Question

Oregon Paper Company produces newsprint paper through a special recycling process using scrap paper products. Production and cost data for October 2014, the first month of operations for the company's new Portland plant, follow:

Units of product started in process during October 80,000 tons

Units completed and transferred to finished goods 75,000 tons

Machine hours operated 7,000

Direct materials costs incurred $ 486,000

Direct labor costs incurred $ 190,800

Raw materials are added at the beginning of the process for each unit of product produced, and labor and manufacturing overhead are added evenly throughout the manufacturing process. Manufacturing overhead is applied to Work-in-Process at the rate of $24 per machine hour. Units in process at the end of the period were 60 percent converted. Prepare a cost of production report for Oregon Paper Company for October

Answer 1

Units Reconciliation
Units to account for:
Beginning WIP	-
Units started this period	80,000
Total Units to account for	80,000
Total Units accounted for:
Completed & Transferred out	75,000
Ending WIP	5,000
Total Units accounted for	80,000

EUP - Weighted Average Method	Units	% Material	EUP Materials	% Conversion	EUP - Conversion
Units TRANSFERRED	75,000	100%	75,000	100%	75,000
Units of ENDING WIP	5,000	100%	5,000	60%	3,000
Equivalent Units of Production			80,000		78,000

COST per EUP			Material		Conversion
Cost of Beginning WIP			$                          -		$                                                 -
Cost incurred during the period			$        486,000.00		$                                358,800.00
Total Costs		Costs	$        486,000.00	Costs	$                                358,800.00
Equivalent units of production		EUP	80,000	EUP	78,000
Cost per EUP			$              6.07500		$                                      4.60000

TOTAL COST ACCOUNTED FOR
Cost of Units Transferred Out	EUP	Cost per EUP	Total Cost
- Direct Materials	75,000	$               6.075	$        455,625.00
- Conversion	75,000	$               4.60	$        345,000.00
Total Cost transferred Out				$            800,625.00
Cost of ending WIP	EUP	Cost per EUP	Total Cost
- Direct Materials	5,000	$               6.075	$          30,375.00
- Conversion	3,000	$               4.60	$          13,800.00
Total cost of ending WIP				$              44,175.00
Total costs accounted for					$                                844,800.00