Question

E16-7 Prepare a production report
The Sanding Department of Quik Furniture Company has the following production and manufacturing cost
data for March 2017, the first month of operation.
	Production: 7,000 units finished and transferred out; 3,000 units started that are 100% complete as to
	materials and 20% complete as to conversion costs.
	Manufacturing costs: Materials $33,000; labor $21,000; overhead $36,000.
Instructions
Prepare a production cost report.
NOTE: Enter a number in cells requesting a value; enter either a number or a formula in cells with a "?" .
QUIK FURNITURE COMPANY
Sanding Department
Production Cost Report
For the Month ended March 31, 2017
					Equivalent Units
Quantities				Physical Units	Materials	Conversion Costs
Units to be accounted for
Work in process, March 1				Value
Started into production				Value
Total units				?
Units accounted for
Transferred out				Value	Value	Value
Work in process, March 31				Value	Value	?
Total units				?	?	?
Costs				Materials	Conversion Costs	Total
Unit costs
Total cost(a)				?	?	?
Equivalent units (b)				Value	Value
Unit costs (a) ÷ (b)				?	?	?
Costs to be accounted for
Work in process, March 1						Value
Started into production						Value
Total costs						?
Cost Reconciliation Schedule
Cost accounted for
Transferred out						Value
Work in Process, March 31
Materials					Value
Conversion costs					Value	?
Total costs						?
After you have completed the requirements of E16-7, consider this additional question.
1.	Assume that 9,000 units were completed and transferred out. Show the impact of this change
	on the calculation of equivalent units, unit cost, and on the cost reconciliation schedule.

Answer 1

QUICK FURNITURE COMPANY
Cost of Production Report - Sanding Department
For the month ended March 31, 2017
	Whole	Equivalent Units
	Units	Material	Direct labor	Overhead
Units to be accounted for:
Inventory in process, March 1	0
Started production	10000
Total units accounted for by the Sanding Department	10000
Units accounted for:
Started and completed in March	7000	7000	7000	7000
Transferred to finished goods in march	7000	7000	7000	7000
Inventory in process , March 31	3000	3000	600	600
Total units to be assigned costs	10000	10000	7600	7600
	Costs
Costs	Material	Direct Labor	Overhead	Total Costs
Cost per equivalent unit:
Total costs for March in Sanding Department	33000	21000	36000	90000
Total equivalent units	10000	7600	7600
Cost per equivalent unit	$3.30	$2.76	$4.74
Costs charged to production:
Inventory in process , March 1				0
Costs incurred in March				90000
Total costs accounted for by Filling Department				90000
Cost allocated allocated and partially completed units
Inventory in balance on March 1 balance				0
To complete inventory in process		0	0	0
Cost of completed October 1 work-in-process				0
Started and completed in March	23100	19342	33158	75600
Transferred to finished goods in February				75600
Inventory in process , March 31	9900	1658	2842	14400
Total costs assigned by the Filling Department				90000

1.

QUICK FURNITURE COMPANY
Cost of Production Report - Sanding Department
For the month ended March 31, 2017
	Whole	Equivalent Units
	Units	Material	Direct labor	Overhead
Units to be accounted for:
Inventory in process, March 1	0
Started production	10000
Total units accounted for by the Filling Department	10000
Units accounted for:
Started and completed in March	9000	9000	9000	9000
Transferred to finished goods in march	9000	9000	9000	9000
Inventory in process , March 31	1000	1000	200	200
Total units to be assigned costs	10000	10000	9200	9200
	Costs
Costs	Material	Direct Labor	Overhead	Total Costs
Cost per equivalent unit:
Total costs for October in Blending Department	33000	21000	36000	90000
Total equivalent units	10000	9200	9200
Cost per equivalent unit	$3.30	$2.28	$3.91
Costs charged to production:
Inventory in process , March 1				0
Costs incurred in October				90000
Total costs accounted for by Filling Department				90000
Cost allocated allocated and partially completed units
Inventory in balance on March 1 balance				0
To complete inventory in process		0	0	0
Cost of completed October 1 work-in-process				0
Started and completed in March	29700	20543	35217	85461
Transferred to finished goods in February				85461
Inventory in process , March 31	3300	457	783	4539
Total costs assigned by the Filling Department				90000

Since the finished goods inventory has gone up , the cost per equivalent unit will for conversion come down and thereby the value of ending inventory will go down and the cost of finished goods will go up.