human resources hault testbank

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Chapter 4 Process Costing

Chapter 4Process Costing

Solutions to Questions

4-1 A process costing system should be used in situations where a homogeneous product is produced on a continuous basis.

4-2 Job-order and processing costing are similar in the following ways:1. Job-order costing and process costing have the same basic purposes—to assign materials, labor, and overhead cost to

products and to provide a mechanism for computing unit product costs.2. oth systems use the same basic manufacturing accounts.

!. "osts #ow through the accounts in basically the same way in both systems.

4-3 "ost accumulation is simpler under process costing because costs only need to be assigned to departments—notindividual $obs. A company usually has a small number of processing departments, whereas a $ob-order costing system oftenmust %eep trac% of the costs of hundreds or even thousands of $obs.

4-4 &n a process costing system, a 'or% in (rocess account is maintained for each processing department.

4-5 )he $ournal entry to record the transfer of wor% in process from the *i+ing epartment to the iring epartment is:

'or% in (rocess, iring............................. ...

'or% in (rocess,*i+ing................................................

4-6 )he costs that might be added in the iring epartment include: /10 costs transferred in from the *i+ing epartment /20materials costs added in the iring epartment /!0 labor costs added in the iring epartment and /0 overhead costs added inthe iring epartment.

4-7 3nder the weighted-average method, e4uivalent units of production consist of units transferred to the ne+t department/or to 5nished goods0 during the period plus the e4uivalent units in the department6s ending wor% in process inventory.

4-1


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4-8 )he company will want to distinguish between the costs of the metals used to ma%e the medallions, but the medals areotherwise identical and go through the same production processes. )hus, operation costing is ideally suited for the company6sneeds.

Exercise 4-1 /27 minutes0

a. )o record issuing raw materials for use in production:

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'or% in (rocess—*olding epartment 28,777'or% in (rocess—iring epartment 9,777

aw *aterials !!,777

b. )o record direct labor costs incurred:'or% in (rocess—*olding epartment 18,777'or% in (rocess—iring epartment 9,777

'ages (ayable 2!,777

c. )o record applying manufacturing overhead:'or% in (rocess—*olding epartment 2,777'or% in (rocess—iring epartment !;,777

*anufacturing oods 178,777'or% in (rocess—iring epartment 178,777

f. )o record "ost of >oods ?old:"ost of >oods ?old 17=,777

inished >oods 17=,777

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'eighted-Average *ethod

Equivalent Units

MaterialsConversio

n3nits transferred out .............................. 17,777 17,777'or% in process, ending:

!7,777 units @ ;7.............................. 21,777!7,777 units @ 97.............................. 19,777

B4uivalent units of production................. !1,777 29,777

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1.Material

s Labor Overhea

d"ost of beginning wor% in

process inventory.................. C 1,997C 2!,=2

7 C118,177"ost added during the period... 88,!97 1,!!7 ;1,=97

)otal cost /a0............................ C172,D77 C!;,D97 C18D,;97

B4uivalent units of production

/b0......................................... 1,277 1,177 1,177"ost per e4uivalent unit /a0 E/b0......................................... C89.;9 C!.97 C1;2.97

2."ost per e4uivalent unit for

materials.......................................C 89.;9

"ost per e4uivalent unit for labor... . !.97"ost per e4uivalent unit for

overhead....................................... 1;2.97

)otal cost per e4uivalent unit...........C2D2.;

9

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Materials

Conversion

Total

Ending work in process inventory:B4uivalent units of production........... !77 177"ost per e4uivalent unit.................... C!1.9= CD.!2"ost of ending wor% in process

inventory....................................... CD,=8 CD!2C17,7

7

Units completed and transerred out:

3nits transferred to the ne+tdepartment................................... 1,!77 1,!77

"ost per e4uivalent unit.................... C!1.9= CD.!2"ost of units transferred out.............. C1,72

8 C12,11=C9!,1

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a%ing epartment"ost econciliation

"osts to be accounted for:"ost of beginning wor% in processinventory.............................................

C ,8!7

"osts added to production during theperiod..................................................

29,=97

)otal cost to be accounted for................ C!7,87

"osts accounted for as follows:

"ost of ending wor% in processinventory.............................................

C 1,127

"ost of units completed and transferredout.......................................................

