chapter 18 (finman); chapter 3 (man) process … content... · 1. a. an assembly-type industry...

1. a. An assembly-type industry using mass production methods, such as TV assembly, would use the process cost system because the products are somewhat standard and lose their identities as individual items. In such industries, it is neither practical nor necessary to identify output by jobs.

b. A job order cost system would be used by a building contractor to accumulate the costs for each individual building because the costs can be identified with each job without great difficulty.

c. A job order cost system is best suited for an automobile repair shop because costs can be reasonably identified with each job.

d. A process cost system would be best suited for a paper manufacturer because the processes are continuous and the products are homogeneous.

e. A job order cost system is best suited for a custom jewelry manufacturer because most of the production consists of job orders, and costs can be reasonably identified with each job.

2. Since all goods produced in a process cost system are identical units, it is not necessary to classify production costs into job orders.

3. In a process cost system, the direct labor and factory overhead applied are debited to the work in process accounts of the individual production departments in which they occur. The reason is that all products produced by the department are similar. Thus, there is no need to charge these costs to individual jobs. For the process manufacturer, the direct materials and the conversion costs are charged to the department and divided by the completed production of the department to determine a cost per unit.

4. The cost per equivalent unit is frequently determined separately for direct materials and conversion costs because these two costs are frequently added at different rates in the production process. For example, materials may be incurred entirely at the beginning of the process, while conversion costs are typically incurred evenly throughout the process.

5. The cost per equivalent unit is used to allocate direct materials and conversion costs between completed and partially completed units.

6. The transferred-in cost from Blending to Filling includes the materials costs, direct labor, and applied factory overhead incurred to complete units in Blending.

7. The most important purpose of the cost of production report is to assist in the control of costs. This is accomplished by holding each department head responsible for the costs incurred in the department.

8. Cost of production reports can provide detailed data about the process. The reports can provide information on the department by individual cost elements. This can enable management to investigate problems and opportunities.

CHAPTER 18 (FINMAN); CHAPTER 3 (MAN)PROCESS COST SYSTEMS

DISCUSSION QUESTIONS

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DISCUSSION QUESTIONS (Continued)

9. Yield is a measure of the materials usage efficiency of a process manufacturer. It is determined by dividing the output volume of product by the input volume of product. For example, if 950 tons of aluminum were rolled from 1,000 tons of ingot, then the yield would be said to be 95%. Five percent of the ingot was scrapped during the rolling process.

10. Just-in-time processing emphasizes combining process functions into manufacturing cells, involving employees in process improvement efforts, eliminating wasteful activities, and reducing the amount of work in process inventory required to fulfill production targets.


PE 18–1A (FINMAN); PE 3–1A (MAN)Shipbuilding Job orderGasoline refining ProcessFlour mill ProcessMovie studio Job orderPlastic manufacturing ProcessHome construction Job order

PE 18–1B (FINMAN); PE 3–1B (MAN)Steel manufacturing ProcessBusiness consulting Job orderWeb designer Job orderComputer chip manufacturing ProcessCandy making ProcessDesigner clothes manufacturing Job order

PE 18–2A (FINMAN); PE 3–2A (MAN)37,400 ounces started and completed (40,400 ounces completed – 3,000 ounces beginning WIP), or (38,000 ounces started – 600 ounces ending WIP)

PE 18–2B (FINMAN); PE 3–2B (MAN)7,500 tons started and completed (7,900 tons completed – 400 tons beginning WIP), or (8,500 tons started – 1,000 tons ending WIP)

PRACTICE EXERCISES


PE 18–3A (FINMAN); PE 3–3A (MAN)Percent

Total Materials EquivalentWhole Added In Units forUnits Period Materials

Inventory in process, beginning of period……………… 3,000 0% 0Started and completed during the period……………… 37,400 100% 37,400Transferred out of Filling (completed)…………………… 40,400 37,400Inventory in process, end of period……………………… 600 100% 600Total units to be assigned costs………………………… 41,000 38,000

* 40,400 – 3,000

PE 18–3B (FINMAN); PE 3–3B (MAN)Percent

Total Materials EquivalentWhole Added In Units forUnits Period Materials

Inventory in process, beginning of period……………… 400 0% 0Started and completed during the period……………… 7,500 100% 7,500Transferred out of Rolling (completed)………………… 7,900 7,500Inventory in process, end of period……………………… 1,000 100% 1,000Total units to be assigned costs………………………… 8,900 8,500

* 7,900 – 400

*

*****


PE 18–4A (FINMAN); PE 3–4A (MAN)Percent

Total Conversion EquivalentWhole Completed Units forUnits in Period Conversion

Inventory in process, beginning of period……………… 3,000 40% 1,200Started and completed during the period……………… 37,400 100% 37,400Transferred out of Filling (completed)…………………… 40,400 38,600Inventory in process, end of period……………………… 600 25% 150Total units to be assigned costs………………………… 41,000 38,750

* 40,400 – 3,000

PE 18–4B (FINMAN); PE 3–4B (MAN)Percent

Total Conversion EquivalentWhole Completed Units forUnits in Period Conversion

Inventory in process, beginning of period……………… 400 80% 320Started and completed during the period……………… 7,500 100% 7,500Transferred out of Rolling (completed)………………… 7,900 7,820Inventory in process, end of period……………………… 1,000 30% 300Total units to be assigned costs………………………… 8,900 8,120

* 7,900 – 400

PE 18–5A (FINMAN); PE 3–5A (MAN)

$13,30038,000

$3,10038,750

PE 18–5B (FINMAN); PE 3–5B (MAN)

$510,0008,500

$81,2008,120

Equivalent units of conversion: = $10 per ton

Equivalent units of direct materials: = $0.35 per ounce

Equivalent units of conversion: = $0.08 per ounce

Equivalent units of direct materials: = $60 per ton

**

****


PE 18–6A (FINMAN); PE 3–6A (MAN)Direct

Materials Conversion TotalCosts Costs Costs

Inventory in process, balance…………………………… $ 1,200Inventory in process, beginning of period…………… 0 + 1,200 × $0.08 96

Cost of completed beginning work in process……… $ 1,296Started and completed during the period……………… 37,400 × $0.35 + 37,400 × $0.08 16,082

Transferred out of Filling (completed)………………… $17,378

Inventory in process, end of period…………………… 600 × $0.35 + 150 × $0.08 222

Total costs assigned by the Filling Dept. …………… $17,600

Completed and transferred-out production…………… $17,378

Inventory in process, ending…………………………… $222

PE 18–6B (FINMAN); PE 3–6B (MAN)Direct

Materials Conversion TotalCosts Costs Costs

Inventory in process, balance…………………………… $ 25,000

Inventory in process, beginning of period…………… 0 + 320 × $10 3,200

Cost of completed beginning work in process……… $ 28,200Started and completed during the period……………… 7,500 × $60 + 7,500 × $10 525,000

Transferred out of Rolling (completed)………………… $553,200

Inventory in process, end of period…………………… 1,000 × $60 + 300 × $10 63,000

Total costs assigned by the Rolling Dept. …………… $616,200

Completed and transferred-out production…………… $553,200

Inventory in process, ending…………………………… $63,000



a. Work in Process—Filling 13,300Work in Process—Blending 5,000Materials 8,300

Work in Process—Filling 3,100Factory Overhead—Filling 1,100Wages Payable 2,000

Finished Goods 17,378Work in Process—Filling 17,378

b. $222 ($1,200 + $13,300 + $3,100 – $17,378)


a. Work in Process—Rolling 510,000Work in Process—Casting 510,000

Work in Process—Rolling 81,200Factory Overhead—Rolling 54,700Wages Payable 26,500

Finished Goods 553,200Work in Process—Rolling 553,200

b. $63,000 ($25,000 + $510,000 + $81,200 – $553,200)



$14,87542,500

$14,61539,500

The cost of energy has increased by 2 cents per pound between June and July, indicating inefficiency in the use of energy.


$76,000800

$77,350850

The cost of materials has decreased by $4 per ton between September and October, indicating an improvement in the cost of materials.

Material cost per ton, September: = $95

Material cost per ton, October: = $91

Energy cost per pound, June: = $0.35

Energy cost per pound, July: = $0.37


Ex. 18–1 (FINMAN); Ex. 3–1 (MAN)

a. Work in Process—Blending Department XXX Materials—Cocoa XXX Materials—Sugar XXX Materials—Dehydrated Milk XXX

b. Work in Process—Molding Department XXX Work in Process—Blending Department XXX

c. Work in Process—Packing Department XXX Work in Process—Molding Department XXX

d. Finished Goods XXX Work in Process—Packing Department XXX

e. Cost of Goods Sold XXX Finished Goods XXX



Materials

Factory Overhead— Work in Process— Finished Goods—

Factory Overhead—Smelting Dept. Smelting Dept.

Work in Process—

Rolled SheetRolling Dept. Rolling Dept.

Factory Overhead— Work in Process—Cost of Goods Sold

Finished Goods—Converting Dept. Sheared SheetConverting Dept.

