6-21.

Basic Cost Flow Model

Give the amounts for the following items in the Merchandise Inventory account:
a. Beginning Balance (BB).
$300,000
b. Transfers-in (TI).
$3,000,000
c.

Ending Balance (EB).

$300,000 + $3,000,000 - $2,240,000 = $1,060,000

d. Transfers-out (TO).
$400,000 + $1,200,000 + $40,000 + $400,000 + $200,000 = $2,240,000
6-25. Basic Cost Flow Model
Fill in the missing items for the following inventories:

Beginning Balance
Ending Balance
Transferred In
Transferred Out

A
$30,000
$21,000
$18,000
$27,000

B
$30,000
$31,000
$110,000
$109,000

C
$260,000
$120,000
$780,000
$920,000

6-30. Basic Product Costing: Ethical Issues

a. Compute cost of goods sold for November.
b. What is the value of work-in-process inventory on November 30?
c. The president tells the controller that stock analysts expect higher income for the month
and asks the controller to change the production managers estimate about the ending
work-in-process inventory.
1) If the controller wanted to comply with the presidents request, would he raise of
lower the estimated percentage complete from the 30 percent estimate of the
production supervisor? Explain
2) What should the controller do?

Production:
Barrels
Percentage Complete
Equivalent Barrels
Costs:

Total

Sold

Work-in-Process
November 30

10,000

8,800
100%
8,800

1,200
30%
360

9,160

Materials
Manufacturing Overhead
Total Cost Incurred
Cost Per Equivalent Barrel
Cost Assigned To Product

$18,072
$20,400
$38,472
$4.20
$38,472

a.

$ 4.20=$ 38,472 9,160 equivalent units

b.

$ 36,960=8,800 equivalent units $ 4.20

c.

$ 1,512=360 equivalent units $ 4.20

$36,960

$1,512

6-35. Predetermined Overhead Rates

Refer to the data in Exercise 6-34. Compute the predetermined overhead rate assuming that
Tiger Furnishing uses direct labor costs to allocate overhead costs.

Predetermined Overhead=

Estimated Overhead
$ 174,100
=
=$ 1.741
Estimated AllocationBase $ 100,000

6-38. Operations Costing

Howrley-David uses operations costing and assigns conversion costs based on the number of
units assembled. Compute the cost of each model assembled in August.

Details
Total Operation Cost
Total Number of Units
Cost per Unit
Allocation of Operation Cost:
Operation cost ($2,000 per unit)
Material Cost
Total Cost
Number of Units
Unit Cost

Fat Boy

Screamer

2,000

4,000

$4,000,000

$8,000,000

$4,000,000
8,000,000
2,000
$4,000

$12,000,000
$20,000,000
4,000
$5,000

Total
$12,000,000
6,000
$2,000
$12,000,000

6-40.Operation Costing
Organic Grounds uses operations costing and assigns conversion cost based on the number of
pounds of coffee produced. Compute the cost unit of each brand of coffee produced in February.

Number of pounds
Materials cost per pound

Star
5,000
$4.00

Bucks
20,000
$6.00

Total
25,000

Costs
Conversion Costs:
Direct Labor
Indirect Materials
Other Overhead
Total Operation Cost

$20,000

$120,000

$140,000
$50,000
$15,000
$100,000
$165,000

Cost per pound plant=$ 165,000 25,000units=$ 6.60 per pound

Star

Bucks

Total

$33,000

$132,000

$165,000

Material Cost

$20,000

$120,000

Total cost

$53,000

$252,000

Conversion Cost (@ $6.60 per

pound)

Number of pounds

5,000

Cost per pound

$10.60

20,000
$12.60

$ 33,000=5,000 units $ 6.60 per pound

$ 132,000=20,000 units $ 6.60 per pound

6-42. Product Costing
Refer to the data in Exercise 6-34. Compute the individual product costs per unit assuming that
Tiger Furnishings uses machine-hours to allocate overhead to the products.

Basic
1,000
4,000

Dominator
250
2,000

Total
1,250
6,000

$10,000
$64,500

$3,750
$35,500

$13,750
$100,000

Manufacturing Overhead
($29.02 per machine hour)

$116,067

$58,020

$174,087

Total Cost

$190,567

$97,270

$287,837

Units Cost

$190.57

$389.08

Details
Units produced
Machine hours
Costs
Direct Material Cost
Direct Labor

6-45. Two-Stage Allocation and Product Costing

a. Compute the predetermined overhead rates assuming that Owl-Eye Radiologists uses
equipment-hours to allocate equipment-related overhead costs and labor-hours to
allocate labor-related overhead costs.
b. Compute the total costs of production and the cost per unit for each or the two types of
patients undergoing in June.

Predetermined Overhead=

Equipment Related Overhead $ 4,800+ $ 8,400+ $ 3,360

=
=$ 46
Equipment Hours
360

$46 per equipment hour

Predetermined Overhead=

Equipment Related Overhead $ 12,600+ $ 20,400

=
=$ 50
Equipment Hours
660

$50, per direct labor hour

Details
Units (procedures) produced
Equipment hours
Direct labor hours
Product Costing
Direct Material Cost
Direct labor hours
Overhead
Equipment Related ($46 per
equipment hour)
Labor Related ($50 per direct
labor hour)
Total Cost
Unit Cost

Hospital
Patients
640
240
480
Hospital
Patients
$0
$38,400

Other
Patients
860
120
180
Other
Patients
$0
$10,800

$0
$49,200

$11,040

$5,520

$16,560

$24,000

$9,000

$33,000

$73,440
$114.75

$25,320
$29.44

$98,760

Total
1500
360
660
Total