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BA225 Week 3 6Qs

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BE3-6 Trek Company has the following production data for April: units transferred out 40,000,
and ending work in process 5,000 units that are 100% complete for materials and 40% complete
for conversion costs. If unit materials cost is $4 and unit conversion cost is $7, determine
the costs to be assigned to the units transferred out and the units in ending work in process.

BE3-8 Data for Cascio Company are given in BE3-7. Production records indicate that 18,000
units were transferred out, and 2,000 units in ending work in process were 50% complete as
to conversion cost and 100% complete as to materials. Prepare a cost reconciliation schedule.

E3-7 The Sanding Department of Richards Furniture Company has the following production
and manufacturing cost data for March 2014, the first month of operation.
Production: 9,000 units finished and transferred out; 3,000 units started that are 100%
complete as to materials and 20% complete as to conversion costs.
Manufacturing costs: Materials $33,000; labor $24,000; overhead $36,000.

Instructions
Prepare a production cost report

BE4-2 Finney Inc. has conducted an analysis of overhead costs related to one of its product
lines using a traditional costing system (volume-based) and an activity-based costing
system. Here are its results

Traditional costing ABC
Sales revenue   600,000  600,000
Overhead costs:
 Product RX3   34,000  50,000
 Product Y12   36,000  20,000
 70,000  70,000

BE4-8 Rich Novelty Company identified the following activities in its production and
support operations. Classify each of these activities as either value-added or non value added.
(a) Machine setup.
(b) Design engineering.
(c) Storing inventory.
(d) Moving work in process.
(e) Inspecting and testing.
(f) Painting and packing.

E4-10 Wilmington, Inc. manufactures five models of kitchen appliances at its Mesa plant.
The company is installing activity-based costing and has identified the following activities
performed at its Mesa plant.
1. Designing new models.
2. Purchasing raw materials and parts.
3. Storing and managing inventory.
4. Receiving and inspecting raw materials and parts.
5. Interviewing and hiring new personnel.
6. Machine forming sheet steel into appliance parts.
7. Manually assembling parts into appliances.
8. Training all employees of the company.
9. Insuring all tangible fixed assets.
10. Supervising production.
11. Maintaining and repairing machinery and equipment.
12. Painting and packaging finished appliances.

Having analyzed its Mesa plant operations for purposes of installing activity-based costing,
Wilmington, Inc. identified its activity cost centers. It now needs to identify relevant
activity cost drivers in order to assign overhead costs to its products.

Instructions
Using the activities listed above, identify for each activity one or more cost drivers that
might be used to assign overhead to Wilmington’s five products.

Brief Exercises: BE3-6, BE3-8
Exercise: E3-7
Brief Exercises: BE4-2, BE4-8

Exercise: E4-10

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