2D,!=7

F

)otal cost accounted for......................... C!7,87

F)he cost of units completed and transferred out can be deduced as follows:

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"ost of beginning "osts added "ost of ending "ost of unitswor% in process G to production Hwor% in processGcompleted and

inventory during the period inventory transferred out

"ost ofC,8!7 G C29,=97 H C1,127 G unitscompleted andtransferred out

"ost of unitscompleted and H C,8!7 G C29,=97 - C1,127transferred out

"ost of unitscompleted and H C2D,!=7

transferred out

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1. Materials

Labor Overhead

3nits transferred to the ne+tdepartment................................. ;D7,777 ;D7,777 ;D7,777

'or% in process, ending:*aterials:

97,777 units @ =7 complete. . !7,777Iabor and overhead:

97,777 units @ 27 complete.. 17,777 17,777B4uivalent units of production....... 827,777 877,777 877,777

2. Materials Labor

Overhead

"ost of beginning wor% inprocess....................................

C=8,=77

C!7,777

C8,777

"ost added during the period..... D7;,277 !;7,77

7 9D2,77

7

)otal cost /a0.............................. CD;9,877 C77,777 C=7,777

B4uivalent units of production/b0........................................... 827,777 877,777 877,777

"ost per e4uivalent unit /a0 E/b0........................................... C1.1D C7.97 C7.87

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Exercise 4-7 /!7 minutes0


1.


!ulping Conversion

)ransferred to ne+t department................ 1=,777

1=,777

Bnding wor% in process:(ulping: =,777 units + 177 complete.... =,777"onversion: =,777 units + ;9 complete ,977

B4uivalent units of production.................. 192,777

197,977

2.

"ost per e4uivalent unit

!ulping Conversion

"ost of beginning wor% in process......... C 1,977 C 77

"ost added during the period................ 9D,!77 22,177 )otal cost /a0.......................................... C=7,877 C22,977B4uivalent units of production /b0.......... 192,777 197,977"ost per e4uivalent unit, /a0 E /b0......... C7.7 C7.1D9

!.

"ost of ending wor% in process inventory and units transferredout

!ulping Conversi Total

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onBnding wor% in processinventory:

B4uivalent units of

production......................... =,777 ,977"ost per e4uivalent unit...... C7.7 C7.1D9"ost of ending wor% inprocess inventory.............. C2,77 C=;! C!,7;!

3nits completed and transferred out:3nits transferred to the ne+tdepartment....................... 1=,777 1=,777

"ost per e4uivalent unit...... C7.7 C7.1D9

"ost of units completed andtransferred out.................. C98,77 C21,82; C87,22;

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Exercise 4-7 /continued0

.

"ost reconciliation

"osts to be accounted for:"ost of beginning wor% in processinventory/C1,977 G C770.................................. C 1,D77

"osts added to production during theperiod/C9D,!77 G C22,1770............................ 81,77

)otal cost to be accounted for................ C8!,!77"osts accounted for as follows:

"ost of ending wor% in processinventory............................................. C !,7;!

"ost of units completed and transferredout....................................................... 87,22;

)otal cost accounted for......................... C8!,!77

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'or% in (rocess—*i+ing !!7,777aw *aterials &nventory !!7,777

'or% in (rocess—*i+ing 2=7,777'or% in (rocess—a%ing 127,777

'ages (ayable !87,777

'or% in (rocess—*i+ing 1D7,777'or% in (rocess—a%ing D7,777

*anufacturing oods D87,777'or% in (rocess—a%ing D87,777

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1. "omputation of e4uivalent units in ending inventory:Material

s Labor Overhea

d3nits in ending inventory..... 1,977 1,977 1,977(ercent completed............... D7 7 7B4uivalent units of

production......................... 1,!97 =77 =77

2. "ost of ending wor% in process inventory and units transferred out:Material

sLabor Overhea

dTotal

Bnding wor% in process inventory:B4uivalent units ofproduction............... 1,!97 =77 =77

"ost per e4uivalentunit......................... C2.77 C;.77 C1.77

"ost of ending wor%in process inventory C!2,77 C,277 C8,77 C9,777

3nits completed and transferredout:

3nits transferred tothe ne+t department................................ 18,777 18,777 18,777

"ost per e4uivalent C2.77 C;.77 C1.77

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unit........................."ost of unitscompleted andtransferred out........