10© 2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.


a. 1. Work in Process—Refining Department 335,000Materials 335,000

2. Work in Process—Refining Department 127,000Wages Payable 127,000

3. Work in Process—Refining Department 91,200Factory Overhead—Refining Department 91,200

b. Work in Process—Sifting Department* 555,600Work in Process—Refining Department 555,600

* $26,800 + $335,000 + $127,000 + $91,200 – $24,400

Ex. 18–4 (FINMAN); Ex. 3–4 (MAN)a. Factory overhead rate:

$97,500 ÷ $75,000 = 130%

b. Work in Process—Blending Department 8,190Factory Overhead—Blending Department 8,190

$6,300 × 130% = $8,190

c. ($8,250 – $8,190)

d. Underapplied factory overhead


Whole DirectUnits Materials Conversion

Inventory in process, beginning(75% completed) 840 0 210

Started and completed 13,760 13,760 13,760Transferred to Packing Department 14,600 13,760 13,970 Inventory in process, ending

(30% completed) 900 900 270Total 15,500 14,660 14,240

1 840 units × (1 – 75%)2 14,600 units – 840 units3 900 units × 30%

$60 debit

Equivalent Units

1

2

3


Ex. 18–6 (FINMAN); Ex. 3–6 (MAN)a. Drawing Department


Inventory in process, September 1(40% completed) 7,000 0 4,200

Started and completed in September 78,000 78,000 78,000Transferred to Winding Department in

September 85,000 78,000 82,200 Inventory in process, September 30

(60% completed) 5,800 5,800 3,480Total 90,800 83,800 85,680

1 7,000 units × (1 – 40%)2 85,000 units – 7,000 units3 5,800 units × 60%

b. Winding Department


Inventory in process, September 1(80% completed) 3,200 0 640

Started and completed in September 82,800 82,800 82,800Transferred to finished goods in September 86,000 82,800 83,440 Inventory in process, September 30

(15% completed) 2,200 2,200 330Total 88,200 85,000 83,770


Note: Of the 85,000 units transferred in from Drawing, 82,800 units were started andcompleted in Winding and 2,200 units are in Winding ending work in process.

Equivalent Units

Equivalent Units

1

2

3

1

2

3


Ex. 18–7 (FINMAN); Ex. 3–7 (MAN)a. Units in process, July 1…………………………………………………………… 8,000

Units placed into production for July…………………………………………… 162,000Less units finished during July…………………………………………………… (157,400)Units in process, July 31…………………………………………………………… 12,600

b.Whole DirectUnits Materials Conversion

Inventory in process, July 1(2/5 completed) 8,000 0 4,800

Started and completed in July 149,400 149,400 149,400Transferred to finished goods in July 157,400 149,400 154,200 Inventory in process, July 31

(3/5 completed) 12,600 12,600 7,560Total 170,000 162,000 161,760

1 8,000 units × (1 – 40%)2 157,400 units – 8,000 units3 8,000 units + 162,000 units – 157,400 units4 12,600 units × 60%

Equivalent Units

1

2

43


Ex. 18–8 (FINMAN); Ex. 3–8 (MAN)a. 1. $1.90 ($307,800 ÷ 162,000 units)

2. $0.40 [($43,600 + $21,104) ÷ 161,760 units]

3. $18,496, determined as follows:

Work in Process—Baking Department balance, July 1…………………… $16,576Conversion costs incurred during July

(4,800 equivalent units × $0.40)……………………………………………… 1,920Cost of beginning work in process completed during July……………… $18,496

4. $343,620 [($1.90 + $0.40) × 149,400 units]

Note to Instructors: The cost of the beginning work in process completed during July, $18,496 (a. 3), plus the cost of the units started and completed during July, $343,620 (a. 4), equals the cost of the units finished during July, $362,116.

5. $26,964, determined as follows:

Direct materials ($1.90 × 12,600 units)……………………………………… $23,940Conversion costs ($0.40 × 7,560 equivalent units)………………………… 3,024Cost of ending work in process……………………………………………… $26,964

Note: The cost of the ending work in process is also the balance of Work in Process—Baking Department as of July 31.

b. The conversion costs in July decreased by $0.03 per equivalent unit,determined as follows:

Work in Process—Baking Department balance, July 1………………………… $16,576Deduct direct materials cost incurred in June

($1.90 × 8,000 units, same cost per unit as July)……………………………… 15,200Conversion costs incurred in June $ 1,376

June conversion cost per equivalent unit[$1,376 ÷ (8,000 units × 2/5)]……………………………………………………. $ 0.43

July conversion cost per equivalent unit………………………………………… $ 0.40Less June conversion cost per equivalent unit………………………………… 0.43Decrease in conversion cost per equivalent unit………………………………… $(0.03)


Ex. 18–9 (FINMAN); Ex. 3–9 (MAN)Equivalent units of production:

ConversionCereal Boxes Cost

(in pounds) (in boxes) (in boxes)

Inventory in process, March 1……………… 0 0 600Started and completed in March…………… 75,300 50,200 50,200Transferred to finished goods

in March……………………………………… 75,300 50,200 50,800Inventory in process, March 31…………… 825 550 0Total…………………………………………… 76,125 50,750 50,800

Supporting explanation:

The whole unit inventory in process on March 1 includes both the cereal in the hopper and the boxes in the carousel, and thus includes no equivalent units for the material during the current period. The reason is because the costs for the cereal and boxes were introduced to the Packing Department in February. Since conversion costs are incurred only when the cereal is filled into boxes, all 600 boxes of the March 1 inventory in process will have conversion costs incurred in March.

The product started and completed in March includes 50,200 boxes (50,800 boxes completed less the 600 in the carousel on March 1). These boxes represent 75,300 pounds of cereal [50,200 × (24 oz. ÷ 16 oz.)], since there are 16 ounces to a pound.

The inventory in process on March 31 includes the remaining pounds of cereal in the hopper and boxes in the carousel that are properly included in the equivalent unit computation for March (since the costs were incurred in the department in March). No conversion costs have been applied to these boxes, since they remain unfilled.

Note to Instructors: An actual cereal-filling line begins with the empty box carousel. The box carousel holds flattened boxes that are fed into a high-speed line that opens the box up and places it on a conveyor. The conveyor brings the opened box under a filler head. The cereal pours from the hopper through the filler head into the open box (actually into the inner sealer bag). The box then moves down the line to be boxed into a large shipping carton, which is then moved to the warehouse.


Ex. 18–10 (FINMAN); Ex. 3–10 (MAN)a. Direct labor…………………………………………………………………………… $36,705

Factory overhead applied…………………………………………………………… 18,600Total conversion cost……………………………………………………………… $55,305

b. Equivalent units of production for conversion costs:Beginning inventory……………………………………………………………… 0Started and completed…………………………………………………………… 72,000Ending inventory (3/5 × 2,900 units)………………………………………… 1,740Total equivalent units for conversion costs………………………………… 73,740

Conversion cost per equivalent unit:

$55,30573,740

c. Equivalent units of production for direct materials costs:Beginning inventory……………………………………………………………… 0Started and completed…………………………………………………………… 72,000Ending inventory (all units completed as to direct materials)…………… 2,900Total equivalent units for direct materials costs…………………………… 74,900

Direct materials cost per equivalent unit:

$202,23074,900

= $2.70 direct materials cost per equivalent unit

= $0.75 conversion cost per equivalent unit


Ex. 18–11 (FINMAN); Ex. 3–11 (MAN)a. Units in process at beginning of period………………………………………… 900

Units placed in production during period……………………………………… 16,000Less units finished during period………………………………………………… (16,260)Units in process at end of period………………………………………………… 640


Inventory in process, beginning(35% completed) 900 0 585

Started and completed 15,360 15,360 15,360Transferred to finished goods 16,260 15,360 15,945 Inventory in process, ending

(45% completed) 640 640 288Total units 16,900 16,000 16,233


c.Direct

Materials Conversion

Total costs for period in Assembly Department $336,000 $194,796Total equivalent units (from above) 16,000 16,233Cost per equivalent unit $ 21.00 $ 12.00

* $101,380 + $93,416

d. $506,880 [($21.00 + $12.00) × 15,360 units]

Equivalent Units

Costs

1

2

3

÷ ÷*


Ex. 18–12 (FINMAN); Ex. 3–12 (MAN)a. 1. $29,470; determined as follows:

Beginning work in process balance…………………………………………… $ 22,450Conversion costs incurred during period

(585 equivalent units × $12.00)……………………………………………… 7,020Cost of beginning work in process completed during period…………… $ 29,470

2. Cost of beginning work in process…………………………………………… $ 29,470Cost of units started and completed during period*……………………… 506,880Cost of units transferred to finished goods during period……………… $536,350

* ($21.00 + $12.00) × 15,360 units

3. $16,896; determined as follows:Direct materials ($21.00 × 640 units)………………………………………… $ 13,440Conversion costs ($12.00 × 288 equivalent units)………………………… 3,456Cost of ending work in process inventory…………………………………… $ 16,896

Note: The cost of the ending work in process is also the ending balance of Work in Process—Assembly Department.

4. $32.74 rounded ($29,470 ÷ 900 units)

b. Yes. The production costs per unit increased during the current period. The cost per unit of the units started and completed during the period is $33 ($21 + $12). Since the cost per unit of the beginning work in process is$32.74 [see part (4) above], the production costs during the current periodmust have increased.

c. The conversion cost in the current period increased by $0.73 per equivalentunit, determined as follows:

Beginning work in process…………………………………………………………… $22,450Deduct direct materials cost incurred in prior period

($21.00 × 900 units, cost per unit unchanged)………………………………… 18,900Conversion costs incurred in prior period………………………………………… $ 3,550

Current-period conversion cost per equivalent unit…………………………… $12.00Less prior-period conversion cost per equivalent unit

[$3,550 ÷ (900 units × $0.35)]……………………………………………………… 11.27Increase in conversion cost per equivalent unit during

current period………………………………………………………………………… $ 0.73


Ex. 18–13 (FINMAN); Ex. 3–13 (MAN)1. In computing the equivalent units for conversion costs applicable to the June 1

inventory, the 6,400 units are multiplied by 3/5 rather than 2/5, which is the portion of the work completed in June. Therefore, the equivalent units should be 2,560 (6,400 × 2/5) instead of 3,840.

