  60%) ____ 600 0 360
Accounted for 3,600 ____ ____ ____
Work done in current period only 2,700 3,000 3,000

a
Degree of completion in this department: Transferred-in costs, 100%; direct materials, 0%; conversion costs, 40%.
b
3,000 physical units completed and transferred out minus 900 physical units completed and transferred out from beginning
work-in-process inventory.
c
Degree of completion in this department: transferred-in costs, 100%; direct materials, 0%; conversion costs, 60%.

17-39
SOLUTION EXHIBIT 17-39B
Steps 3, 4, and 5: Summarize Total Costs to Account For, Compute Cost per Equivalent Unit, and Assign Total Costs to Units
Completed and to Units in Ending Work in Process;
FIFO Method of Process Costing,
Binding Department of Publish, Inc. for April 2009.

Total
Production Direct Conversion
Costs Transferred-in Costs Materials Costs
(Step 3) Work in process, beginning (given) $ 42,855 $ 27,855 $ 0 $15,000
Costs added in current period (given) 237,450 141,750 26,700 69,000
Total costs to account for $280,305 $169,605 $26,700 $84,000

(Step 4) Costs added in current period $141,750 $26,700 $69,000

Divide by equivalent units of work done in current period (Sol.
Exhibit 17-39A) ÷ 2,700 ÷ 3,000 ÷ 3,000
Cost per equivalent unit of work done in current period $ 52.50 $ 8.90 $ 23.00

(Step 5) Assignment of costs:

Completed and transferred out (3,000 units)
Work in process, beginning (900 units) $ 42,855 $27,855 + $0 + $15,000
Costs added to beginning work in process in current period 20,430 (0a × $52.50) + (900a × $8.90) + (540a × $23)
Total from beginning inventory 63,285
Started and completed (2,100 units) 177,240 (2,100b × $52.50) + (2,100b × $8.90) + (2,100b × $23)
Total costs of units completed and transferred out 240,525
Work in process, ending (600 units): 39,780 (600c × $52.50) + (0c × $8.90) + (360c × $23)
Total costs accounted for $280,305 $169,605 + $26,700 + $84,000

a
Equivalent units used to complete beginning work in process from Solution Exhibit 17-39A, step 2.
b
Equivalent units started and completed from Solution Exhibit 17-39A, step 2.
c
Equivalent units in ending work in process from Solution Exhibit 17-39A, step 2.

17-40
17-40 (45 min.) Transferred-in costs, weighted-average and FIFO methods.

1. Solution Exhibit 17-40A computes the equivalent units of work done to date in the
Drying and Packaging Department for transferred-in costs, direct materials, and conversion
costs. Solution Exhibit 17-40B summarizes total Drying and Packaging Department costs for
week 37, calculates the cost per equivalent unit of work done to date in the Drying and
Packaging Department for transferred-in costs, direct materials, and conversion costs, and
assigns these costs to units completed and transferred out and to units in ending work in process
using the weighted-average method.

2. Solution Exhibit 17-40C computes the equivalent units of work done in week 37 in the
Drying and Packaging Department for transferred-in costs, direct materials, and conversion
costs. Solution Exhibit 17-40D summarizes total Drying and Packaging Department costs for
week 37, calculates the cost per equivalent unit of work done in week 37 in the Drying and
Packaging Department for transferred-in costs, direct materials, and conversion costs, and
assigns these costs to units completed and transferred out and to units in ending work in process
using the FIFO method.

SOLUTION EXHIBIT 17-40A

Steps 1 and 2: Summarize Output in Physical Units and Compute Output in Equivalent Units;
Weighted-Average Method of Process Costing,
Drying and Packaging Department of Frito-Lay Inc. for Week 37.
(Step 1) (Step 2)
Equivalent Units
Physical Transferred- Direct Conversion
Flow of Production Units in Costs Materials Costs
Work in process, beginning (given) 1,250
Transferred in during current period (given) 5,000
To account for 6,250
Completed and transferred out
during current period 5,250 5,250 5,250 5,250
Work in process, ending* (given) 1,000
1,000  100%; 1,000  0%; 1,000  40% 1,000 0 400
Accounted for 6,250
Work done to date 6,250 5,250 5,650

*Degree of completion in this department: transferred-in costs, 100%; direct materials, 0%; conversion costs, 40%.

17-41
SOLUTION EXHIBIT 17-40B
Steps 3, 4, and 5: Summarize Total Costs to Account For, Compute Cost per Equivalent Unit, and Assign Total
Costs to Units Completed and to Units in Ending Work in Process;
Weighted-Average Method of Process Costing,
Drying and Packaging Department of Frito-Lay Inc. for Week 37.

