Question

Smart Golf, Inc. (SGI) sells products and services for the sport of golf. One of its key business units specializes in the repair and reconditioning of golf carts. SGI enters into contracts with a number of golf clubs throughout the U.S. in which the clubs send their carts to SGI for a complete reconditioning: motor, frame repair where necessary, and replacement of seat covers and canvas tops. The clubs usually will cycle 10-15% of their carts through this process each year. Because SGI's business has been growing steadily, it is very important to complete the reconditioning of the carts within budgeted time and cost. The firm uses weighted-average process costing to keep track of the costs incurred in the reconditioning process.

SGI's golf cart repair and the reconditioning unit have the following information for the month of November, in which 960 carts were stared for reconditioning.

Beginning WIP:

120 units, 50% complete for materials ($13,280) and 30% complete for conversion ($16,120)

Current costs:

Direct Materials: $160,000

Conversion: $308,000(conversion costs for SGI usually average about $250-$320 per unit, based on an average of 1,000-1,300 units completed each month)

Ending WIP: 240 units, 30% complete for direct materials and 20% complete for conversion

Required:

1) Complete the production cost report for the month of November.

2) SGI is scheduled to start another batch of 1,200 carts for reconditioning in December. In your own words, comment on the information the cost report contains regarding planning for December's work.

Answer 1