2. In computing the equivalent units for conversion costs for units started and completed in June, the June 1 inventory of 6,400 units, rather than the June 30 inventory of 5,200 units, was subtracted from 55,000 units started in the department during June. Therefore, the equivalent units started and completed should be 49,800 instead of 48,600.

3. The correct equivalent units for conversion costs should be 53,400, determined as follows:

To process units in inventory on June 1:6,400 × 2/5……………………………………………………………………………… 2,560

To process units started and completed in June:55,000 – 5,200………………………………………………………………………… 49,800

To process units in inventory on June 30:5,200 × 1/5……………………………………………………………………………… 1,040

Equivalent units of production……………………………………………………… 53,400


Ex. 18–14 (FINMAN); Ex. 3–14 (MAN)a. 8,600 units (1,200 + 8,300 – 900)


Inventory in process, November 1(60% completed) 1,200 0 480

Started and completed in November 7,400 7,400 7,400Transferred to finished goods in 8,600 7,400 7,880

November Inventory in process, November 30

(70% completed) 900 900 630Total units 9,500 8,300 8,510

1 1,200 units × (1 – 60%)2 8,600 units – 1,200 units3 900 units × 70%

DirectMaterials Conversion

Total costs for November in Forging Department $124,500 $39,146Total equivalent units (from above) 8,300 8,510Cost per equivalent unit $ 15.00 $ 4.60

* $18,950 + $20,196

c. $145,040 [7,400 units × ($15.00 + $4.60)]

Equivalent Units

Costs

1

2

3

÷ ÷*


Ex. 18–15 (FINMAN); Ex. 3–15 (MAN)a. $23,064; determined as follows:

Beginning work in process balance……………………………………………… $ 20,856Conversion costs incurred during November

(480 equivalent units × $4.60)…………………………………………………… 2,208Cost of beginning work in process completed during November…………… $ 23,064

b. Cost of beginning work in process……………………………………………… $ 23,064Cost of units started and completed during November*……………………… 145,040Cost of units transferred to finished goods during period…………………… $168,104

* ($15.00 + $4.60) × 7,400 units

c. $16,398; determined as follows:Direct materials ($15.00 × 900 units)……………………………………………… $ 13,500Conversion costs ($4.60 × 630 equivalent units)……………………………… 2,898Cost of ending work in process inventory……………………………………… $ 16,398

Note: The cost of the ending work in process is also the ending balance of the Work in Process—Forging Department as of November 30.

d. Direct materials cost per equivalent unit: $14.50 ($17,400 ÷ 1,200 units)

Conversion cost per equivalent unit: $4.80 ($3,456* ÷ 720 units**)

* Work in process, November 1…………………………………………………Less direct materials cost………………………………………………………Conversion cost included in November 1, work in process………………

** Equivalent units in November 1, work in process (1,200 × 60%) = 720 units

e. Direct materials: Increase of $0.50 ($15.00 – $14.50)

Conversion: Decrease of $0.20 ($4.60 – $4.80)

$20,85617,400

$ 3,456


Ex. 18–16 (FINMAN); Ex. 3–16 (MAN)

Whole DirectUNITS Units Materials Conversion

(1) (1)

Units charged to production:Inventory in process, August 1 700Received from materials storeroom 14,300Total units accounted for by the

Roasting Department 15,000Units to be assigned costs:

Inventory in process, August 1(20% completed) 700 0 560

Started and completed in August 13,900 13,900 13,900Transferred to finished goods in August 14,600 13,900 14,460Inventory in process, August 31

(42% completed) 400 400 168Total units to be assigned costs 15,000 14,300 14,628


MORNING BREW COFFEE COMPANYCost of Production Report—Roasting Department

For the Month Ended August 31, 2014Equivalent Units

1

2

3


Ex. 18–16 (FINMAN); Ex. 3–16 (MAN) (Concluded)

DirectCOSTS Materials Conversion Total

Costs per equivalent unit:Total costs for August in Roasting

Department $65,780 $21,942Total equivalent units 14,300 14,628Cost per equivalent unit (2) $ 4.60 $ 1.50

Costs assigned to production:Inventory in process, August 1 $ 3,479Costs incurred in August 87,722Total costs accounted for by the

Roasting Department $91,201Costs allocated to completed and

partially completed units:Inventory in process, August 1 balance $ 3,479To complete inventory in process,

August 1 $ 0 $ 840 840Cost of completed August 1 work in

process $ 4,319Started and completed in August 63,940 20,850 84,790Transferred to finished goods in August (3) $89,109Inventory in process, August 31 (4) 1,840 252 2,092Total costs assigned by the Roasting

Department $91,201

1 $65,780 + $21,9422 560 units × $1.503 13,900 units × $4.604 13,900 units × $1.505 400 units × $4.606 168 units × $1.50

b. Materials: From current period…………………………………………………From beginning inventory…………………………………………Decrease………………………………………………………………

Conversion: From current period…………………………………………………From beginning inventory…………………………………………Increase………………………………………………………………

The cost per equivalent unit of materials decreased by $0.10 per pound, and the costper equivalent unit of conversion cost increased by $0.15 per pound. Managementmay wish to investigate the causes for the increase in the conversion cost.

$ 1.501.35

$ 0.15

Costs

$ 4.604.70

$(0.10)

1

2

3

÷ ÷

4

5 6


Ex. 18–17 (FINMAN); Ex. 3–17 (MAN)a.


Units charged to production:Inventory in process, January 1 1,400Received from Weaving Department 58,000Total units accounted for by the

Cutting Department 59,400Units to be assigned cost:

Inventory in process, January 1(75% completed) 1,400 0 350

Started and completed in January 54,800 54,800 54,800Transferred to finished goods in

January 56,200 54,800 55,150Inventory in process, January 31

(30% completed) 3,200 3,200 960Total units to be assigned cost 59,400 58,000 56,110


KARACHI CARPET COMPANYCost of Production Report—Cutting Department

For the Month Ended January 31, 2014Equivalent Units

1

2

3


Ex. 18–17 (FINMAN); Ex. 3–17 (MAN) (Concluded)

DirectCOSTS Materials Conversion TotalCosts per equivalent unit:

Total costs for January in CuttingDepartment $742,400 $286,161

Total equivalent units 58,000 56,110Cost per equivalent unit $ 12.80 $ 5.10

Costs assigned to production:Inventory in process, January 1 $ 22,960Costs incurred in January 1,028,561Total costs accounted for by the

Cutting Department $1,051,521Cost allocated to completed and

partially completed units:Inventory in process, January 1 balance $ 22,960To complete inventory in process,

January 1 $ 1,785 1,785Cost of completed January 1 work in $ 24,745

processStarted and completed in January $701,440 279,480 980,920Transferred to finished goods in

January $1,005,665Inventory in process, January 31 40,960 4,896 45,856Total costs assigned by the Cutting

Department $1,051,521

1 $134,550 + $151,6112 $742,400 + $134,550 + $151,6113 350 units × $5.104 54,800 units × $12.805 54,800 units × $5.106 3,200 units × $12.807 960 units × $5.10

b. Materials: From current period…………………………………………………From beginning inventory…………………………………………Increase………………………………………………………………

Conversion From current period…………………………………………………From beginning inventory…………………………………………Increase………………………………………………………………

The cost per equivalent unit of materials increased by $0.15 per unit, and the costper equivalent unit of conversion cost increased by $0.10 per unit. Managementmay wish to investigate the causes for these changes in cost.

$ 5.105.00

$ 0.10

Costs

$12.8012.65

$ 0.15

1

3

÷ ÷

5

7

2


Ex. 18–18 (FINMAN); Ex. 3–18 (MAN)

a. 1. Work in Process—Casting Department 350,000Materials—Alloy 350,000

2. Work in Process—Casting Department 49,600Wages Payable 19,840Factory Overhead* 29,760

* $19,840 × 150%

3. Work in Process—Machining Department* 402,684Work in Process—Casting Department 402,684

* Supporting calculations:Cost of 2,530 transferred-out pounds:

Inventory in process, May 1…………………………………………………………… $ 32,844Cost to complete May 1 inventory:

92 pounds × $20/lb. (see calculations below)……………………………………… 1,840Pounds started and completed in May

[2,300 lbs. × ($140 + $20)]…………………………………………………………… 368,000

Transferred to Machining Department…………………………………………………$402,684

Supporting equivalent unit and cost per equivalent unit calculations:

Whole Units Materials Conversion

Inventory in process, May 1(60% completed) 230 0 92

Started and completed in May 2,300 2,300 2,300Transferred to Machining Department

in May 2,530 2,300 2,392 Inventory in process, May 31

(44% completed) 200 200 88Total 2,730 2,500 2,480

1 230 units × (1 – 60%)2 2,530 units – 230 units3 230 units + 2,500 units – 2,530 units4 200 units × 44%

$350,0002,500

$49,6002,480

Cost per equivalent unit of conversion: = $20 per pound

Equivalent Units

= $140 per poundCost per equivalent unit of materials:

1

2

3 4


Ex. 18–18 (FINMAN); Ex. 3–18 (MAN) (Concluded)b. $29,760; determined as follows:

Direct materials (200 × $140)……………………………… $28,000Conversion (200 × 44% × $20)…………………………… 1,760

$29,760

or $29,760 = $32,844 + $350,000 + $49,600 – $402,684

c. Materials: From current period………………………………………$140From beginning inventory……………………………… 132Increase…………………………………………………… $ 8

Conversion: From current period………………………………………$ 20From beginning inventory……………………………… 18Increase…………………………………………………… $ 2

The cost per equivalent unit of materials increased by $8 per pound, and the costper equivalent unit of conversion cost increased by $2 per pound. Managementmay wish to investigate the causes for these increases in cost.


