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ACTG22a Process Costing in Subseq Dept. Exercises

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92 views

ACTG22a Process Costing in Subseq Dept. Exercises

Uploaded by

Cecilia Peji
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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Benson Pharmaceuticals uses a process costing system to compute the unit costs of the over-the counter

cold remedies that it produces. It has three departments: mixing, encapsulating, and bottling. In mixing,
the ingredients for the cold capsules are measured, sifted, and blended (with materials assumed to be
uniformly added throughout the process). The mix is transferred out in gallon containers. The
encapsulating department takes the powdered mix and places it in capsules (which are necessarily added
at the beginning of the process). One gallon of powdered mix converts into 1,500 capsules. After the
capsules are filled and polished, they are transferred to bottling, where they are placed in bottles that are
then affixed with a safety seal, lid, and label. Each bottle receives 50 capsules.

During March, the following results are available for the first two departments:

Mixing Encapsulating
Beginning inventories:
Physical units 10 gallons 4,000

Costs:
Materials $252 $32
Labor 282 20
Overhead ? ?
Transferred-in n/a $140

Current production:
Transferred out 140 gallons 208,000
Ending inventory 20 gallons 6,000

Current costs:
Materials $3,636 $1,573
Transferred-in n/a ?
Labor $4,618 $1,944
Overhead ? ?

Percentage of completion
Beginning inventory 2/5 ½
Ending inventory ½ 2/5

Overhead in both departments are applied as a percentage of direct labor. In the mixing department,
overhead is 200%; in encapsulating, 150%.

Required: Prepare a cost of production report for both departments using the weighted average method
and first in, first out method.

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