Trek company has the following production

W3 Assignment “Application Problems 3”

Page 120: Brief Exercises 3-7 and 3-9

BE3-7 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.

BE3-9 Data for Hollins Company are given in BE3-8. 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 costs and 100% complete as to materials. Prepare a cost reconciliation schedule.

Page 123: Exercise 3-7

E3-7 The Sanding Department of Quik Furniture Company has the following production

and manufacturing cost data for March 2017, the first month of operation.

Production: 7,000 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 $21,000; and overhead $36,000.

Instructions

Prepare a production cost report.

Pages 164-165: Brief Exercise 4-2, and 4-8

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

Explain how a difference in the overhead costs between the two systems may have

occurred.

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–valueadded.

(a) Machine setup. (d) Moving work in process.

(b) Design engineering. (e) Inspecting and testing.

(c) Storing inventory. (f) Painting and packing.

Page 170: Exercise 4-8

E4-8 Wilmington, Inc. manufactures five models of kitchen appliances. 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.

W3 Assignment “Application Problems 3”

Page 120: Brief Exercises 3

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