Ex. 18–19 (FINMAN); Ex. 3–19 (MAN)

a. 1. Work in Process—Papermaking Department 330,750Materials—Pulp 330,750

2. Work in Process—Papermaking Department 95,355Wages Payable 40,560Factory Overhead 54,795

3. Work in Process—Converting Department* 420,925Work in Process—Papermaking Department 420,925

* Supporting calculations:Cost of 103,900 transferred-out units:

Inventory in process, March 1………………………………………………………… $ 9,139Cost to complete March 1 inventory:

1,690 units × $0.90/unit (see calculations below)………………………………… 1,521Pounds started and completed in March

[101,300 units × ($3.15 + $0.90)]…………………………………………………… 410,265

Transferred to Converting Department……………………………………………… $420,925

Supporting equivalent unit and cost per equivalent unit calculations:

Whole Units Materials Conversion

Inventory in process, March 1(35% completed) 2,600 0 1,690

Started and completed in March 101,300 101,300 101,300Transferred to Converting Department

in March 103,900 101,300 102,990 Inventory in process, March 31

(80% completed) 3,700 3,700 2,960Total 107,600 105,000 105,950

1 2,600 units × (1 – 35%)2 3,700 units × 80%

$330,750105,000

$95,355105,950

b. $14,319; determined as follows:

Direct materials (3,700 × $3.15)……………… $11,655Conversion (3,700 × 80% × $0.90)…………… 2,664

$14,319

or $14,319 = $9,139 + $330,750 + $95,355 – $420,925

Cost per equivalent unit of conversion: = $0.90 per unit

Equivalent Units

= $3.15 per unitCost per equivalent unit of materials:

1

2


Ex. 18–20 (FINMAN); Ex. 3–20 (MAN)MemoTo: Production Manager

The cost of production report is used to identify the cost per case for each of the four flavors as shown below.

Orange Cola Lemon-Lime Root Beer

Total cost $19,125 $391,800 $324,000 $36,000Number of cases 2,500 60,000 50,000 4,000Cost per case $ 7.65 $ 6.53 $ 6.48 $ 9.00

As can be seen, the cost per case of Root Beer is significantly above the cost per case of the other three flavors. A more detailed analysis is necessary to understand the causes of this difference. The individual cost elements that determine the total cost can be divided by the number of cases. This analysis is provided below.

Orange Cola Lemon-Lime Root Beer

Concentrate $1.85 $2.15 $2.10 $1.90Water 0.50 0.50 0.50 0.50Sugar 1.20 1.20 1.20 1.20Bottles 2.20 2.20 2.20 2.20Flavor changeover 1.20 0.08 0.08 2.50Conversion cost 0.70 0.40 0.40 0.70Total cost per case $7.65 $6.53 $6.48 $9.00

The table above indicates that the concentrate per case is actually less for Orange and Root Beer than for Cola and Lemon-Lime. This is because the concentrate supplier charges a higher price for the more popular flavors. The costs per case for water, sugar, and bottles are the same for each flavor. However, the costs per case for changeover are much greater for Orange and Root Beer than for the other two flavors. In addition, the conversion costs per unit for Orange and Root Beer are $0.30 higher than for Cola and Lemon-Lime. These last two cost elements are sufficient to cause the cost per case of Orange and Root Beer to be greater than Cola and Lemon-Lime.

Although further analysis is necessary, it appears that Orange and Root Beer are either bottled in short production runs, meaning more frequent changeovers, or that each Orange and Root Beer changeover is very difficult and expensive. The conversion cost per case is larger because the bottling line rate appears slower for Orange and Root Beer, compared to Cola and Lemon-Lime. It’s possible that shorter run sizes are related to the slower line rate because it takes some run time to work the line rate up to a fast speed after a changeover. Root Beer costs more per case than Orange because it may have the shortest run length.

Cost per Case by Cost Element

÷ ÷÷ ÷


Ex. 18–21 (FINMAN); Ex. 3–21 (MAN)The solution to this exercise is to determine if the cost per pound trends in paper stock, conversion, and coating costs are remaining stable over time. The following table can be developed from the data:

a. January February March April May June

Paper stock($ ÷ pounds output) $0.70 $0.70 $0.70 $0.70 $0.70 $0.70

Coating($ ÷ pounds output) $0.12 $0.13 $0.15 $0.17 $0.20 $0.24

Conversion cost($ ÷ pounds output) $0.40 $0.40 $0.40 $0.40 $0.40 $0.40

Yield (pounds transferred out ÷pounds input) 96% 96% 96% 96% 96% 96%

The cost per pound information is determined by dividing the costs by the pounds transferred out. The yield is determined by dividing the pounds transferred out by the pounds input.

b. Operator 1 believes that energy consumption is becoming less efficient. The energy cost is part of the conversion cost. The conversion cost per output pound has remained constant for the six months. If the energy efficiency were declining, it would take more energy per pound of output over time. Thus, we would expect to see the conversion rate per pound increasing if Operator 1 were correct.

Operator 2 believes that there are increasing materials losses from increasing startup and shutdown activity. Yield data would help determine if this were true. If materials losses were growing, then there would be less materials transferred out per pound of inputs over time. The yield has remained constant over the six-month period. Thus, Operator 2’s hypothesis is not validated. The stable cost of the paper stock per output pound also suggests that the yields are remaining stable.

Operator 3 is concerned about coating costs. The coating cost per output pound is increasing over time. Thus, we can conclude that the coating efficiency is declining over time. Apparently, twice the coating material was being spread per pound of output in June than in January. The coating operation may need to be repaired or recalibrated. Too much coating is being spread on the paper stock.


Ex. 18–22 (FINMAN); Ex. 3–22 (MAN)The Hawkeye Machining managers are displaying typical fears to a just-in-time processing system. Just-in-time removes the safety provided by materials, in-process, and finished goods inventory balances. Indeed, these types of comments reflect conventional manufacturing philosophy, which views inventory as a necessary buffer against surprises and other unwelcome events. The just-in-time philosophy focuses on removing the causes that require a need for inventory.

In the case of materials inventories, a just-in-time philosophy requires all suppliers to provide high-quality materials on a daily basis in just the right quantities needed for a day’s production. If the supplier has unreliable production schedules or quality, then the sources of unreliability would need to be fixed before moving to just-in-time delivery. Only when suppliers are reliable can Hawkeye Machining move to a just-in-time strategy without exposing the company to significant risk.

The in-process inventories can be reduced significantly if the underlying manufacturing processes are made reliable. The director of manufacturing is correct in his observation, but his solution is wrong. The solution is not to increase inventory but to improve the reliability of the machines so that they do not experience emergency breakdowns. Thus, the manufacturing operation must be improved to produce the right product, in the right quantities, at the right quality, and at the right time. Only with this level of reliability can a plant responsibly remove in-process inventories from the system.

The finished goods inventory can also be reduced if the manufacturing system can be made responsive to customer demands. A company will no longer have to stock warehouses with product based on guesses at what the customer will want many weeks ahead of demand. Rather, goods are produced at the time the customer orders them. This is what Dell Inc. does. It builds a computer to order, rather than stocking the computer and selling it from inventory.

In other words, inventory covers a “multitude of sins.” When the “sins” are removed, the inventory can be removed.


Appendix Ex. 18–23 (FINMAN); Ex. 3–23 (MAN)a. and b.

a. Whole b. Equivalent UnitsUnits of Production

Units to be accounted for:Beginning work in process 1,900Units started during period 15,100

Total 17,000Units to be assigned costs:

Transferred to Packing Department 15,800 15,800Inventory in process, ending

(30% completed) 1,200 360Total 17,000 16,160

1 15,800 units – 1,900 units + 1,200 units2 30% × 1,200 units

1

2


Appendix Ex. 18–24 (FINMAN); Appendix Ex. 3–24 (MAN)a. Drawing Department

Whole Equivalent UnitsUnits of Production

Units to be accounted for:Beginning work in process 500Units started during period 11,600


Transferred to Winding Department in July 11,400 11,400Inventory in process, July 31

(55% completed) 700 385Total 12,100 11,785

1 11,400 units – 500 units + 700 units2 55% × 700 units

b. Winding Department

Whole Equivalent UnitsUnits of Production

Units to be accounted for:Beginning work in process 350Units started during period 11,400


Transferred to finished goods in July 10,950 10,950Inventory in process, July 31

(25% completed) 800 200Total 11,750 11,150

1 10,950 units – 350 units + 800 units2 25% × 800 units

1

2

1

2


Appendix Ex. 18–25 (FINMAN); Appendix Ex. 3–25 (MAN)a. Units in process, May 1…………………………………………………………… 4,200

Units placed into production for May…………………………………………… 23,600Less units finished during May………………………………………………… (24,700)Units in process, May 31………………………………………………………… 3,100

b. EquivalentWhole Units ofUnits Production

Units to be accounted for:Beginning work in process 4,200Units started during the period 23,600


Transferred to finished goods in May 24,700 24,700Inventory in process, May 31

(30% completed) 3,100 930Total 27,800 25,630

* 30% × 3,100 units

*


Appendix Ex. 18–26 (FINMAN); Appendix Ex. 3–26 (MAN)a. and b.

