Question

Thakin Industries Inc. manufactures dorm furniture in separate processes. In each process, materials are entered at the beginning, and conversion costs are incurred uniformly. Production and cost data for the first process in making two products in two different manufacturing plants are as follows.

		Cutting Department
Production Data—July		Plant 1 T12-Tables		Plant 2 C10-Chairs
Work in process units, July 1		0		0
Units started into production		24,600		19,680
Work in process units, July 31		3,690		615
Work in process percent complete		60		80
Cost Data—July
Work in process, July 1		$0		$0
Materials		467,400		354,240
Labor		288,312		135,300
Overhead		127,920		128,904
Total		$883,632		$618,444

3). For each plant determine the unit costs of production. (Round unit costs to 2 decimal places, e.g. 5.25.)
4). For each plant show the assignment of costs to units transferred out and in process.

Expert Answer

Answer 1

3)

Unit costs of production:
T12 Tables	$             37.00
C10 Chairs	$             31.51

Working:

T12 Tables:

	Physical Units
Units in Work in process, July 1	0
Units started in Production	24600
Total Units to account for	24600
		Equivalent Units
	Physical Units	Materials	Labor + Overheads
Units completed and transferred out	20910	20910	20910
Units in Work in process, July 31	3690	3690	2214
Total Units accounted for	24600	24600	23124
Total Costs to be accounted for
	Materials	Labor + Overheads	Total
Work in process, July 1	0	0	0
Costs added during the month	467400	416232	883632
Total costs to be accounted for	467400	416232	883632
Cost per Equivalent unit
	Materials	Labor + Overheads	Total
Total costs to be accounted for	467400	416232	883632
Total equivalent units accounted for	24600	23124
Cost per equivalent unit	19.00	18.00	37.00

C10 Chairs:

	Physical Units
Units in Work in process, July 1	0
Units started in Production	19680
Total Units to account for	19680
		Equivalent Units
	Physical Units	Material	Labor + Overheads
Units completed and transferred out	19065	19065	19065
Units in Work in process, July 31	615	615	492
Total Units accounted for	19680	19680	19557
Total Costs to be accounted for
	Material	Labor + Overheads	Total
Work in process, July 1	0	0	0
Costs added during the month	354240	264204	618444
Total costs to be accounted for	354240	264204	618444
Cost per Equivalent unit
	Materials	Labor + Overheads	Total
Total costs to be accounted for	354240	264204	618444
Total equivalent units accounted for	19680	19557
Cost per equivalent unit	18.00	13.51	31.51

4)

Assignment of costs:
Plant 1:
Units transferred out	$       773,670
Units in process	$       109,962
Plant 2:
Units transferred out	$       600,738
Units in process	$ 17,717

Working:

T12 Tables
Costs accounted for:
Transferred out (20910 x $37)		773670
Work in process
Materials (3690 x $19)	70110
Conversion costs (2214 x $18)	39852	109962
Total costs		883632
C10 Chairs
Costs accounted for:
Transferred out (19065 x $31.51)		600738
Work in process
Materials (615 x $18)	11070
Conversion costs (492 x $13.51)	6647	17717
Total costs		618455

Please note: There is a difference of $11 in the total costs of C10 chairs on account of rounding off.