Process Costing Using FIFO: Crone Corporation’s Assembly Department (ACC 601, Part D)

Process Costing Using FIFO: Crone Corporation’s Assembly Department (ACC 601, Part D)

Instructions:

Process Costing Using FIFO: Crone Corporation’s Assembly Department (ACC 601, Part D)

ACC 601 Managerial Accounting Case 1 (100 points)

Instructions: 1. Complete the following activities in good form. Use excel or word only.

Provide all supporting calculations to show how you arrived at your numbers

2. Submit only one copy of your completed work via Moodle. Do not send it to me by email.
3. Case study needs to be in APA format.

Part A: Schedules of Cost of Goods Manufactured and Cost of Goods Sold; Income Statement

Nish Corporation has provided the following data for the month of April:

Sales……………………………………….. $220,000 Raw materials purchases …………… $50,000 Direct labor cost ………………………. $23,000 Manufacturing overhead cost …….. $59,000 Selling expense………………………… $18,000 Administrative expense …………….. $43,000

Inventories: Beginning Ending Raw materials …….. $26,000 $35,000 Work in process….. $18,000 $22,000 Finished goods……. $42,000 $29,000

Required:

1. Prepare a Schedule of Cost of Goods Manufactured in good form for April. b. Prepare an Income Statement in good form for April.

Part B: Application of Job Order Costing

Scanlon Company has a job-order costing system and applies manufacturing overhead cost to products on the basis of machine-hours. The following estimates were used in preparing the predetermined overhead rate for the most recent year:

Machine-hours…………………………. 95,000 Manufacturing overhead cost …….. $1,710,000

During the most recent year, a severe recession in the company’s industry caused a buildup of inventory in the company’s warehouses. The company’s cost records revealed the following actual cost and operating data for the year:

Machine-hours………………………………………………………………….. 75,000 Manufacturing overhead cost ……………………………………………… $1,687,500 Amount of applied overhead in inventories at year-end:

Work in process……………………………………………………………… $337,500 Finished goods……………………………………………………………….. $253,125 Amount of applied overhead in cost of goods sold……………… $759,375

Required:

1. Compute the company’s predetermined overhead rate for the year and the amount of underapplied or overapplied overhead for the year.
2. Determine the difference between net operating income for the year if the underapplied or overapplied overhead is allocated to the appropriate accounts rather than closed directly to Cost of Goods Sold.

Part C: Process Costing using Weighted Average

Timberline Associates uses the weighted-average method in its process costing system. The following

data are for the first processing department for a recent month:

Work in process, beginning: Units in process ……………………………………………….. 2,400

Percent complete with respect to materials ………….. 75% Percent complete with respect to conversion ………..

50% Costs in the beginning inventory:

Materials cost ………………………………………………….. $8,400 Conversion cost ……………………………………………….. $7,200

Units started into production during the month……….. 20,800 Units completed and transferred out ……………………… 22,200 Costs added to production during the month:

Materials cost ………………………………………………….. $97,400 Conversion cost ……………………………………………….. $129,600

Work in process, ending: Units in process ……………………………………………….. 1,000

Percent complete with respect to materials ………….. 80% Percent complete with respect to conversion ………..

60%

Required:

1. Determine the equivalent units of production. b. Determine the costs per equivalent unit. c. Determine the cost of ending work in process inventory. d. Determine the cost of the units transferred to the next department.

Part D: Process Costing using First-in-First Out (FIFO)

Crone Corporation uses the FIFO method in its processing costing system. The following data concern the company’s Assembly Department for the month of October.

Cost in beginning work in process inventory…….. $1,920 Units started and completed this month ……………. 3,130

Materials Conversion Cost per equivalent unit………………………………….. $9.50 $20.40 Equivalent units required to complete the units in

beginning work in process inventory…………….. 360 140 Equivalent units in ending work in process

inventory …………………………………………………… 330 264

Required:

Determine the cost of ending work in process inventory and the cost of units transferred out of the department during October using the FIFO method.

Part E: Activity-Based Costing

Welk Manufacturing Corporation has a traditional costing system in which it applies manufacturing overhead to its products using a predetermined overhead rate based on direct labor-hours (DLHs). The company has two products, H16Z and P25P, about which it has provided the following data:

H16Z P25P Direct materials per unit ……………. $10.20 $50.50 Direct labor per unit …………………. $8.40 $25.20 Direct labor-hours per unit ………… 0.40 1.20 Annual production……………………. 30,000 10,000

The company’s estimated total manufacturing overhead for the year is $1,464,480 and the company’s estimated total direct labor-hours for the year is 24,000.

The company is considering using a variation of activity-based costing to determine its unit product costs for external reports. Data for this proposed activity-based costing system appear below:

Activities and Activity Measures Estimated Overhead Cost Supporting direct labor (DLHs)…………….. $ 552,000 Setting up machines (setups) ………………… 132,480 Parts administration (part types) ……………. 780,000 Total ………………………………………………….. $1,464,480

H16Z P25P Total Supporting direct labor …… 12,000 12,000 24,000 Setting up machines ……….. 864 240 1,104 Parts administration ……….. 600 960 1,560

Required:

1. Determine the manufacturing overhead cost per unit of each of the company’s two products under the traditional costing system.
2. Determine the manufacturing overhead cost per unit of each of the company’s two products under activity-based costing system.

Process Costing Using FIFO: Crone Corporation’s Assembly Department (ACC 601, Part D)

RUBRIC
Excellent Quality 95-100%	Introduction 45-41 points The background and significance of the problem and a clear statement of the research purpose is provided. The search history is mentioned.		Literature Support 91-84  points The background and significance of the problem and a clear statement of the research purpose is provided. The search history is mentioned.			Methodology 58-53 points Content is well-organized with headings for each slide and bulleted lists to group related material as needed. Use of font, color, graphics, effects, etc. to enhance readability and presentation content is excellent. Length requirements of 10 slides/pages or less is met.
Average Score 50-85%	40-38 points More depth/detail for the background and significance is needed, or the research detail is not clear. No search history information is provided.		83-76  points Review of relevant theoretical literature is evident, but there is little integration of studies into concepts related to problem. Review is partially focused and organized. Supporting and opposing research are included. Summary of information presented is included. Conclusion may not contain a biblical integration.			52-49  points Content is somewhat organized, but no structure is apparent. The use of font, color, graphics, effects, etc. is occasionally detracting to the presentation content. Length requirements may not be met.
Poor Quality 0-45%	37-1 points The background and/or significance are missing. No search history information is provided.		75-1 points Review of relevant theoretical literature is evident, but there is no integration of studies into concepts related to problem. Review is partially focused and organized. Supporting and opposing research are not included in the summary of information presented. Conclusion does not contain a biblical integration.			48-1 points There is no clear or logical organizational structure. No logical sequence is apparent. The use of font, color, graphics, effects etc. is often detracting to the presentation content. Length requirements may not be met
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