EquivalentWhole Units ofUnits Production

Units to be accounted for:Beginning work in process 900Units started during the period 8,400


Transferred to finished goods 8,100 8,100Inventory in process, ending 1,200 720

Total units 9,300 8,820

* 60% × 1,200 units

$61,740*8,820 units

* $2,466 + $34,500 + $16,200 + $8,574

d. Cost of units transferred to Finished Goods: $56,700 (8,100 units × $7.00)

e. Cost of units in ending Work in Process: $5,040 (1,200 units × 60% × $7.00)

Total Equivalent Unitsc. Cost per Equivalent Unit =

Cost per Equivalent Unit = = $7.00

Total Production Costs

*


Appendix Ex. 18–27 (FINMAN); Appendix Ex. 3–27 (MAN)

a. EquivalentWhole Units ofUnits Production

Units to be accounted for:Beginning work in process 500Units started during the period 3,700


Transferred to finished goods in June 3,600 3,600Inventory in process, June 30

(70% completed) 600 420Total units 4,200 4,020

* 70% × 600 units

$104,520**4,020 units

** $5,000 + $49,200 + $25,200 + $25,120

b. Cost of units transferred to Finished Goods: $93,600 (3,600 units × $26.00)

c. Cost of units in ending Work in Process: $10,920 (600 units × 70% × $26.00)

Total Equivalent UnitsCost per Equivalent Unit =

Cost per Equivalent Unit = = $26.00

Total Production Costs

**



Whole Equivalent UnitsUNITS Units of Production

Units to account for during production:Inventory in process, May 1 1,150Received from materials storeroom 10,900Total units accounted for by the

Roasting Department 12,050Units to be assigned cost:

Transferred to finished goods in May 11,250 11,250Inventory in process, May 31

(80% completed) 800 640Total units to be assigned cost 12,050 11,890

* 80% × 800 units

COSTS Costs

Costs per equivalent unit:Total costs for May in Roasting Department $42,804Total equivalent units 11,890Cost per equivalent unit $ 3.60

Costs assigned to production:Inventory in process, May 1 $ 1,700Costs incurred in May 41,104Total costs accounted for by the Roasting Department $42,804

Costs allocated to completed and partially completed units:Transferred to finished goods in May

(11,250 units × $3.60) $40,500Inventory in process, May 31

(800 units × 80% × $3.60) 2,304Total costs assigned by the Roasting Department $42,804

1 $1,700 + $28,600 + $12,5042 $28,600 + $12,504

HIGHLANDS COFFEE COMPANYCost of Production Report—Roasting Department

For the Month Ended May 31, 2014

*

1

2

÷




Units charged to production:Inventory in process, January 1 3,400Received from Weaving Department 64,000Total units accounted for by the

Cutting Department 67,400Units to be assigned cost:

Transferred to finished goods in January 63,500 63,500Inventory in process, January 31

(10% completed) 3,900 390Total units to be assigned cost 67,400 63,890

* 10% × 3,900 units

COSTS

Costs per equivalent unit:Total costs for January in Cutting Department $575,010Total equivalent units 63,890Cost per equivalent unit $ 9.00

Costs assigned to production:Inventory in process, January 1 $ 23,000Costs incurred in January 552,010Total costs accounted for by the Cutting Department $575,010

Costs allocated to completed and partially completed units:Transferred to finished goods in January

(63,500 units × $9.00) $571,500Inventory in process, January 31

(3,900 units × 10% × $9.00) 3,510Total costs assigned by the Cutting Department $575,010

1 $23,000 + $366,200 + $105,100 + $80,7102 $366,200 + $105,100 + $80,710

DALTON CARPET COMPANYCost of Production Report—Cutting Department

For the Month Ended January 31, 2014

*

1

2

÷


Prob. 18–1A (FINMAN); Prob. 3–1A (MAN)

1. a. Materials 74,200Accounts Payable 74,200

b. Work in Process—Spinning Department 38,300Work in Process—Tufting Department 31,200Factory Overhead—Spinning Department 3,000Factory Overhead—Tufting Department 2,400

Materials 74,900

c. Work in Process—Spinning Department 22,300Work in Process—Tufting Department 16,900Factory Overhead—Spinning Department 11,900Factory Overhead—Tufting Department 10,200

Wages Payable 61,300

d. Factory Overhead—Spinning Department 4,900Factory Overhead—Tufting Department 3,000

Accumulated Depreciation 7,900

e. Factory Overhead—Spinning Department 1,000Factory Overhead—Tufting Department 800

Prepaid Insurance 1,800

f. Work in Process—Spinning Department 21,400Work in Process—Tufting Department 15,600

Factory Overhead—Spinning Department 21,400Factory Overhead—Tufting Department 15,600

g. Work in Process—Tufting Department 83,000Work in Process—Spinning Department 83,000

h. Finished Goods 143,700Work in Process—Tufting Department 143,700

i. Cost of Goods Sold 146,900Finished Goods 146,900


Prob. 18–1A (FINMAN); Prob. 3–1A (MAN) (Concluded)2. Work in Work in

Process— Process— FinishedMaterials Spinning Dept. Tufting Dept. Goods

Balance, August 1…… $ 3,700 $ 1,200 $ 1,900 $ 4,800Debits………………… 74,200 82,000 146,700 143,700Credits………………… (74,900) (83,000) (143,700) (146,900)

Balance, August 31… $ 3,000 $ 200 $ 4,900 $ 1,600

1 $38,300 + $22,300 + $21,4002 $31,200 + $16,900 + $15,600 + $83,000

3.

Balance, August 1……Debits…………………Credits…………………Balance, August 31…

1 $3,000 + $11,900 + $4,900 + $1,0002 $2,400 + $10,200 + $3,000 + $800

$ (600) $ 800

$ 0 $ 020,800 16,400

(21,400) (15,600)

Factory Overhead— Factory Overhead—Spinning Dept. Tufting Dept.

Cr. Dr.

1 2

1 2


Prob. 18–2A (FINMAN); Prob. 3–2A (MAN)1.


Units charged to production:Inventory in process, May 1 1,200Received from materials storeroom 18,900Total units accounted for by the


Inventory in process, May 1(30% completed) 1,200 0 840

Started and completed in May 17,000 17,000 17,000Transferred to Packing Department in

May 18,200 17,000 17,840Inventory in process, May 31


1 1,200 units × (1 – 30%)2 18,200 units – 1,200 units3 1,200 units + 18,900 units – 18,200 units4 1,900 units × 40%

ABICA COFFEE COMPANYCost of Production Report—Roasting Department

For the Month Ended May 31, 2014Equivalent Units

1

2

3 4


Prob. 18–2A (FINMAN); Prob. 3–2A (MAN) (Continued)


Costs per equivalent unit:Total costs for May in Roasting

Department $81,270 $20,460Total equivalent units 18,900 18,600Cost per equivalent unit $ 4.30 $ 1.10

Costs assigned to production:Inventory in process, May 1 $ 5,610Costs incurred in May 101,730Total costs accounted for by the

Roasting Department $107,340Cost allocated to completed and

partially completed units:Inventory in process, May 1 balance $ 5,610To complete inventory in process,

May 1 $ 0 $ 924 924Cost of completed May 1 work in $ 6,534

processStarted and completed in May 73,100 18,700 91,800Transferred to Packing Department

in May $ 98,334Inventory in process, May 31 8,170 836 9,006Total costs assigned by the Roasting

Department $107,340

Costs transferred to Packing Department: $98,334Work in process, May 31: 1,900 units at a cost of $9,006


Costs

2

3

4

÷ ÷

5

6 7

1


Prob. 18–2A (FINMAN); Prob. 3–2A (MAN) (Concluded)2. Direct materials cost decreased from $4.36 in April to $4.30 in May.

Conversion cost increased from $1.05 in April to $1.10 in May.

Computations:

Direct materials: $4.36 ($5,232 ÷ 1,200 units)Conversion: $1.05; determined as follows:

May 1, work in process………………………………………………………… $5,610Less direct materials…………………………………………………………… 5,232Conversion costs…………………………………………………………………$ 378

Conversion cost equivalent units: (1,200 × 30%) = 360 units

Conversion cost per equivalent unit: $1.05 ($378 ÷ 360)


Prob. 18–3A (FINMAN); Prob. 3–3A (MAN)1.


Units charged to production:Inventory in process, July 1 700Received from Milling Department 12,300Total units accounted for by the

Sifting Department 13,000Units to be assigned cost:

Inventory in process, July 1(3/5 completed) 700 0 280

Started and completed in July 11,300 11,300 11,300Transferred to Packaging Department

in July 12,000 11,300 11,580Inventory in process, July 31

(4/5 completed) 1,000 1,000 800Total units to be assigned cost 13,000 12,300 12,380

1 700 units × (1 – 3/5)2 12,300 units – 1,000 units3 1,000 units × 4/5

LILY FLOUR COMPANYCost of Production Report—Sifting Department

For the Month Ended July 31, 2014Equivalent Units

1

2

3




Costs per equivalent unit:Total costs for July in Sifting

Department $31,980 $ 7,428Total equivalent units 12,300 12,380Cost per equivalent unit $ 2.60 $ 0.60

Costs assigned to production:Inventory in process, July 1 $ 2,037Costs incurred in July 39,408Total costs accounted for by the

Sifting Department $41,445Cost allocated to completed and

partially completed units:Inventory in process, July 1 balance $ 2,037To complete inventory in process,

July 1 $ 0 $ 168 168Cost of completed July 1 work in

process $ 2,205Started and completed in July 29,380 6,780 36,160Transferred to Packaging Department

in July $38,365Inventory in process, July 31 2,600 480 3,080Total costs assigned by the Sifting

Department $41,445


Costs

2

3

4

÷ ÷

5

6 7

1


Prob. 18–3A (FINMAN); Prob. 3–3A (MAN) (Concluded)

2. Work in Process—Sifting Department 31,980Work in Process—Milling Department 31,980

Work in Process—Packaging Department 38,365Work in Process—Sifting Department 38,365

3. Direct materials: $0.02 increase ($2.60 – 2.58)Conversion: $0.05 increase ($0.60 – 0.55)

4. The cost of production report may be used as the basis for allocating product costs between Work in Process and Transferred-Out (or Finished) Goods. The report can also be used to control costs by holding each department head responsible for the units entering production and the costs incurred in the department. Any differences in unit product costs from one month to another, such as those in part (3), can be studied carefully and any significant differences investigated.