C!2,777

C12=,777

C292,777

C817,777

!. "ost reconciliation:

)otal cost to be accounted for.................... C899,777"osts accounted for as follows:

"ost of ending wor% in processinventory............................................. C 9,777

"ost of units completed and transferredout....................................................... 817,777

)otal cost accounted for......................... C899,777

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1."ilogramso Cement

'or% in process, *ay 1..................................... 87,777?tarted into production during the month......... !77,777

)otal %ilograms in process................................. !87,777educt wor% in process, *ay !1....................... 97,777"ompleted and transferred out during the

month.............................................................!!7,777

2.Equivalent Units

#EU$Material

sConversio

n3nits transferred out........................... !!7,777 !!7,777'or% in process, ending:

*aterials: 97,777 %ilograms @ 7.. 27,777"onversion: 97,777 %ilograms @

17...............................................

9,777

B4uivalent units of production............ !97,777 !!9,777

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Exercise 4-11 /!7 minutes0


1.Materia

lsConversi

on3nits transferred to the ne+t process....... !77,777 !77,777Bnding wor% in process:

*aterials: 7,777 units @ 97complete............................................. 27,777

"onversion: 7,777 units @ 29complete............................................. 17,777

B4uivalent units of production.................. !27,777 !17,777

2. Materials

Conversion

"ost of beginning wor% in process...........C 9=,=7

7 C 1,D77

"ost added during the period.................. !89,77

7 21,977

)otal cost /a0...........................................

C1,=7

7 C22D,77B4uivalent units of production /b0........... !27,777 !17,777"ost per e4uivalent unit /a0 E /b0............ C1.!8 C7.;

!.

Materials

Conversion

Total

Ending work in process inventory:

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B4uivalent units ofproduction /see above0. .. 27,777 17,777

"ost per e4uivalent unit/see above0..................... C1.!8 C7.;

"ost of ending wor% inprocessinventory........................ C2;,=77 C;,77 C!9,777

Units completed and transerred out:3nits transferred to the

ne+t process................... !77,777 !77,777"ost per e4uivalent unit

/see previous e+ercise0. .. C1.!8 C7.;"ost of units completedand transferred out.........

C1,777 C222,777

C=!=,777

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Materials

Labor %Overhead

(ounds transferred to the (ac%ingepartment during *ayF..............................

D7,777 D7,777

'or% in process, *ay !1:*aterials: 27,777 pounds @ 177

complete.................................................... 27,777Iabor and overhead: 27,777 pounds @

D7 complete............................................ 18,777

B4uivalent units of production.........................917,77

7 978,777

F !7,777 G 87,777 K 27,777 H D7,777

Pro!le" 4-13 /9 minutes0


1.

B4uivalent 3nits of (roduction

Materials

Conversion

)ransferred to ne+t departmentF............... !87,777

!87,777

Bnding wor% in process:*aterials: 7,777 units + ;9 complete. !7,777

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"onversion: 7,777 units + 29complete...............................................

17,777

B4uivalent units of production.................. 17,777

!D7,777

F3nits transferred to the ne+t department H 3nits in beginning wor% in process G 3nitsstarted into production L 3nits in ending wor% in process H ;7,777 G !97,777 L 7,777H !87,777

2.

"ost per B4uivalent 3nit

Materials

Conversion

"ost of beginning wor% in process......... C 8=,777

C !=,777

"ost added during the period................ ;,777

1D8,777

)otal cost /a0.......................................... C9!!,777

C2!,777

B4uivalent units of production /b0.......... 17,777 !D7,777"ost per e4uivalent unit, /a0 E /b0......... C1.!7 C7.=7

!.

"ost of Bnding 'or% in (rocess &nventory and 3nits )ransferred


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Materials

Conversion

Total

Bnding wor% in process

inventory:B4uivalent units ofproduction /materials:7,777 units + ;9complete conversion:7,777 units + 29complete0....................... !7,777 17,777

"ost per e4uivalent unit... C1.!7 C7.=7"ost of ending wor% inprocess inventory........... C!D,777 C=,777 C9,777

3nits completed and transferred out:3nits transferred to the ne+tdepartment.................... !87,777 !87,777

"ost per e4uivalent unit... C1.!7 C7.=7"ost of units completed andtransferred out...............

CD,777 C228,777

C;22,777

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Pro!le" 4-13 /continued0

.

"ost econciliation

"osts to be accounted for:"ost of beginning wor% in processinventory/C8=,777 G C!=,7770............................ C122,777

"osts added to production during theperiod/C;,777 G C1D8,7770........................ =9,777

)otal cost to be accounted for................ C;=;,777"osts accounted for as follows:

"ost of ending wor% in processinventory............................................. C 9,777

"ost of units completed and transferredout....................................................... ;22,777

)otal cost accounted for......................... C;=;,777

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1.