Total
Production Transferred Direct Conversion
Costs -in Costs Materials Costs
(Step 3) Work in process, beginning (given) $ 38,060 $ 29,000 $ 0 $ 9,060
Costs added in current period (given) 159,600 96,000 25,200 38,400
Total costs to account for $197,660 $125,000 $25,200 $47,460

(Step 4) Costs incurred to date $125,000 $25,200 $47,460

Divide by equivalent units of work done
to date (Solution Exhibit 17-40A)  6,250  5,250  5,650
Equivalent unit costs of work done to date $ 20 $ 4.80 $ 8.40

(Step 5) Assignment of costs:

Completed and transferred out (5,250 units) $174,300 (5,250* $20) + (5,250* $4.80) + (5,250* $8.40)
Work in process, ending (1,000 units) 23,360 (1,000†  $20) + (0†  $4.80) + (400†  $8.40)
Total costs accounted for $197,660 $125,000 + $25,200 + $47,460
*
Equivalent units completed and transferred out from Solution Exhibit 17-40A, Step 2.
†Equivalent units in ending work in process from Solution Exhibit 17-40A, Step 2.

17-42
SOLUTION EXHIBIT 17-40C
Steps 1 and 2: Summarize Output in Physical Units and Compute Output in Equivalent Units;
FIFO Method of Process Costing,
Drying and Packaging Department of Frito-Lay Inc. for Week 37.
(Step 2)
(Step 1) Equivalent Units
Physical Transferred- Direct Conversion
Flow of Production Units in Costs Materials Costs
Work in process, beginning (given) 1,250 (work done before current period)
Transferred-in during current period (given) 5,000
To account for 6,250
Completed and transferred out during current period:
From beginning work in process§ 1,250
1,250  (100%  100%); 1,250  (100%  0%);
1,250  (100%  80%) 0 1,250 250
Started and completed 4,000†
4,000  100%; 4,000  100%; 4,000  100% 4,000 4,000 4,000
Work in process, ending* (given) 1,000
1,000  100%; 1,000  0%; 1,000  40% 1,000 0 400
Accounted for 6,250
Work done in current period only 5,000 5,250 4,650

§
Degree of completion in this department: Transferred-in costs, 100%; direct materials, 0%; conversion costs, 80%.
†
5,250 physical units completed and transferred out minus 1,250 physical units completed and transferred out from
beginning work-in-process inventory.
*Degree of completion in this department: transferred-in costs, 100%; direct materials, 0%; conversion costs, 40%.

17-43
 SOLUTION EXHIBIT 17-40D
Steps 3, 4, and 5: Summarize Total Costs to Account For, Compute Cost per Equivalent Unit, and Assign Total Costs
to Units Completed and to Units in Ending Work in Process;
FIFO Method of Process Costing,
Drying and Packaging Department of Frito-Lay Inc. for Week 37.

Total
Production Transferred Direct Conversion
Costs -in Costs Materials Costs
(Step 3) Work in process, beginning (given) $ 37,980 $ 28,920 $ 0 $ 9,060
Costs added in current period (given) 157,600 94,000 25,200 38,400
Total costs to account for $195,580 $122,920 $25,200 $47,460

(Step 4) Costs added in current period $ 94,000 $25,200 $38,400

Divide by equivalent units of work done in current period
(Solution Exhibit 17-40C)  5,000  5,250  4,650
Cost per equivalent unit of work done in current period $ 18.80 $ 4.80 $ 8.258

(Step 5) Assignment of costs:

Completed and transferred out (5,250 units):
Work in process, beginning (1,250 units) $ 37,980 $28,920 + $0 + $9,060
Costs added to beg. work in process in current period 8,065 (0  $18.80) + (1,250  $4.80) + (250  $8.258)
* * *

Total from beginning inventory 46,045

Started and completed (4,000 units) 127,432 (4,000†  $18.80) + (4,000†  $4.80) + (4,000†  $8.258)
Total costs of units completed & transferred out 173,477
Work in process, ending (1,000 units) 22,103 (1,000#  $18.80) + (0#  $4.80) + (400#  $8.258)
Total costs accounted for $195,580 $122,920 + $25,200 $47,460
(Step 3)
*
Equivalent units used to complete beginning work in process from Solution Exhibit 17-40C, Step 2.
†
Equivalent units started and completed from Solution Exhibit 17-40C, Step 2.
#
Equivalent units in ending work in process from Solution Exhibit 17-40C, Step 2.

17-44
17-41 (30-35 min.) Weighted-average and standard-costing method.

1. Solution Exhibit 17-41A computes the equivalent units of work done in November 2010
by Paquita’s Pearls Company for direct materials and conversion costs.

2. and 3. Solution Exhibit 17-41B summarizes total costs of the Paquita’s Pearls Company
for November 30, 2010 and, using the standard cost per equivalent unit for direct materials and
conversion costs, assigns these costs to units completed and transferred out and to units in ending
work in process. The exhibit also summarizes the cost variances for direct materials and
conversion costs for November 2010.