Prob. 18–4A (FINMAN); Prob. 3–4A (MAN)

1. and 2.

Item Dr. Cr. Dr. Cr.

Apr. 1 Bal., 800 units, 30% completed 3,86030 Cooking Dept., 7,800 units at $4.40 34,320 38,18030 Direct labor 8,562 46,74230 Factory overhead 6,387 53,12930 Finished goods* 49,818 3,31130 Bal., 550 units, 90% completed 3,311

May 31 Cooking Dept., 9,600 units at $4.60 44,160 47,47131 Direct labor 12,042 59,51331 Factory overhead 6,878 66,39131 Finished goods* 64,801 1,59031 Bal., 300 units, 35% completed 1,590

*The credits are determined from the supporting cost of production reports.

DateBalance

Work in Process—Filling




(a) (a)

Units charged to production:Inventory in process, April 1 800Received from Cooking Department 7,800Total units accounted for by the

Filling Department 8,600Units to be assigned cost:

Inventory in process, April 1(30% completed) 800 0 560

Started and completed in April 7,250 7,250 7,250Transferred to finished goods in

April 8,050 7,250 7,810Inventory in process, April 30

(90% completed) 550 550 495Total units to be assigned cost 8,600 7,800 8,305


HEARTY SOUP CO.Cost of Production Report—Filling Department

For the Month Ended April 30, 2014Equivalent Units

1

2

3




Costs per equivalent unit:Total costs for April in Filling

Department $34,320 $14,949Total equivalent units 7,800 8,305Cost per equivalent unit (b) $ 4.40 $ 1.80

Costs assigned to production:Inventory in process, April 1 $ 3,860Costs incurred in April 49,269Total costs accounted for by the

Filling Department $53,129Cost allocated to completed and

partially completed units:Inventory in process, April 1

balance (c) $ 3,860To complete inventory in process,

April 1 (c) $ 0 $ 1,008 1,008Cost of completed April 1 work in

process $ 4,868Started and completed in April (c) 31,900 13,050 44,950Transferred to finished goods

in April (c) $49,818Inventory in process, April 30 (d) 2,420 891 3,311Total costs assigned by the Fillng

Department $53,129

1 $8,562 + $6,3872 $34,320 + $8,562 + $6,3873 560 units × $1.804 7,250 units × $4.405 7,250 units × $1.806 550 units × $4.407 495 units × $1.80

Costs

2

3

4

÷ ÷

5

6 7

1


Prob. 18–4A (FINMAN); Prob. 3–4A (MAN) (Continued)2.


(a) (a)

Units charged to production:Inventory in process, May 1 550Received from Cooking Department 9,600Total units accounted for by the


Inventory in process, May 1(90% completed) 550 0 55

Started and completed in May 9,300 9,300 9,300Transferred to finished goods in

May 9,850 9,300 9,355Inventory in process, May 31

(35% completed) 300 300 105Total units to be assigned cost 10,150 9,600 9,460


HEARTY SOUP CO.Cost of Production Report—Filling Department

For the Month Ended May 31, 2014Equivalent Units

1

2

3


Prob. 18–4A (FINMAN); Prob. 3–4A (MAN) (Concluded)


Costs per equivalent unit:Total costs for May in Filling


Costs charged to production:Inventory in process, May 1 $ 3,311Costs incurred in May 63,080Total costs accounted for by the


partially completed units:Inventory in process, May 1 balance (c) $ 3,311To complete inventory in process,

May 1 (c) $ 0 $ 110 110Cost of completed May 1 work in $ 3,421

processStarted and completed in May (c) 42,780 18,600 61,380Transferred to finished goods in

May (c) $64,801Inventory in process, May 31 (d) 1,380 210 1,590Total costs assigned by the Filling

Department $66,391

1 $12,042 + $6,8782 $44,160 + $12,042 + $6,8783 55 units × $2.004 9,300 units × $4.605 9,300 units × $2.006 300 units × $4.607 105 units × $2.00

3. The cost per equivalent unit for direct materials increased from $4.30 in March to $4.40 in April to $4.60 in May. Similarly, the cost per equivalent unit for conversion costs increased from $1.75 in March to $1.80 in April to $2.00 in May. These increases should be investigated for their underlying causes, and any necessary corrective actions should be taken.

Costs

2

3

4

÷ ÷

5

6 7

1


Appendix Prob. 18–5A (FINMAN); Appendix Prob. 3–5A (MAN)


Units to account for during production:Inventory in process, December 1 10,500Received from materials storeroom 210,400Total units accounted for by the


Transferred to Packing Department in December 208,900 208,900

Inventory in process, December 31(25% completed) 12,000 3,000

Total units to be assigned cost 220,900 211,900

1 10,500 units + 210,400 units – 208,900 units2 25% units × 12,000 units

COSTS

Unit costs:Total costs for December in Roasting Department $572,130Total equivalent units 211,900

Cost per equivalent unit $ 2.70Costs charged to production:

Inventory in process, December 1 $ 21,000Costs incurred in December 551,130

Total costs accounted for by the Roasting Department $572,130Costs allocated to completed and partially completed units:

Transferred to Packing Department in December (208,900 units × $2.70) $564,030

Inventory in process, December 31(12,000 units × 25% × $2.70) 8,100

Total costs assigned by the Roasting Department $572,130

* $246,800 + $135,700 + $168,630

SUNRISE COFFEE COMPANYCost of Production Report—Roasting Department

For the Month Ended December 31, 2014

*

1 2

÷


Prob. 18–1B (FINMAN); Prob. 3–1B (MAN)

1. a. Materials 149,800Accounts Payable 149,800

b. Work in Process—Making Department 105,700Work in Process—Packing Department 31,300Factory Overhead—Making Department 4,980Factory Overhead—Packing Department 1,530

Materials 143,510

c. Work in Process—Making Department 32,400Work in Process—Packing Department 40,900Factory Overhead—Making Department 15,400Factory Overhead—Packing Department 18,300

Wages Payable 107,000

d. Factory Overhead—Making Department 10,700Factory Overhead—Packing Department 7,900

Accumulated Depreciation 18,600

e. Factory Overhead—Making Department 2,000Factory Overhead—Packing Department 1,500

Prepaid Insurance 3,500

f. Work in Process—Making Department 32,570Work in Process—Packing Department 30,050

Factory Overhead—Making Department 32,570Factory Overhead—Packing Department 30,050

g. Work in Process—Packing Department 166,790Work in Process—Making Department 166,790

h. Finished Goods 263,400Work in Process—Packing Department 263,400

i. Cost of Goods Sold 265,200Finished Goods 265,200


Prob. 18–1B (FINMAN); Prob. 3–1B (MAN) (Concluded)2. Work in Work in

Process— Process— FinishedMaterials Making Dept. Packing Dept. Goods

Balance, July 1……… $ 5,100 $ 6,790 $ 7,350 $ 13,500Debits………………… 149,800 170,670 269,040 263,400Credits………………… (143,510) (166,790) (263,400) (265,200)

Balance, July 31…… $ 11,390 $ 10,670 $ 12,990 $ 11,700

1 $105,700 + $32,400 + $32,5702 $31,300 + $40,900 + $30,050 + $166,790

3.

Balance, July 1………Debits…………………Credits…………………Balance, July 31……

1 $4,980 + $15,400 + $10,700 + $2,0002 $1,530 + $18,300 + $7,900 + $1,500

$ 510 $ (820)

$ 0 $ 033,080 29,230

(32,570) (30,050)

Factory Overhead— Factory Overhead—Making Dept. Packing Dept.

Dr. Cr.

1 2

21


Prob. 18–2B (FINMAN); Prob. 3–2B (MAN)1.


Units charged to production:Inventory in process, October 1 2,300Received from materials storeroom 26,000Total units accounted for by the

Blending Department 28,300Units to be assigned cost:

Inventory in process, October 1(3/5 completed) 2,300 0 920

Started and completed in October 23,400 23,400 23,400Transferred to Molding Department in

October 25,700 23,400 24,320Inventory in process, October 31


1 2,300 units × (1 – 3/5)2 25,700 units – 2,300 units3 2,300 units + 26,000 units – 25,700 units4 2,600 units × 1/5

BAVARIAN CHOCOLATE COMPANYCost of Production Report—Blending Department

For the Month Ended October 31, 2014Equivalent Units

1

2

43


Prob. 18–2B (FINMAN); Prob. 3–2B (MAN) (Continued)


Costs per equivalent unit:Total costs for October in Blending


Costs charged to production:Inventory in process, October 1 $ 46,368Costs incurred in October 578,040Total costs accounted for by the

Blending Department $624,408Cost allocated to completed and

partially completed units:Inventory in process, October 1 balance $ 46,368To complete inventory in process,

October 1 $ 5,520 5,520Cost of completed October 1 work in $ 51,888

processStarted and completed in October $386,100 140,400 526,500Transferred to Molding Department

in October $578,388Inventory in process, October 31 42,900 3,120 46,020Total costs assigned by the Blending

Department $624,408

Costs transferred to Molding Department: $578,388Work in process, October 31: 2,600 units at a cost of $46,020


Costs

2

3

4

÷ ÷÷

5

6 7

1


Prob. 18–2B (FINMAN); Prob. 3–2B (MAN) (Concluded)2. Direct materials: Decrease of $0.15 ($16.50 – $16.65)

Conversion: Increase of $0.15 ($6.00 – $5.85)

Computations:

Direct materials cost per equivalent unit: $16.65 ($38,295 ÷ 2,300 units)

Conversion cost per equivalent unit: $5.85 ($8,073* ÷ 1,380 units**)

* Work in process, October 1…………………………………………………………………………… $46,368

Less direct materials cost…………………………………………………………………………… 38,295

Conversion cost included in October 1, work in process……………………………………… $ 8,073

** Equivalent units in October 1, work in process (2,300 × 3/5) = 1,380 units


Prob. 18–3B (FINMAN); Prob. 3–3A (MAN)1.


