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Problem 4-36 Operation Costing; Unit Costs; Journal Entries (LO 4-7)

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Plasto Corporation manufactures a variety of plastic products, including a series of molded chairs. The three models of molded chairs, which are all variations of the same design, are Standard (can be stacked), Deluxe (with arms), and Executive (with arms and padding). The company uses batch manufacturing and has an operation-costing system. The production process includes an extrusion operation and subsequent operations to form, trim, and finish the chairs. Plastic sheets are produced by the extrusion operation, some of which are sold directly to other manufacturers. During the forming operation, the remaining plastic sheets are molded into chair seats and the legs are added; the Standard model is sold after this operation. During the trim operation, the arms are added to the Deluxe and Executive models and the chair edges are smoothed. Only the Executive model enters the finish operation where the padding is added. All of the units produced receive the same steps within each operation. The May production run had a total manufacturing cost of $912,060. The units of production and direct-material costs incurred were as follows:

     

	Units Produced		Extrusion Materials			Form Materials			Trim Materials			Finish Materials
Plastic sheets	4,900		$	58,800
Standard model	5,700			68,400		$	28,500
Deluxe model	3,000			36,000			15,000		$	12,000
Executive model	1,800			21,600			9,000			7,200		$	12,600
Total	15,400		$	184,800		$	52,500		$	19,200		$	12,600

   

Manufacturing costs applied during the month of May were as follows:

   

	Extrusion Operation				Form Operation				Trim Operation				Finish Operation
Direct labor		$	170,940			$	57,000			$	26,400			$	14,400
Manufacturing overhead			231,000				79,500				40,320				23,400

Problem 4-36 Part 1

Required:

1. For each product produced by Plasto Corporation during the month of May, determine the (a) unit cost and (b) total cost. Be sure to account for all costs incurred during the month. (Round "Unit costs" to 2 decimal places.)

• 1

  Record raw material and conversion cost incurred by the extrusion department.

• 2

  Record the transfer of plastic sheets completed by the extrusion department.

• 3

  Record raw material and conversion cost incurred by the forming department.

• 4

  Record the transfer of Standard model chairs completed by the forming department.

• 5

  Record raw material and conversion cost incurred by the trimming department.

• 6

  Record the transfer of Deluxe model chairs completed by the trimming department.

• 7

  Record raw material and conversion cost incurred by the finishing department.

• 8

  Record the transfer of Executive model chairs completed by the finishing department.

• Note :  = journal entry has been entered

No	Transaction	General Journal	Debit	Credit

Answer 1

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	Working		Extrusion	Form	Trim	Finish
		Units produced	15,400	10,500	4,800	1,800
		Material costs	$                            184,800	$                    52,500	$                        19,200	$                      12,600
		Unit material cost	$                                 12.00	$                        5.00	$                            4.00	$                          7.00
		Conversion costs (Direct Labor+Overheads)	$                            401,940	$                 136,500	$                        66,720	$                      37,800
		Unit conversion cost	$                                 26.10	$                      13.00	$                          13.90	$                        21.00
			Plastic Sheets	Standard Model	Deluxe Model	Executive Model
		Unit Costs
		Material costs:
		Extrusion	$                                 12.00	$                      12.00	$                          12.00	$                        12.00
		Form		$                        5.00	$                            5.00	$                          5.00
		Trim			$                            4.00	$                          4.00
		Finish				$                          7.00
		Conversion costs:
		Extrusion	$                                 26.10	$                      26.10	$                          26.10	$                        26.10
		Form		$                      13.00	$                          13.00	$                        13.00
		Trim			$                          13.90	$                        13.90
		Finish				$                        21.00
		Total unit cost	$                                 38.10	$                      56.10	$                          74.00	$                      102.00
		Units produced	4,900	5,700	3,000	1,800
		Total product cost	$                            186,690	$                 319,770	$                     222,000	$                   183,600
		Product	Total Product Costs
		Plastic sheets	$                            186,690
		Standard model	$                            319,770
		Deluxe model	$                            222,000
		Executive model	$                            183,600
		Total	$                            912,060
	Journal entries:
		Work-in-Process Inventory: Extrusion	$                            586,740
		Raw-Material Inventory		$                 184,800
		Applied Conversion Costs		$                 401,940
		Finished-Goods Inventory	$                            186,690
		Work-in-Process Inventory: Extrusion		$                 186,690
		Work-in-Process Inventory: Forming ($56.10*10,500)	$                            589,050
		Work-in-Process Inventory: Extrusion		$                 400,050
		Raw-Material Inventory		$                    52,500
		Applied Conversion Costs		$                 136,500
		Finished-Goods Inventory	$                            319,770
		Work-in-Process Inventory: Forming		$                 319,770
		Work-in-Process Inventory: Trimming (4,800*$74)	$                            355,200
		Work-in-Process Inventory: Forming		$                 269,280
		Raw-Material Inventory		$                    19,200
		Applied Conversion Costs		$                    66,720
		Finished-Goods Inventory	$                            222,000
		Work-in-Process Inventory: Trimming		$                 222,000
		Work-in-Process Inventory: Finishing (1,800*$102)	$                            183,600
		Work-in-Process Inventory: Trimming		$                 133,200
		Raw-Material Inventory		$                    12,600
		Applied Conversion Costs		$                    37,800
		Finished-Goods Inventory	$                            183,600
		Work-in-Process Inventory: Finishing		$                 183,600