Question: This exercise relates to the Double Diamond
This exercise relates to the Double Diamond Skis’ Shaping and Milling Department that was discussed earlier in the chapter.The Excel worksheet form that appears below consolidates data from Exhibits 4–5 and 4–8.Download the workbook containing this form from Connect, where you will also receive instructions about how to use this worksheet form.
You should proceed to the requirements below only after completing your worksheet.
Exhibits 4–5:
Exhibits 4–5:
Required:
1. Check your worksheet by changing the beginning work in process inventory to 100 units, the units started into production during the period to 2,500 units, and the units in ending work in process inventory to 200 units, keeping all of the other data the same as in the original example. If your worksheet is operating properly, the cost per equivalent unit for materials should now be $152.50 and the cost per equivalent unit for conversion should be $145.50. If you do not get these answers, find the errors in your worksheet and correct them. How much is the total cost of the units transferred out? Did it change? Why or why not?
2. Enter the following data from a different company into your worksheet:
Beginning work in process inventory:
Units in process ..........................................................................................200
Completion with respect to materials .....................................................100%
Completion with respect to conversion .....................................................20%
Costs in the beginning work in process inventory:
Materials cost ………………………………....................................................$2,000
Conversion cost ........................................................................................$800
Units started into production during the period ……..............................1,800
Costs added during the period:
Materials cost ......................................................................................$18,400
Conversion cost ……………………………...................................................$38,765
Ending work in process inventory:
Units in process ...........................................................................................100
Completion with respect to materials ....................................................100%
Completion with respect to conversion ....................................................30%
What is the cost of the units transferred out?
3. What happens to the cost of the units transferred out in part (2) above if the percentage completion with respect to conversion for the beginning inventory is changed from 20% to 40% and everything else remains the same? What happens to the cost per equivalent unit for conversion? Explain.
Transcribed Image Text:
D Chapter 4: Applying Excel Data 4 Begirning work in process imentory Unts in process Completion with respect to materials 7 Completion with respact to conversion 8 Costs in the beginning werk in process inventory Materiais 200 55% 30% 59.600 $6.575 cost 10 Conversion cost Unta stanad into production during the pariod 12 Costa added te production during the peried 13 Materials cost 14 Comersion cost 15 Ending work in process inventory 16 Units in process 17 Completion with respect to materials 18 Completion with respect to comversion 19 20 Ender a formula indo each of the cella marked wth a ? below 21 22 Weighted-Average method: 5,000 $368.600 $350,900 400 40% 25% Equivalent Uwis of Production Materials Canversion 26 Units tianstered to the next department 27 Endng work in process inventory 28 Matarials 29 Comersion 30 Equialent units of production Costs per Equivalant Unit Matarials Conversion 34 Cest of begirning wok in process imentory 35 Cosets added dunng the period 36 Total cost 37 Equivalant units af production 18 Cost per equivalent unit 40 41 42 Ending work in process imentory 43 Equivalent units of production 44 Cost per equialent unt 45 Cost of ending wark in process inentory Costs of Ending work in process inventory and she Units Transferred Out Total Materials Canvarsion 47 Units completed and transfered out 48 Units transferred to the next department 49 Cost per aquialent unt 50 Cost of units transferred out 51 Cost Reconcilation 53 Costs to be accourted for 54 Cost of beginning wark in process inertory s Costs added to production during the period 50 Total cost to be accounted for 57 Costs accounted for as follows 58 Cost of anding work in process imentory 59 Cost of units transferred out 60 Total cost accouted for H Chanter Ferm0hate ad Percent Complete Shaping and Milling Department Units Materials Conversion 200 30% Beginning work in process inventory. Units started into production during May ...... 55% 5,000 Units completed during May and transferred to the next department. Ending work in process inventory.... 4,800 100%* 100%* 400 40% 25% *We always assume that units transferred out of a department are 100% complete with respect to the processing done in that department. Materials Conversion Total Cost of beginning work in process inventory Costs added during the period. $ 9,600 $ 350,900 $ 356,475 $ 15,175 719,500 5,575 368,600 Total cost...... $378,200 $734,675
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> What is the meaning of break-even point?
> What is the meaning of operating leverage?
> What is the meaning of contribution margin ratio? How is this ratio useful in planning business operations?
> Assume that a company has two processing departments—Mixing followed by Firing. Explain what costs might be added to the Firing Department’s Work in Process account during a period.
> How do direct labor costs flow through a job-order costing system?
> How do you compute the unadjusted cost of goods sold?
> How do you compute the cost of goods manufactured?
> How do you compute the total manufacturing costs within a schedule of cost of goods manufactured?
> How do you compute the raw materials used in production?
> What is underapplied overhead? Overapplied overhead?
> Stillicum Corporation makes ultra-light weight backpacking tents. Data concerning the company’s two product lines appear below: The company has a traditional costing system in which manufacturing overhead is applied to units based on di
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> Describe the terms (a) “control premium” and (b) “illiquidity discount” when discussing possible external or outside buyers of a venture.
> What is an employee stock option plan (ESOP)? How is an ESOP used to buy out a venture?
> What is foreclosure?
> What is meant by loan default? Also, describe (a) an acceleration provision and (b) a cross-default provision.
> What is the purpose of the U.S. Bankruptcy Code? What are some of the characteristics of ventures that use instead of private liquidation?
> Describe a venture bankruptcy. Also, indicate the difference between (a) a voluntary bankruptcy petition and (b) an involuntary bankruptcy petition.
> What is bankruptcy and how is it used by ventures?
> What are the steps or stages in a “typical” execution and time line schedule used in planning and executing an IPO?
> Describe the absolute priority rule.
> What is a private liquidation? What does the process of assignment mean?
> What is a private workout? Also, describe some of the characteristics of ventures that are likely to engage in private workouts.
> What is a systematic liquidation of a venture? What are some of the advantages and disadvantages of a systematic liquidation?
> What is meant by initial public offering (IPO) underpricing?
> Describe the two following terms that may be involved in underwriting a new securities issue: (a) green shoe and (b) lockup provision.
> When an investment banking firm decides whether to underwrite or market a securities issue, what is meant by a firm commitment and best efforts?
> What is meant by due diligence? How does a traditional registration differ from a shelf registration?
> An insolvent venture is one where equity is negative and/or the cash flow of the firm is unable to meet debt obligations.
> Define asset restructuring and describe how it can be implemented to escape from financial distress.
> Define operations restructuring and describe how it can be implemented to escape financial distress.
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> Use the concept of cash flow insolvency over time and describe what would happen if the problem is temporary rather than permanent.
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> Describe how the relative value method is used to value a firm’s equity.
> Describe an outright sale of a venture. What are the four categories of possible buyers?