Units charged to production:Inventory in process, January 1 3,400Received from Reaction Department 52,300Total units accounted for by the


Inventory in process, January 1(60% completed) 3,400 0 1,360

Started and completed in January 49,600 49,600 49,600Transferred to finished goods

in January 53,000 49,600 50,960Inventory in process, January 31



DOVER CHEMICAL COMPANYCost of Production Report—Filling Department

For the Month Ended January 31, 2012Equivalent Units

1

2

3




Costs per equivalent unit:Total costs for January in Filling


Costs charged to production:Inventory in process, January 1 $ 40,528Costs incurred in January 693,576Total costs accounted for by the


partially completed units:Inventory in process, January 1 balance $ 40,528To complete inventory in process,

January 1 $ 0 $ 5,168 5,168Cost of completed January 1 work in

process $ 45,696Started and completed in January 471,200 188,480 659,680Transferred to finished goods in

January $705,376Inventory in process, January 31 25,650 3,078 28,728Total costs assigned by the Filling

Department $734,104

1 $101,560 + $95,1662 $496,850 + $101,560 + $95,1663 1,360 units × $3.804 49,600 units × $9.505 49,600 units × $3.806 2,700 units × $9.507 810 units × $3.80

Costs

2

3

4

÷ ÷÷

5

6 7

1


Prob. 18–3B (FINMAN); Prob. 3–3B (MAN) (Concluded)

2. Work in Process—Filling Department 496,850Work in Process—Reaction Department 496,850

Finished Goods 705,376Work in Process—Filling Department 705,376

3. Direct materials: –$0.08 decrease ($9.50 – $9.58)Conversion: –$0.10 decrease ($3.80 – $3.90)

4. The cost of production report may be used as the basis for allocating product costs between Work in Process and Finished Goods. The report can also be used to control costs by holding each department head responsible for the units entering production and the costs incurred in the department. Any differences in unit product costs from one month to another, such as those in part (3), can be studied carefully and any significant differences investigated.


Prob. 18–4B (FINMAN); Prob. 3–4B (MAN)

1. and 2.

Item Dr. Cr. Dr. Cr.

Sept. 1 Bal., 2,600 units, 1/4 completed 45,82530 Smelting Dept., 28,900 units at

$16.00/unit 462,400 508,22530 Direct labor 158,920 667,14530 Factory overhead 101,402 768,54730 Finished goods* 702,195 66,35230 Bal., 2,900 units, 4/5 completed 66,352

Oct. 31 Smelting Dept., 31,000 units at $16.50/unit 511,500 577,852

31 Direct labor 162,850 740,70231 Factory overhead 104,494 845,19631 Finished goods* 805,156 40,04031 Bal., 2,000 units, 2/5 completed 40,040

*The credits are determined from the supporting cost of production reports.

DateBalance

Work in Process—Rolling




(a) (a)

Units charged to production:Inventory in process, September 1 2,600Received from Smelting Department 28,900Total units accounted for by the

Rolling Department 31,500Units to be assigned cost:

Inventory in process, September 1(1/4 completed) 2,600 0 1,950

Started and completed in September 26,000 26,000 26,000Transferred to finished goods in

September 28,600 26,000 27,950Inventory in process, September 30

(4/5 completed) 2,900 2,900 2,320Total units to be assigned cost 31,500 28,900 30,270

1 2,600 units × (1 – 1/4)2 28,900 units – 2,900 units3 2,900 units × 4/5

PITTSBURGH ALUMINUM COMPANYCost of Production Report—Rolling Department

For the Month Ended September 30, 2014Equivalent Units

1

2

3




Costs per equivalent unit:Total costs for September in Rolling


Costs assigned to production:Inventory in process, September 1 $ 45,825Costs incurred in September 722,722Total costs accounted for by the

Rolling Department $768,547Cost allocated to completed and

partially completed units:Inventory in process, September 1

balance (c) $ 45,825To complete inventory in process,

September 1 (c) $ 0 $ 16,770 16,770Cost of completed September 1 work

in process $ 62,595Started and completed in September (c) 416,000 223,600 639,600Transferred to finished goods

in September (c) $702,195Inventory in process, September 30 (d) 46,400 19,952 66,352Total costs assigned by the Rolling

Department $768,547

1 $158,920 + $101,4022 $462,400 + $158,920 + $101,4023 1,950 units × $8.604 26,000 units × $16.005 26,000 units × $8.606 2,900 units × $16.007 2,320 units × $8.60

Costs

2

3

4

÷ ÷

5

6 7

1


Prob. 18–4B (FINMAN); Prob. 3–4B (MAN) (Continued)2.


(a) (a)

Units charged to production:Inventory in process, October 1 2,900Received from Smelting Department 31,000Total units accounted for by the

Rolling Department 33,900Units to be assigned cost:

Inventory in process, October 1(4/5 completed) 2,900 0 580

Started and completed in October 29,000 29,000 29,000Transferred to finished goods in

October 31,900 29,000 29,580Inventory in process, October 31


1 2,900 units × (1 – 4/5)2 31,000 units – 2,000 units3 2,000 units × 2/5

PITTSBURGH ALUMINUM COMPANYCost of Production Report—Rolling Department

For the Month Ended October 31, 2014Equivalent Units

1

2

3


Prob. 18–4B (FINMAN); Prob. 3–4B (MAN) (Concluded)


Costs per equivalent unit:Total costs for October in Rolling


Costs charged to production:Inventory in process, October 1 $ 66,352Costs incurred in October 778,844Total costs accounted for by the

Rolling Department $845,196Cost allocated to completed and

partially completed units:Inventory in process, October 1 balance (c) $ 66,352To complete inventory in process,

October 1 (c) $ 0 $ 5,104 5,104Cost of completed October 1 work in

process $ 71,456Started and completed in October (c) 478,500 255,200 733,700Transferred to finished goods in

October (c) $805,156Inventory in process, October 31 (d) 33,000 7,040 40,040Total costs assigned by the Rolling

Department $845,196


Costs

2

3

4

÷ ÷

5

6 7

1


Appendix Prob. 18–5B (FINMAN); Appendix Prob. 3–5B (MAN)


Units charged to production:Inventory in process, May 1 1,500Received from Milling Department 18,300Total units accounted for by the

Sifting Department 19,800Units to be assigned cost:

Transferred to Packaging Department in May 18,000 18,000

Inventory in process, May 31(75% completed) 1,800 1,350

Total units to be assigned cost 19,800 19,350

* 75% units × 1,800 units

COSTS Costs

Unit costs:Total costs for May in Sifting Department1 $58,050Total equivalent units 19,350

Cost per equivalent unit $ 3.00Costs charged to production:

Inventory in process, May 1 $ 3,400Costs incurred in May2 54,650

Total costs accounted for by the Sifting Department $58,050Costs allocated to completed and partially completed units:

Transferred to Packaging Department in May (18,000 units × $3.00) $54,000

Inventory in process, May 31(1,800 units × 75% × $3.00) 4,050

Total costs assigned by the Sifting Department $58,050

1 $3,400 + $32,600 + $14,560 + $7,4902 $32,600 + $14,560 + $7,490

BLUE RIBBON FLOUR COMPANYCost of Production Report—Sifting Department

For the Month Ended May 31, 2014

*

÷


CP 18–1 (FINMAN); CP 3–1 (MAN)This case comes from a real story. In the real story, the first reduction in chips hadno impact on the marketplace. The manager was promoted, and the next manager attempted the same strategy—reduce chips by 10%. Again, it worked. The next manager did the same thing. All of a sudden, the market demand dropped for the cookie. A threshold was reached, and the cookie was in trouble in the marketplace. The current cookie was nothing like the original recipe. The cookie’s integrity was slowly eroded until it wasn’t “Full of Chips.” Senior management had no idea this was happening, since it occurred slowly over a period of many years. Now, with respectto the controller, there are a number of options.

a. Do nothing. This is a safe strategy. It would be highly unlikely that failing to reveal this information to anybody would ever be discovered or “pinned” on you. Unfortunately, this is one of those situations where silence has very little penalty, yet speaking up entails some risk. However, silence may not be the best option. Silence may allow the product quality erosion to continue, which could be harmful to the company.

b. Talk to Bishop. You can have a conversation with Bishop. This is also a reasonably safe strategy and probably the best start. For example, you may discover that the reduction in chips was okayed by the vice president or that there was a market study that revealed that the market thought the cookie had too many chips. This kind of information could be discovered very easily and without any risk through a personal conversation with Bishop.

c. Talk to the vice president. You could also go right over Bishop’s head to the vice president. This strategy might label you as “not a team player,” so some care is in order here. You might get Bishop in trouble, or you may get yourself in some trouble. This is probably not the best first move. It is within Bishop’s authority to make the chip decision, so you are, in a sense, second-guessing Bishop when you go to the vice president. You could be accused of being out of your expertise. After all, what do you know about chips and the marketplace?