B4uivalent 3nits of (roduction

Materials

Conversion

)ransferred to ne+t department................97,77

797,777

Bnding wor% in process:*aterials: 87,777 units + ;9 complete. =7,777"onversion: 87,777 units + 29

complete............................................... 27,777

B4uivalent units of production..................917,77

7;7,777

2.

"ost per B4uivalent 3nit

Materials

Conversion

"ost of beginning wor% in process......... C !=,997

C 1!,977

"ost added during the period................ !D1,897

28;,!77

)otal cost /a0.......................................... C28,77

C!77,877

B4uivalent units of production /b0.......... 917,777 ;7,777"ost per e4uivalent unit, /a0 E /b0......... C7.8 C7.=

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!.

Applying "osts to 3nits

Material

s

Conversi

on

Total

Bnding wor% in processinventory:

B4uivalent units ofproduction ..................... =7,777 27,777

"ost per e4uivalent unit... C7.8 C7.="ost of ending wor% inprocess inventory........... C97,77 C12,877 C=!,277

3nits completed and transferred out:3nits transferred to the ne+tdepartment.................... 97,777 97,777

"ost per e4uivalent unit... C7.8 C7.="ost of units completed andtransferred out...............

C!;8,777 C288,777

C===,777

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.

"ost econciliation

"osts to be accounted for:"ost of beginning wor% in processinventory/C!=,997 G C1!,9770............................ C 97,797

"osts added to production during theperiod/C!D1,897 G C28;,!770........................ =;D,197

)otal cost to be accounted for................ C;2D,277"osts accounted for as follows:

"ost of ending wor% in processinventory............................................. C =!,277

"ost of units completed and transferredout....................................................... ===,777

)otal cost accounted for......................... C;2D,277



1.


Materials

Conversion

)ransferred to ne+t departmentF............... 2;7,77 2;7,777

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7Bnding wor% in process:*aterials: 9,777 units + 177complete...............................................

9,777

"onversion: 9,777 units + =7complete...............................................

2;,777

B4uivalent units of production.................. !19,777

2D;,777

F3nits transferred to the ne+t department H 3nits in beginning wor% in process G 3nitsstarted into production L 3nits in ending wor% in process H !9,777 G 287,777 L 9,777H 2;7,777

2. "ost per e4uivalent unit

Materials

Conversion

"ost of beginning wor% in process......... C !,77

C 27,!77

"ost added during the period................ !D;,=77

18;,=77

)otal cost /a0.......................................... C1,77

7

C27;,D77

B4uivalent units of production /b0.......... !19,777 2D;,777"ost per e4uivalent unit, /a0 E /b0......... C1.7 C7.;7

!.

"ost of ending wor% in process inventory and units transferredout

Material Conversi Total

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s on

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Bnding wor% in processinventory:

B4uivalent units of

production......................... 9,777 2;,777"ost per e4uivalent unit...... C1.7 C7.;7"ost of ending wor% inprocess inventory.............. C=!,777 C18,D77 C81,D77

3nits completed and transferred out:3nits transferred to the ne+tdepartment....................... 2;7,777 2;7,777

"ost per e4uivalent unit...... C1.7 C7.;7"ost of units completed andtransferred out..................

C!;8,777 C18D,777

C9=;,777

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1.a. 'or% in (rocess—lending 1;,=77'or% in (rocess—ottling 9,777aw *aterials 1D2,=77

b. 'or% in (rocess—lending ;!,277'or% in (rocess—ottling 1;,777

?alaries and 'ages (ayableD7,277

c. *anufacturing


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2.

Accounts eceivable aw *aterials/g0 1,77,77

7al. 1D8,=7

7/a0

1D2,=77

al. =,777

'or% in (rocesslending epartment

'or% in (rocessottling epartment

al.

!2,877 /e0 ;22,777 al.

D,777 /f0 D27,777

/a0 1;,=77 /a0 9,777/b0 ;!,277 /b0 1;,777/d0 81,777 /d0 178,777al.

12,=77 /e0 ;22,777

al.

