Process costing:
LSW Co. uses a process costing system to account for manufacturing costs. The following data pertains to the period just ended:
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Direct Material Costs
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Conversion Costs |
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Beg. Inv.
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$5,000
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$3,000
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Current
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Production
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96,000
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58,000
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The beginning inventory consisted of 2,500 units of partially complete products that were 80% complete in material costs and 75% complete in conversion costs. Production on 48,000 units was begun during the period, and of those, 3,000 were incomplete at the end of the period. Those units in ending inventory were 30% complete in material costs and 40% complete in conversion costs.
Required:
Using Excel or some other spreadsheet software, you need to develop an automatic process costing system based on the FIFO method that will calculate LSW's ending inventory and cost of goods manufactured for every period. To do this, you will need to label a tab on a spreadsheet "INPUT." On this sheet, the inputs that change every period will be entered. IMPORTANT: the input sheet has data points only. No calculations of any sort should be on the input sheet. For example, the number of products started, the number of units in ending inventory, the percentage of completion with respect to materials, the material costs in beginning inventory are all examples of data points. You then need to label another tab "Cost of Production Report" or "OUTPUT." On this tab, you will perform all calculations for the current period by linking the data from the INPUT tab. In this manner, for every subsequent period, one would only have to update the information under the INPUT tab and the OUTPUT sheet would automatically calculate the correct EI balance and Cost of Goods Manufactured (HINT: there should not be any "hard" numbers on the OUTPUT sheet).
Standard Costing:
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ACTUAL RESULTS
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Total overhead costs
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$483,500
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Variable overhead costs
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$185,000
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Fixed overhead costs incurred
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$298,500
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Number of products produced
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11,900 units
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Direct labor costs
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$104,703 (10,265 hours @ $10.20)
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Direct material costs
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$599,841 (120,450 lbs. @$4.98/lb.)
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STANDARDS
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Per unit/DLH
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Direct materials
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10 pounds @ $5 per pound
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Direct labor
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1 DLH @ $10/DLH
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Variable overhead rate
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$15 per allowed DLH
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Fixed overhead rate
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$25 per allowed DLH
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Total overhead rate
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$40 per allowed DLH
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Normal activity level
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12,000 units
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Fixed OverheadEstimate
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$300,000
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Required:
Using Excel or some other spreadsheet software, you need to develop an automatic standard costing system that will calculate JCL's variances for every period. To do this, you will need to label a tab on a spreadsheet "INPUT." On this sheet, the inputs that change every period will be entered. IMPORTANT: the input sheet has data points only. No calculations of any sort should be on the input sheet. For example, the actual production for the period, the actual per unit cost for materials, the actual labor hours for the period, the actual variable overhead costs are all examples of data points. This sheet would be accessed every period and updated as these inputs change.
You then need to label another tab "STANDARDS." On this tab, you will put all the standards JCL uses to gauge their performance as well as the expected level of activity. This sheet is accessed periodically as JCL re-visits and revises their standards. This would probably not happen every period.
You then need to label another tab "VARIANCES" or "OUTPUT." No hard numbers should go on this sheet. It should perform all variance calculations for the current period by linking the data from the INPUT tab and the STANDARDS tab. In this manner, for every subsequent period, one would only have to update the information under the INPUT tab (and, less frequently, the STANDARDS tab,) and the OUTPUT sheet would automatically calculate the variances.
Variable Costing:
March:
Beginning inventory= 2,500 units $26,500 ($10,000 variable)
Production= 32,000 units
Sales = 31,000 units @ $50 each
VMC (DM, DL, and VOH) = $129,600
FMC = $300,000
VS/A costs = $124,000
FS/A costs = $550,000
April:
Beginning inventory = ?
Production = 33,000 units
Sales = 34,000 units @ $50 each
VMC (DM, DL, and VOH) = $133,650
FMC = $300,000
VS/A costs = $126,000
FS/A costs = $550,000
Required:
Variable costing income and full-absorption costingincome for both March and April.Prepare automated reportsfor both income methods for both months. A proper solution will include a separate input section (under a separate tab) in which only data items will be entered (you may use one input tab for both months). In a separate section (under another tab), you should link items from the input tab to anoutput section that contains the income reports (you may use one section for both variable and full-absorption costing income). Using the information above, your solution will be for these periods.