Cost Accounting (14th Edition)

17-41 Standard-costing with beginning and ending work in process. Penelope’s Pearls Company (PPC)
is a manufacturer of knock off jewelry. Penelope attends Fashion Week in New York City every September
and February to gauge the latest fashion trends in jewelry. She then makes trendy jewelry at a fraction of the
cost of those designers who participate in Fashion Week. This Fall’s biggest item is triple-stranded pearl
necklaces. Because of her large volume, Penelope uses process costing to account for her production. In
October, she had started some of the triple strands. She continued to work on those in November. Costs and
output figures are as follows:
Penelope’s Pearls Company
Process Costing
For the Month Ended November 30, 2012
Units Direct Materials Conversion Costs
Standard cost per unit $3.00 $10.50
Work in process, beginning inventory (Nov. 1) 24,000 $72,000 $176,400
Degree of completion of beginning work in process 100% 70%
Started during November 124,400
Completed and transferred out 123,000
Work in process, ending inventory (Nov. 30) 25,400
Degree of completion of ending work in process 100% 50%
Total costs added during November $329,000 $1,217,000
ASSIGNMENT MATERIAL 643
1. Compute equivalent units for direct materials and conversion costs. Show physical units in the first column
of your schedule.
2. Compute the total standard costs of pearls transferred out in November and the total standard costs of
the November 30 inventory of work in process.
3. Compute the total November variances for direct materials and conversion costs.
Required
Collaborative Learning Problem
17-42 Standard-costing method. Ozumo’s Gardening makes several different kinds of mulch. Its busy
period is in the summer months. In August, the controller suddenly quit due to a stress-related disorder. He
took with him the standard costing results for RoseBark, Ozumo’s highest quality mulch. The controller had
already completed the assignment of costs to finished goods and work in process, but Ozumo does not
know standard costs or the completion levels of inventory. The following information is available:
Physical and Equivalent Units for RoseBark
For the Month Ended August 31, 2012
Equivalent Units
(yards)
Physical Units
(Yards of Mulch)
Direct
Materials
Conversion
Costs
Completion of beginning work in process 965,000 — 434,250
Started and completed 845,000 845,000 845,000
Work on ending work in process 1,817,000 1,817,000 1,090,200
ƒƒƒƒƒƒƒƒ 2,662,000 2,369,450
Units to account for 3,627,000
Costs
Cost of units completed from beginning work in process $ 7,671,750
Cost of new units started and completed
ƒƒ6,717,750
Cost of units completed in August 14,389,500
Cost of ending work in process
ƒ12,192,070
Total costs accounted for $26,581,570
1. Calculate the completion percentages of beginning work in process with respect to the two inputs.
2. Calculate the completion percentages of ending work in process with respect to the two inputs.
3. What are the standard costs per unit for the two inputs?
4. What is the total cost of work-in-process inventory as of August 1, 2012?
Required