21,777

inished >oods *anufacturing


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/c0 9D=,777 /b0

D7,277

?ales "ost of >oods ?old

/g0 1,77,777

/g0 8D7,777

Pro!le" 4-17 /=7 minutes0


1. "omputation of e4uivalent units in ending inventory:

Mi&ing Materials

Conversion

3nits transferred to the ne+t department =7.7 =7.7 =7.7Bnding wor% in process:

*i+ing: 1 unit @ 177 complete......... 1.7*aterials: 1 unit @ 27 complete....... 7.2"onversion: 1 unit @ 17 complete.... 7.1

B4uivalent units of production................. =1.7 =7.2 =7.1

2. "osts per e4uivalent unit:Mi&ing Material

sConversi

on"ost of beginning wor% in processinventory...............................................

C 1,=7 C 2= C 179

"ost added during the period.................. D,;

7 8,72 =1,1D;

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)otal cost.................................................CD=,!8

7 C8,28C=1,!7

2B4uivalent units of production................. =1.7 =7.2 =7.1"ost per e4uivalent unit.......................... C1,987 C17 C1,727

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!. "osts of ending wor% in process inventory and units transferred out:

Mi&ing Materials Conversi

on

Total

Bnding wor% in process inventory:B4uivalent units of production............ 1.7 7.2 7.1"ost per e4uivalent unit...................... C1,987 C17 C1,727"ost of ending wor% in processinventory........................................... C1,987 C28 C172

C1,;17

3nits completed and transferred out:3nits transferred to the ne+tdepartment....................................... =7.7 =7.7 =7.7

"ost per e4uivalent unit...................... C1,987 C17 C1,727"ost of units transferred out...............

CD,877 C8,77 C=1,277C1=,7

7

. "ost reconciliation:

"ost to be accounted for:"ost of beginning wor% in process

inventory/C1,=7 G C2= G C1790........................ C 1,;;1

"ost added to production during theperiod/CD,;7 G C8,72 G C=1,1D;0............ 1=,!!D

)otal cost to be accounted for................ C1==,117"osts accounted for as follows:

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"ost of ending wor% in processinventory............................................. C 1,;17

"ost of units transferred out.................. 1=,77 )otal cost accounted for......................... C1==,117

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Pro!le" 4-18 /!7 minutes0


1.

)otal units transferred to the ne+tdepartment.............................................. !7,777

Iess units in the *ay 1 inventory.............. 9,7773nits started and completed in *ay.......... 29,777

2.

)he e4uivalent units were:

Materials

Conversion

)ransferred to ne+t department........... !7,777 !7,777Bnding wor% in process:

*aterials: ,777 units + ;9complete..........................................

!,777

"onversion: ,777 units + 97complete..........................................

2,777

B4uivalent units of production............. !!,777 !2,777

!

.

)he costs per e4uivalent unit were:

Materials

Conversion

"ost of beginning wor% in process M D 777 M 77


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inventory................................. 7

9. *ultiplying the unit cost 5gure of M!.17 per unit by 1,777 unitsdoes not provide a valid estimate of the incremental cost ofprocessing an additional 1,777 units through the department. &f there is suNcient idle capacity to process an additional 1,777units, the incremental cost per unit is almost certainly less thanM!.17 per unit because the conversion costs are li%ely toinclude 5+ed costs.


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Case 4-19 /D7 minutes0

•

)his case is diNcult—particularly part !, which re4uiresanalytical s%ills.• ecause there are no beginning inventories, it ma%es no

diOerence whether the weighted-average or &< method isused by the company. Pou may choose to specify that the &<method be used rather than the weighted-average method.

1.

"omputation of the "ost of >oods?old:

Transerred'n

Conversion

3nits completed and sold................ 297,777 297,777Bnding wor% in process: )ransferred in:

27,777 units + 177 complete..... 27,777"onversion:27,777 units + 29 complete....... 9,777

B4uivalent units of production......... 2;7,777 299,777

Transerred

'n

Conversio

n"ost of beginning wor% in process.. . C 7 C7

"ost added during the period D 221 777 1= !27 77


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ending wor% in process, the higher the e4uivalent units for theperiod and the lower the unit costs.

!. &ncreasing the percentage of completion can increase netoperating income by reducing the cost of goods sold. )oincrease net operating income by C=2,977, the cost of goodssold would have to be decreased by C=2,977 from C=1,9;9,777down to C=1,912,977. ?ee the ne+t page for the necessarycalculations.