SOLUTION EXHIBIT 17-41A

Steps 1 and 2: Summarize Output in Physical Units and Compute Output in Equivalent Units;
Standard Costing Method of Process Costing,
Paquita’s Pearls Company for the month ended November 30, 2010.

(Step 2)
(Step 1) Equivalent Units
Physical Direct Conversion
Flow of Production Units Materials Costs
Work in process, beginning (given) 25,000 (work done before current period)
Started during current period (given) 126,250
To account for 151,250
Completed and transferred out during current period:
From beginning work in process§ 25,000
25,000  (100%  100%); 25,000  (100% – 75%) 0 6,250
Started and completed 100,000†
100,000  100%, 100,000  100% 100,000 100,000
Work in process, ending* (given) 26,250
26,250  100%; 26,250  50% _______ 26,250 13,125
Accounted for 151,250 _______ _______
Work done in current period only 126,250 119,375
§
Degree of completion in this department: direct materials, 100%; conversion costs, 75%.
†
125,000 physical units completed and transferred out minus 25,000 physical units completed and transferred out
from beginning work-in-process inventory.

*Degree of completion in this department: direct materials, 100%; conversion costs, 50%.

17-45
SOLUTION EXHIBIT 17-41B
Steps 3, 4, and 5: Summarize Total Costs to Account For, Compute Cost per
Equivalent Unit, and Assign Total Costs to Units Completed and to Units in
Ending Work in Process;
Standard-Costing Method of Process Costing,
Paquita’s Pearls Company for the month ended November 30, 2010.

Total
Production Direct Conversion
Costs Materials Costs
(Step 3) Work in process, beginning (given) $ 250,000 $ 62,500 + $ 187,500
Costs added in current period at standard costs 1,509,375 (126,250  2.50) + (119,375  $10.00)
Total costs to account for $1,759,375 $378,125 + $1,381,250

(Step 4) Standard cost per equivalent unit (given) $ 2.50 $ 10.00

(Step 5) Assignment of costs at standard costs:
Completed and transferred out (125,000 units):
Work in process, beginning (25,000 units) $ 250,000 $62,500 + $187,500
Costs added to beg. work in process in current period 62,500 (0*  $2.50) + (6,250*  $10.00)
Total from beginning inventory 312,500
Started and completed (100,000 units) 1,250,000 (100,000†  $2.50) + (100,000†  $10.00)
Total costs of units transferred out 1,562,500
Work in process, ending (26,250 units) 196,875 (26,250#  $2.50) + (13,125#  $10.00)
Total costs accounted for $1,759,375 $378,125 + $1,381,250
Summary of variances for current performance:
Costs added in current period at standard costs (see Step 3 above) $315,625 $1,193,750
Actual costs incurred (given) 327,500 1,207,415
Variance $ 11,875 U $ 13,665 U

*Equivalent units to complete beginning work in process from Solution Exhibit 17-41A, Step 2.
†
Equivalent units started and completed from Solution Exhibit 17-41A, Step 2.
#
Equivalent units in ending work in process from Solution Exhibit 17-41A, Step 2.

17-46
17-42 (25-30 min.) Operation costing

1. To obtain the overhead rates, divide the budgeted cost of each operation by the pairs of shoes
that are expected to go through that operation.

Budgeted Budgeted Conversion

Conversion Pairs of Cost per Pair
Cost Shoes of Shoes
Operation 1 $145,125 32,250 $4.50
Operation 2 58,050 32,250 1.80
Operation 3 4,275 2,250 1.90
Operation 4 67,725 32,250 2.10
Operation 5 13,500 30,000 0.45
Operation 6 2,025 2,250 0.90

2.
Work Order Work Order
10399 10400
Shoe type: Basic Elaborate
Quantity: 1,000 150
Direct Materials $13,000 $4,200
Operation 1 4,500 675
Operation 2 1,800 270
Operation 3 0 285
Operation 4 2,100 315
Operation 5 450 0
Operation 6 0 135
Total $21,850 $5,880

The direct materials costs per unit vary based on the type of shoe ($390,000 ÷ 30,000 = $13 for
the Basic, and $63,000 ÷ 2,250 = $28 for the Elaborate). Conversion costs are charged using the
rates computed in part (1), taking into account the specific operations that each type of shoe
actually goes through.

3. Work order 10399 (Basic shoes): Work order 10400 (Elaborate shoes):
Total cost $21,850 Total cost: $5,880
Divided by number of Divided by number of
pairs of shoes: ÷ 1,000 pairs of shoes: ÷ 150
Cost per pair of plain shoes: $ 21.85 Cost per pair of fancy shoes: $39.20

17-47