Probably the best move is to talk to Bishop. If you discover that Bishop is acting independently, with the primary motivation being to improve the “bottom line,” then you may need to talk to the vice president. This is a delicate situation. You would need to make your case that the reduction in chips strikes you as a short-term decision that may have short-term benefits but may be a poor long-term decision. Again, Bishop has the prerogative to make the chip decision; so in a sense, you are second-guessing Bishop. Your objections should be done lightly and with care.

CASES & PROJECTS


CP 18–2 (FINMAN); CP 3–2 (MAN)a. This accounting procedure has the effect of rewarding the production of

broke. In essence, the procedure communicates to operating personnel that broke is a normal part of doing business. In fact, not only is broke a normal part of business, but its production is actually attractive because of the favorable impact on direct materials costs of the papermaking operation. Recording broke as acceptable and favorable is inconsistent with a total quality perspective, which is based on the concept of producing the product right the first time, every time. Recycling is considered non-value-added in the context of a total quality perspective.

b. The accounting for broke that is typical in the industry fails to account for the total impact of broke. It is true that the use of recycled materials may reduce the direct materials cost to the operation. However, such a view is very limited. For example, the production of broke has a cost. Machine capacity was used to produce the broke in the first place. Therefore, broke has an original materials cost and a machine cost. Both of these together are likely to be greater than the cost of virgin material. One mill manager once commented, “There is a free paper machine out there.” What he was implying is that if all the machine capacity used to produce broke could be harnessed for good production, it would have been equal to a “free” paper machine. The cost of misused capacity is not captured by most accounting systems in the accounting for broke.

There are other hidden costs. Broke production makes the total amount produced difficult to predict. As a result of this source of variation (broke), production schedules are difficult to maintain. For example, if a particular production run has a high amount of broke, then the scheduled run will need to be longer. The longer run, however, has ripple effects throughout the mill, since all the following production runs will be delayed, as will downstream operations. Also, the complete recycle operation has a cost associated with it (flow control, piping, maintenance, etc.). Typical accounting systems aggregate the cost of the recycle operation with papermaking. Therefore, it is not made visible as a source of wasted resources.


CP 18–3 (FINMAN); CP 3–3 (MAN)This case is abstracted from a real situation, where higher raw materials costs due to tin content were more than offset by lower energy costs. The cost system used in the real situation was a sophisticated “real-time” expense tracking system. The subtlety of this trade-off analysis is impressive.

The first step is to translate the monthly materials and energy costs into their respective costs per unit of monthly production. In this way, the costs can be compared across the months.

April May June July Aug. Sept.Energy cost per unit……………………$0.28 $0.29 $0.30 $0.31 $0.32 $0.33Materials cost per unit………………… 0.26 0.24 0.22 0.20 0.19 0.16Total cost per unit………………………$0.54 $0.53 $0.52 $0.51 $0.51 $0.49

The graph below shows the total unit cost data for each month.

The graph reveals that the tin content and energy costs are inversely related. That is, as the materials cost increased due to higher tin content, the energy costs dropped by more. In fact, the total cost line shows that the energy savings exceeds the additional materials cost, due to higher tin content. Thus, the recommendation should be to purchase raw can stock with the tin content at the $0.33-per-unit level (September level). This is the material that minimizes the total production cost for this set of data. Additional data could be used to determine the optimal tin content, or the point where energy cost savings fail to overcome additional material costs.

$0.00

$0.10

$0.20

$0.30

$0.40

$0.50

$0.60

April May June July Aug. Sept.

Month

Cos

t per

Uni

t

Energy cost per unitMaterials cost per unitTotal cost per unit


CP 18–4 (FINMAN); CP 3–4 (MAN)To: Jamarcus BradshawFrom: Leann BrunswickRe: Analysis of August Increase in Unit Costs for Papermaking Department

The increase in the unit costs from July to August occurred for both the conversion and materials (pulp and chemicals) costs in the Papermaking Department, as indicated in the table below.

July AugustMaterials cost per ton……………………………………… $246.33 $269.12Conversion cost per ton…………………………………… 121.67 132.39Total…………………………………………………………… $368.00 $401.51

An analysis was done to isolate the cause of the increased cost per ton. My interviews indicated that there were two possible causes. First, we changed the specification of the green paper in early August. This may have altered the way the paper machines process the green paper. Thus, it is possible that the paper machines have improper settings for the new specification and are overapplying materials. Secondly, there is some question as to whether paper machine No. 1 is in need of some repairs. It is possible that our problem is due to lack of repairs on this machine.

Fortunately, we run both colors on paper machine No. 1. Thus, we can separate the analysis between these two possible explanations. I have provided thefollowing cost per ton data for the two paper machines and the two product colors:

Paper machine analysis:Materials Conversion

Cost per Ton Cost per Ton TotalPaper Machine No. 1…………………… $290.54 $143.04 $433.58Paper Machine No. 2…………………… 248.07 121.93 370.00Difference………………………………… $ 42.47 $ 21.11 $ 63.58

Product color analysis:Materials Conversion

Cost per Ton Cost per Ton TotalGreen……………………………………… $269.15 $132.37 $401.52Yellow……………………………………… 269.07 132.41 401.48Difference………………………………… $ 0.08 $ (0.04) $ 0.04


CP 18–4 (FINMAN); CP 3–4 (MAN) (Concluded)The results are clear. Paper machine 1 has a much higher materials and conversioncost per ton in August. Apparently, the paper machine is overapplying pulp. This is resulting in an increase in both the materials and conversion cost per ton. Paper machine No. 2 is running at a cost near our historical cost per ton. There is no evidence of a color problem. Both color papers are running at or near the same materials and conversion cost per ton. Thus, the specification change for green has not appeared to cause a problem in the papermaking operation. I predict that if we improve the operation of paper machine No. 1, we will be able to run the department near the historical average cost per ton.

Note to Instructors: The paper machine and product line analysis are determined by summarizing the data from the computer run provided in the problem. Students must divide costs by ton-volume for each paper machine and then do the same thing for each product color. The tables in the memo show the results of the following analysis ( a spreadsheet is recommended for performing this analysis):

Average materials cost per ton for paper machine No. 1:($40,300 + $41,700 + $44,600 + $36,100) ÷ (150 + 140 + 150 + 120) = $290.54

Average conversion cost per ton for paper machine No. 1:($18,300 + $21,200 + $22,500 + $18,100) ÷ (150 + 140 + 150 + 120) = $143.04

Average materials cost per ton for paper machine No. 2:($38,300 + $33,900 + $35,600 + $33,600) ÷ (160 + 140 + 130 + 140) = $248.07

Average conversion cost per ton for paper machine No. 2:($18,900 + $15,200 + $18,400 + $17,000) ÷ (160 + 140 + 130 + 140) = $121.93

Average materials cost per ton for green paper:($40,300 + $44,600 + $38,300 + $35,600) ÷ (150 + 150 + 160 + 130) = $269.15

Average conversion cost per ton for green paper:($18,300 + $22,500 + $18,900 + $18,400) ÷ (150 + 150 + 160 + 130) = $132.37

Average materials cost per ton for yellow paper:($41,700 + $36,100 + $33,900 + $33,600) ÷ (140 + 120 + 140 + 140) = $269.07

Average conversion cost per ton for yellow paper:($21,200 + $18,100 + $15,200 + $17,000) ÷ (140 + 120 + 140 + 140) = $132.41


CP 18–5 (FINMAN); CP 3–5 (MAN)This activity can be accomplished with multiple groups assigned to one or more of the industry categories. Assign at least one group to each industry category (some are easier than others, so some groups may be assigned multiple categories). Have the groups report their research back to the class. The class’s final product should be a table identifying a company, products, materials, and processes used by these industries. The most difficult information to obtain is the processes and the materials used in the processes. However, Internet and annual report information provide good information for answers. The text problems also provide examples of processes used in these industries. Use this case to familiarize students with process industries. Note that a set of example companies is provided for these industry categories early in the chapter. The instructor may require that the groups select different companies than those already listed in the text. A suggested solution following this approach is provided on the next page.


CP 18–5 (FINMAN); CP 3–5 (MAN) (Concluded)

Industry Category Example Company Products Materials Processes

Beverages PepsiCo, Inc. Pepsi, Diet Pepsi Sugar, carbonated water, concentrate

Mixing, bottling

Chemicals E. I. du Pont de Nemours and Company

Stainmaster®, Kevlar®, Lycra®, Teflon®, refrigerants, electronic materials

Petroleum and petroleum-based intermediates (esters and olefins)

Reaction, blending, distilling, extruding

Food H.J. Heinz Company Ketchup Tomato, sugar, salt, spices Cooking, blending, packaging

Forest & paper products International Paper Company

Paper, paperboard, cardboard

Wood, wood chips, water, sulfuric acid

Chipping, pulping, papermaking, pressing, cutting

Metals AK Steel Holding Company

Steel Iron ore, coke Melting, casting, rolling

Petroleum refining BP Gasoline, diesel, kerosene Oil Catalytic converting, distilling

Pharmaceuticals Eli Lilly and Company Prozac®, Humulin® Hydrochloride Blending, distilling, packing, pelletizing

Soap and cosmetics Unilever Lever 2000® soap Fatty acids, water,fragrances

Making, column blowing, packing

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