Fullerton Aggregate processes raw shale into lightweight aggregate material. This process requires heat treating shale and injecting it with fly ash as it passes through rotating kilns. The shale both expands and hardens in the process, and is ideally suited to road construction. Fullerton uses the weighted-average process costing method to account for production. The following information is available for a recent period:
Beginning work in process on September 1 consisted of 75,000 tons that were 80% complete with respect to raw materials and 50% complete with respect to conversion costs.
Ending work in process on September 30 consisted of 60,000 tons that were 70% complete with respect to raw materials and 40% complete with respect to conversion costs.
860,000 tons of material were put into production, and 875,000 tons exited production. There is no spoilage or loss of tonnage in the production process.
Beginning work in process carried a total cost of $265,000, divided 40/20/40 with respect to direct material/direct labor/factory overhead. Additional costs incurred during the month were $3,000,000, divided 50% to direct material and the remainder on a 1:2 ratio between direct labor and factory overhead.
(a) Prepare a cost of production report for September.
(b) Prepare journal entries to reflect the introduction of additional costs during September, as well as the transfer of completed units to finished goods.
Problem 2
Vintage Furniture constructs and sells executive style conference tables. The selling price is $10,000 per table. A unique feature is that the only raw material used in the construction of each table, other than indirect materials like glues and screws, comes entirely from a single tree. Tree prices and other costs of production have remained stable, and Vintage is able to use each tree purchased without incurring any significant spoilage. Consider the following “disorganized” information and complete the indicated requirements.
Ending work in process (600 tables) $18,00,000
Selling price per table 10,000
Ending finished goods (200 tables) 14,00,000
Indirect labor incurred during the period 1,25,000
Raw materials transferred into production (700 trees) 7,00,000
Beginning finished goods (400 tables) 28,00,000
Cost of glues and screws 35,000
Beginning work in process 14,65,000
Ending raw materials (500 trees) 5,00,000
Direct labor incurred during the period 33,00,000
Selling, general, and administrative costs incurred 11,50,000
Depreciation of factory equipment 75,000
Raw material purchases during the period (900 trees) 9,00,000
All other factory overhead 3,00,000
Tables sold (800 tables)
(a) Complete the reconciliation of units on the accompanying blank worksheet, showing the “unit” activity in raw materials, work in process, and finished goods.
(b) Calculate the cost of goods manufactured.
(c) Calculate the cost of goods sold.
(d) Calculate net income. Assume an income tax rate of 35%.





