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Materials and supplies used :

Pans and machines
Kiln firing
Unloading kilns, etc..

Power ...
Machinery and equipment:

Pans and machines

Materials and supplies on hand.
Office supplies and expense.
Prepaid taxes
Quarry rentals paid in advance
Sales-broken and spoiled brick-net



$ 3,500.00



7,000.00 2,000.00


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The foregoing is the trial balance of the National Shale Brick Company, Inc., manufacturers of shale bricks. The operations consist of (1) blasting, digging and conveying the shale to the machines, called quarrying; (2) grinding, mixing and moulding the wet bricks, called pans and machines; (3) drying; (4) building the bricks in the kiln and preparing the kiln for firing, called setting ; (5) burning or kiln firing; (6) opening the kiln and unloading and stocking the burnt bricks, called unloading.

The kilns are equipped with gas burners, the gas being produced on the premises. Some coke is obtained from the gas producer, which is sold.

The production reports for the year ended October 31, 1920, are:

Wet bricks produced
Good and carried to dryers
Spoiled in drying
Spoiled in burning
Set in kilns

18,000,000 17,600,000


830,000 16,000,000

Bricks sold during the year were 14,500,000.

The inventories of bricks on hand November 1, 1919, were as follows: Burned bricks in yard

55,000 @ $16.25 $ 893.75 Burned bricks in kilns

200,000 @ 14.75 2,950.00 Bricks burning in kilns

100,000 @ 10.20

1,020.00 Green bricks in kilns

80,000 @ 7.10

568.00 Green bricks in dryers

50,000 @ 5.60


$5,711.75 The candidate is required to calculate the number of bricks on hand October 31st, but is advised that, of the total, 100,000 are in the kiln completely burned, 250,000 are in process of burning, 100,000 green bricks are in the kiln. Bricks in process of burning and drying are taken as averaging half the process. Shale and wet bricks from the machine are used as produced and no inventory is taken into account.

The inventories are priced at cost. In the case of burnt bricks work overhead is included; in other cases it is excluded.

The shale bed is rented, rental being payable at the end of each year on the tonnage used. This is calculated at the rate of 372 tons per thousand wet brick, and the rate is 10 cents per ton. The agreement provides for a minimum rental of $4,000.00 per annum. In case the quantity of shale used is not sufficient to make the $4,000.00, the company is allowed to retain the difference out of subsequent years in which the quantity used may amount to more than $4,000.00. Depreciation: Tunnel kilns

712% per annum Periodic kilns

10 % Gas producer

10 % Dryer tunnels

772% Machinery equipment

10 % Other buildings

5 % Sheds and stables

20 % Power is divided 10% to kiln firing, 90% to pans and machines.

repare statements showing cost manufacture, cost per thousand bricks for each operation, profit and loss account and balance sheet. Answer to Question 1:

The first step is to determine the quantities passed through or half through each process and the quantities in the inventories at each stage of production.

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October 31, 1920 Wet bricks produced during the year.

18,000,000 Deduct bricks spoiled in pans and machines..


Good and carried to dryers...
Add green bricks in dryers, Nov. 1, 1919..



Total in dryers
Deduct bricks spoiled in drying..



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Summary of inventory, October 31, 1920 Burned bricks in yard..

655,000 Burned bricks in kilns..

100,000 Bricks burning in kilns.

250,000 Green bricks in kilns..

100,000 Green bricks in dryers...

800,000 The next step is to compute the cost of each process in total and per thousand bricks, and the accumulated cost of the bricks passed through each process. QUARRYING

Exhibit B Labor

$12,000.00 Material and supplies

3,000,00 Steam coal used

2,000.00 Quarry rentals: 18,000,000 @ $.35 per M.

6,300.00 Depreciation-machinery and equipment (10% of $10,000)


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Although 18,000,000 wet bricks were produced, only 17,600,000 were good and put into the dryers.

$24,300.00 = 18,000 = $1.35, cost per M of wet bricks produced.
$24,300.00 • 17,600 = $1.38, cost per M of bricks put into dryers.

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$74,275.00 = 17,600 = $4.22, cost per M of 17,600,000 bricks for P. and M. process.

Accumulated cost :
Cost of quarrying (see exhibit B).
Cost of pans and machines process..

$24,300.00 74,275.00

Total cost of 17,600,000 bricks through P. and M.



$98,575.00 • 17,600 = $5.60, cost of 17,600,000 bricks through P. and M. process. POWER Cost

Exhibit D Labor

$ 7,000.00 Materials and supplies

5,000.00 Steam coal


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Labor ..
Materials and supplies
Steam coal
Depreciation-dryer tunnels-(77% of $10,000)..

Exhibit E $ 8,000.00

1,500.00 5,000.00


Total drying cost


The computation of the drying cost per M is not as simple as in the cases of quarrying and pans and machines, because of the fact that some of the bricks have been fully dried during the year while others have been only half dried, and because of the further fact that some of the bricks were spoiled in drying. This spoilage cost should be charged against the dried bricks removed from the dryers, and no portion of it should be charged against the half-dried bricks still in the dryers. This is because the spoilage is determined when the bricks are taken out of the dryers and is applicable only to those taken out. Presumably, when the bricks still in process of drying are taken out, more spoilage will be discovered, and this additional spoilage will be chargeable to the bricks now in process.

With some bricks fully dried and others half dried, it is necessary to compute the equivalent in terms of fully dried bricks in order to compute the rate per M for full drying. At November 1, 1919, there were 50,000 bricks in the dryers, which the problem states are to be taken as averaging half dried. Completing the drying of these bricks was, therefore, equivalent to drying fully

25,000 During the year 17,600,000 bricks were put into the dryers ;

of this number 800,000 are half dried, which is the equivalent of drying

400,000 The remaining 16,800,000 were fully dried. Adding these.... 16,800,000

makes the total dry for the year (including bricks spoiled)

equivalent to


Then $15,250 • 17,225 = $.8853, drying cost per M of all bricks, good and spoiled. This rate is applied to the 800,000 bricks still in process of drying at October 31, 1920, with the result that no spoilage expense is included in their cost. The cost of the bricks in process of drying is : Cost through P. and M. process: 5.60 X 800 =

Cost of half drying:
$.8853 x 400




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