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Case 4-19 /continued0

)he percentage of completion, , aOects the cost of goodssold by its eOect on the unit cost, which can be determined asfollows:

3nit cost H C182.!7 GC1=,!27,777

297,777 G 27,777

And the cost of goods sold can be computed as follows:

"ost of goods sold H 297,777 @ 3nit cost

ecause the cost of goods sold must be reduced down toC=1,912,977, the unit cost must be C2=.79 /C=1,912,977 E297,777 units0. )hus, the re4uired percentage completion, , toobtain the C=2,977 reduction in cost of goods sold can be foundby solving the following e4uation:

C1=,!27,777C182.!7 G H C2=.79

297,777 G 27,777

C1=,!27,777 H C2=.79 - C182.!7

297,777 G 27,777

C1=,!27,777 H C=!.;9297,777 G 27,777

297,777 G 27,777 1


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!. /continued0"omputation of the "ost of >oods?old:

Transerred'n

Conversion

3nits completed and sold................ 297,777 297,777Bnding wor% in process:

)ransferred in:27,777 units + 177 complete..... 27,777

"onversion:27,777 units + !7 complete....... =,777

B4uivalent units of production......... 2;7,777 29=,777

Transerred

'n

Conversio

n"ost of beginning wor% in process.. . C 7 C

7"ost added during the period.......... D,221,777 1=,!27,77

7 )otal cost /a0.................................... CD,221,77

7

C1=,!27,7

77B4uivalent units of production /b0.... 2;7,777 29=,777"ost per e4uivalent unit, /a0 E /b0. . . C182.!7 C=!.;9


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they can to pull this bonus out of the hat.T )hose who engagein unethical or illegal acts often rationaliUe their own behavior

by e+aggerating the e+tent to which others engage in the same%ind of behavior.


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rom a broader perspective, if the net pro5t 5gures reported bythe managers in a division cannot be trusted, then thecompany would be foolish to base bonuses on the net pro5t5gures. A bonus system based on divisional net pro5tspresupposes the integrity of the accounting system.

)he company should perhaps reconsider how it determines thebonus. &t is 4uite common for companies to pay an Sall ornothingT bonus contingent on ma%ing a particular target. )hisinevitably creates powerful incentives to bend the rules whenthe target has not 4uite been attained. &t might be better tohave a bonus without this Sall or nothingT feature. or e+ample,managers could be paid a bonus of + of pro5ts above targetpro5ts rather than a bonus that is a preset percentage of their

base salary. 3nder such a policy, the eOect of adding that lastdollar of pro5ts that $ust pushes the divisional net pro5ts overthe target pro5t will add a few pennies to the manager6scompensation rather than thousands of dollars. )herefore, theincentives to misstate the net operating income are reduced.'hy tempt people unnecessarilyV


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Case 4-2 /9 minutes0


1. )he revised computations follow:

B4uivalent 3nits of (roduction:Transerre

d 'n MaterialsConversi

on )ransferred to ne+t department................ 177,777 177,777 177,777Bnding wor% in process: )ransferred in: 9,777 units + 177

complete............................................... 9,777

*aterials: 9,777 units + 7 complete..... 7"onversion: 9,777 units + 7 complete 2,777

B4uivalent units of production.................. 179,777 177,777 172,777

"ost per B4uivalent 3nit:Transerred 'n Costs Materials

Conversion

"ost of beginning wor% in process........... C 8,827C !,77

C17,277

"ost added during the period.................. 81,87 2;,=77 D=,D77 )otal cost /a0............................................ CD7,!77

C!1,777C17;,17

7B4uivalent units of production /b0............ 179,777 177,777 172,777"ost per e4uivalent unit, /a0 E /b0........... C7.8= C7.!1 C1.79

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Transerred 'n Costs Materials

Conversion Total

Bnding wor% in process inventory:B4uivalent units of production /seeabove0........................................... 9,777 7 2,777

"ost per e4uivalent unit....................... C7.8= C7.!1 C1.79"ost of ending wor% in processinventory....................................... C,!77 C7 C2,177 C=,77

3nits completed and transferred out:3nits transferred to the ne+tdepartment................................... 177,777

177,777 177,777

"ost per e4uivalent unit....................... C7.8= C7.!1 C1.79"ost of units completed andtransferred out.............................. C8=,777

C!1,777

C179,777

C222,777

2. )he unit cost computed above is C2.22 /H C7.8= G C7.!1 G C1.790 versus C2.28 on theoriginal report. )he unit cost on the report prepared by the accountant is high becausenone of the cost incurred during the month was assigned to the units in the ending wor%in process inventory.

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