Follow the textbook examples – step-by-step Attached. Create a spreadsheet like the one in the book using the same labels – inputting the numbers in the homework problem.PA12Q

PA 12 QUESTION

· Students must  create an Excel file to answer these problems – use the textbook as a guide. Use the correct heading and format for the problem assigned. Create one workbook with a worksheet for each problem. SAVE as a PDF entitle the File using your name and the Assignment Title. Follow the textbook examples – step by step. Create a spreadsheet just like the one in the book using the same labels – inputting the numbers given in the homework problem BELOW THE QUESTION

USE SAMPLE FROM BOOK BELOW

In many production departments, units are typically transferred from the initial stage to the next stage in the process. When the units are transferred, the accumulated cost per unit is transferred along with them. Since the unit being produced includes work from all of the prior departments, the transferred-in cost is the cost of the work performed in all earlier departments.

When the hickory size 5A drumsticks have completed the shaping process, they are transferred to the packaging department along with the inventory costs of $29,775. The inventory costs of $29,775 were $8,775 for materials and $21,000 for conversion costs and were calculated in  Figure 5.6 . During the month of July, Rock City Percussion purchased raw material inventory of $2,000 for the packaging department. As with the shaping department, the packaging department tracks its costs and requisitions the raw material from the material storeroom. The packaging department has computed direct material costs of $2,000, direct labor costs of $13,000, and applied overhead of $9,100, for a total of $22,100 in conversion costs. Equivalent units are computed for this department, and a new cost per unit is computed.

As with calculating the equivalent units and total cost of production in the initial processing stage, there are four steps for calculating these costs in a subsequent processing stage.

Step One: Determining the Stage 2 Units to Which Costs Will Be Assigned

In the initial manufacturing department, there is beginning inventory, and units are started in production. In subsequent stages, instead of starting new units, units are transferred in from the prior department, but the accounting process is the same. Returning to the example, Rock City Percussion had a beginning inventory of 750 units in the packaging department. When the 7,500 sticks are transferred into the packaging department from the shaping department, the total number of units to account for in the reconciliation is 8,250, which is the total of the beginning WIP and the units transferred in:

The reconciliation of units to account for are the same for each department. The units that were completed and transferred out plus the ending inventory equal the total units to account for. The packaging department for Rock City Percussion completed 6,500 units and transferred them into finished goods inventory. Since the maximum number of units to possibly be completed is 8,250 and no units were lost to spoilage, the number of units in the packaging department’s ending inventory must be 1,750. The total of the 6,500 units completed and transferred out and the 1,750 units in ending inventory equal the 8,250 possible units in the packaging department.

Step Two: Computing the Stage 2 Equivalent Units of Production

The only direct material added in the packaging department for the 5A sticks is packaging. The packaging materials are added at the beginning of the process, so all the materials have been added before the units are transferred out, but all of the conversion elements have not. As a result, the number of equivalent units for material costs and for conversion costs remaining in ending inventory is different for the testing and sorting department. As you’ve learned, all of the units transferred to the next department must be 100% complete with regard to that department’s cost, or they would not be transferred. The process cost system must calculate the equivalent units of production for units completed (with respect to materials and conversion) and for ending WIP with respect to materials and conversion.

For the packaging department, the materials are 100% complete with regard to materials costs and 40% complete with regard to conversion costs. The 6,500 units completed and transferred out to the finishing department must be 100% complete with regard to materials and conversion, so they make up 6,500 (6,500 × 100%) units. The 1,750 ending WIP units are 100% complete with regard to material and have 1,750 (1,750 × 100%) equivalent units for material. The 1,750 ending WIP units are only 40% complete with regard to conversion costs and represent 700 (1,750 × 40%) equivalent units.

Step Three: Determining the Stage 2 Cost per Equivalent Unit

Once the equivalent units for materials and conversion are known for the packaging department, the cost per equivalent unit is computed in a manner similar to the calculation for the units accounted for. The costs for material and conversion need to reconcile with the department’s beginning inventory and the costs incurred for the department during that month.

The total materials costs for the period (including any beginning inventory costs) are computed and divided by the equivalent units for materials. The same process is then completed for the total conversion costs. The total of the cost per unit for materials ($1.50) and for conversion costs ($6.90) is the total cost of each unit transferred to the testing and sorting department.

Step Four: Allocating the Costs to the Units in the Finishing Department

Now you can determine the cost of the units transferred out and the cost of the units still in process in the finishing department. For the goods transferred out, simply take the units transferred out times the sum of the two equivalent unit costs (materials and conversion) because all items transferred to the next department are complete with respect to materials and conversion, so each unit brings all its costs. But the ending WIP value is determined by taking the product of the work in process materials units and the cost per equivalent unit for materials plus the product of the work in process conversion units and the cost per equivalent unit for conversion.

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