16/05/2024 19:59 Financial and Managerial Accounting - 9780071316903 - Exercice 1a | Quizlet

Sciences sociales Économie Finance Financial and Managerial Accounting (16th Edition)

Exercice 1a
Chapitre 18, page 829

Financial and Managerial Accounting

ISBN : 9780071316903
Table des matières

Solution Vérifié Réponse fournie il y a 2 ans

Étape 1 1 sur 15

In this exercise, we must determine the equivalent units of production for the three
key cost categories—body materials, wiring materials, and labor and overhead—for
the month of June.

Étape 2 2 sur 15

Superior Lighting, Inc. manufactures reading lamps in large quantities and

therefore uses process costing. Process costing is a costing system in which all
direct and indirect manufacturing expenses incurred by a production process are
gathered and averaged with the homogenous products produced by that process.
In this case, the goods are identical or substantially similar to one another and are
consequently mass-produced in a repetitive process.

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Étape 3 3 sur 15

Meanwhile, equivalent units are a measure of the amount of production work done
over a certain time period, including work on partially-finished units. In other
words, the equivalent unit is the percentage of an activity or production input that
is assigned to partially completed items. In this exercise, the equivalent units for
direct materials and direct labor and manufacturing overhead, also called
conversion cost, are separated since they are applied in the process in a different
manner.

Étape 4 4 sur 15

The equivalent units are composed of the units in beginning work in process
inventory, units started and completed, and the units remaining in work in process.

This is shown below:

Units in beginning work in process inventory XXX

Units Started and Completed XXX
Units remaining in work in process XXX
​ ​ ​

Equivalent Units XXX ​

Étape 5 5 sur 15

Following that, with units started and completed, on the other hand, relate to the
number of units begun and finished in the department during the current month. As

a result, the units started and completed refer to the units completed and
transferred out less the units in the beginning inventory. The units started and

completed in the month of June is calculated as follows:

Units transferred out during June 3,500

Less: Units in the beginning work in process ​ ​
850 ​
​

Units started and completed in June 2,650 ​

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Étape 6 6 sur 15

To begin, as specified in the exercise, body materials are introduced into the

manufacturing process at the start of the process. In this situation, the 850-unit
beginning inventory in June will have zero equivalent units in terms of body

materials because such units are already 100 percent complete for the prior

period, and so no more body materials will be applied with the beginning
inventory in the current month.

Étape 7 7 sur 15

Meanwhile, the 2,650 units started and completed, as well as the 1,200 units in the
ending work in process, have equivalent units of 2,650 and 1,200, respectively. This

is due to the fact that such units are completely applied with body materials in the

current month.

Étape 8 8 sur 15

Considering the above discussions, the equivalent units of production for body

materials in the month of June are as follows:

Units in beginning work in process inventory 0

Units Started and Completed 2,650
Units remaining in work in process ​ ​

1,200 ​

Equivalent Units of Body Materials 3,850 ​

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Étape 9 9 sur 15

In terms of wiring materials, on the other hand, the beginning inventory of 850
would likewise have zero equivalent units. This is because wiring materials are

added halfway through the process, and because the beginning work in process

was around 80% complete, wiring materials were already added in the prior

period.

Étape 10 10 sur 15

Meanwhile, the units started and completed of 2,650 will have 2,650 equivalent
units in terms of wiring materials since these are 100% complete. However, the

ending inventory of 1,200 in June will have zero equivalent units. This is because, as

stated, the ending inventory is only 30% complete, and so no wiring materials

would be added since wiring materials are only added halfway through the
process, or at 50% of the process.

Étape 11 11 sur 15

Based on the discussions above, the equivalent units of production for wiring

materials in June are as follows:

Units in beginning work in process inventory 0

Units Started and Completed 2,650
Units remaining in work in process 0
​ ​ ​

Equivalent Units of Wiring Materials 2,650 ​

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Étape 12 12 sur 15

On the other hand, in respect to conversion, the beginning inventory of 850 in June
is 80% complete since conversion is added evenly throughout the process. In this

case, 20% of conversion is required to complete the beginning inventory. As a

result, the equivalent units of the beginning inventory in terms of conversion is as
follows:

Equivalent Units = Units in beginning work in process × % of conversion in

​
= 850 × 20%

= 170

 

Étape 13 13 sur 15

Then, the ending inventory of 1,200 in June is determined to be 30% completed. In

this case, 30% has been applied with conversion in the month of June. Therefore,
the equivalent units of ending inventory in terms of conversion is as follows:

Equivalent Units = Units in ending work in process × % of conversion incur

​
= 1,200 × 30%

= 360

 

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Étape 14 14 sur 15

Finally, with the calculations made above, the equivalent units of production for

conversion in June are as follows:

Units in beginning work in process inventory 170

Units Started and Completed 2,650
Units remaining in work in process 360
​ ​ ​

Equivalent Units of Conversion 3,180 ​

Étape 15 15 sur 15

To summarize, the equivalent units of production for the three input resources
Superior Lighting, Inc. for the month of June are as follows:

Body Wiring
Conversion
Materials Materials

Units in beginning
work in process 0 0 170
inventory

Units Started and

2,650 2,650 2,650
Completed

Units remaining in
1,200 0 360
work in process

Total Equivalent
3,850 2,650 3,180
Units

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Notez cette solution

Exercice 15d Exercice 1b

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