# Cost Accounting Questions

Howard Poster Incorporated had 12,000 units of work in process in Department A on October 1.
These units were 60 percent complete as to conversion costs.  Materials are added at the end of the process.  During the month of October, 38,000 units were started and 40,000 units were completed.  Howard had 10,000 units of work in process on October 31.  These units were 75 percent complete as to conversion costs.

a)   Compute the equivalent units for materials and conversion costs for the month of October using the FIFO method.

b)   Using the average cost method, determine the equivalent units for materials and conversion costs for the month of October.

 Materials Conversion Costs To complete beginning work in process: Materials ____,______ Labor/Overhead (Conversion Costs) ____,______ Started and finished during month: Materials ____,______ Labor/Overhead (Conversion Costs) ____,______ Ending work in process: Materials ____,______ Labor/Overhead (Conversion Costs) ____,______ Total ____,______ ____,______ Average cost equivalent units: Finished:  Materials ____,______ Finished:  Labor/Overhead (Conversion Costs) ____,______ Ending work in process: Materials ____,______ Labor/Overhead (Conversion Costs) ____,______ Total ____,______ ____,______

2.   Nate Company manufactures Products A and B from a joint process that also yields a by-product, X.
Nate Company accounts for the revenue from its by-product sales as a deduction from the cost
of its main products.  Additional information is as follows:

 Product A B X Total Units produced 15,000 9,000 6,000 30,000 Joint costs ? ? ? \$180,000 Sales value at split off \$420,000 \$140,000 \$20,000 \$580,000

(a)  Assuming that joint product costs are allocated using the relative sales value at split-off approach,
what was the joint cost allocated to Products A and B?

(b)  Prepare the journal entry to transfer the finished products to separate inventory accounts.

(c)  Assuming the sales value of X is stable, prepare the journal entries to:

(i)   place the by-product in stock

(ii)  record the sale of 3,000 units for \$10,500 on account.

(a)

 Product Units Relative sales value Percent sales value Assignment of joint costs A ____,______ \$______,______ ____% \$______,______ B ____,______ ______,______ ____% ______,______ \$______,______ \$______,______

(b)

 Date Accounts Refer Debit Credit

(c) i)

 Date Accounts Refer Debit Credit

(c) ii)

 Date Accounts Refer Debit Credit