ACG 2071 Managerial Accounting Process Costing Systems Minicase PROCESS COSTING PROBLEM Spectre Chemicals produces Zaloff in a two department process. Information on the two departments for March and April, 2011 are as follows: March 2011: Department 1: The company had beginning inventory of 6,000 units, 40% completed with a cost of $45,000. During the month, the department transferred in 22,000 units of the direct materials with a cost of $10 per unit. Ending inventory was 7,000 units, 30% completed. Direct labor is $310,500 and factory overhead is $103,500. Department 2: The company had beginning inventory of 5,000 units, 70% completed with a cost of $80,000. During the month, direct labor was $175,000 and factory overhead was $87,500. Ending inventory was 10,000 units, 50% completed. April 2011: Department 1: During the month, the department transferred in 20,000 units of the direct materials with a cost of $11 per unit. Direct labor is $209,000 and factory overhead is $104,500. Ending inventory is 10,000 units 60% completed. Department 2: The company had beginning inventory of 5,000 units, 70% completed with a cost of $80,000. During the month, direct labor is $175,000 and factory overhead is $87,500. Required: Compute the Equivalent Units of Production, Material costs, and Conversion costs for each department for March and April, 2011. Complete the attached chart – one for each department and each month Prepare a cost of production report for March and April 2011. ACG 2071 Process Cost Systems Created by: M. Mari Fall 2009-1 Page 1 of 13 Process Manufacturing Is the mass production of products in a continuous flow of steps Products pass through a series of sequential processes Each process is identified a separate production, department, workstation, or work center. With the exception of the first process or department, each receives the output from the prior department as a partially processed product. Depending on the nature of the process, a company applies direct labor, overhead, and additional direct materials to move the product toward completion. Process Cost System Assigns direct materials, direct labor, and overhead to specific processes. Costs are allocated by department rather than jobs Manufacturing costs are allocated to products based on units of production Manufacturing costs are accumulated and transferred by department The total costs associated with each process are then divided by the number of units passing through that process to determine the cost per equivalent units for that process ACG 2071 Process Cost Systems Created by: M. Mari Fall 2009-1 Page 2 of 13 To understand how costs are allocated, first we must decide how the costs are accumulated. One method is First in, First out method. Beverage Production Costs flow fr.