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Baxley Products manufactures office furniture by using an assembly-line process. All direct materials are introduced at...

Baxley Products manufactures office furniture by using an assembly-line process. All direct materials are introduced at the start of the process, and conversion cost is incurred evenly throughout manufacturing.

It uses absorption costing for financial performance evaluation and applies overhead based on machine-hours. Data concerning manufacturing overhead (MOH) incurred machine hours (MH) used for the last seven years follow. Currently, Baxley is using weighted-average method of process costing.

Year

Plant-wide MOH$

Machine Hours Used

2011

$245,800

16,380

2012

$246,250

16,250

2013

$354,820

16,320

2014

$353,800

27,200

2015

$302,700

28,200

2016

$276,400

22,400

2017

$254,200

19,600

It has a practical capacity of 20,000 MH per year. It’s normal capacity is estimated to be 18,000 MH.

An examination of the company's Work-in-Process account for August revealed the following selected information:

August 1 balance: 600 units, 40% complete; cost, $44,600*

Production started: 1,800 units

Direct materials used during August: $90,000

MH used during August: 2,000 (within Baxley’s production relevant range)

August direct labor cost: $25,066.67

Production completed: 1,400 units

*Supplementary records disclosed direct material cost of $30,000 and conversion cost of $14,600.

Conversations with manufacturing personnel revealed that the ending work in process was 80% complete.

Required:

A. Determine the number of units in the August 31 work-in-process inventory.

B. Calculate the cost of goods completed during August, and prepare the appropriate journal entry to record completed production.

C. Determine the cost of the August 31 work-in-process inventory.

D. What the factors Baxley needs to consider for switching to FIFO process costing?

Solutions

Expert Solution

ekkarill92 answered 1 year ago
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