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Don’t Cry Over Spilled Milk, Inc., a manufacturer of mops, uses the weighted average method in...

Don’t Cry Over Spilled Milk, Inc., a manufacturer of mops, uses the weighted average method in its processing costing system. The company uses a departmental costing system to allocate manufacturing overhead (MOH) to production. Production in the company's first processing department, Machining, is highly automated. As such, machine hours are used as the allocation base in the department.

At the beginning of the year, the company estimated that its total MOH would be $400,000; 87.5% of which was expected to be generated in the Machining department. The Machining department was expected to log 100,000 machine hours during the year. The following data related to the operations in Machining during June 2018:

Beginning Work in Process

650 mops, 60% complete with respect to all product costs

Costs in Beginning Work in Process

$2,524

Units Started in June

14,200 mops

Direct Product Costs Added During June

direct materials $47,000; direct labor $124,000

Ending Work in Process

400 mops, 70% complete with respect to all product costs

During June, 8,500 actual machine hours were logged during production.

The cost to assemble one mop in June was

A.

​$19.87       

B.

​$13.80

C.

​$19.67

D.

​$11.78

E.

​$13.77

Solutions

Expert Solution

UNITS TO ACCOUNT FOR:
Beginning Work in Process units 650
Add: Units Started in Process 14,200
Total Units to account for: 14,850
UNITS TO BE ACCOUNTED FOR:
Units started and completed 14,450
Ending Work in Process 400
Total Units to be accounted for: 14,850
Equivalent Units:
Total Equivalent units
% Completion Units
Units started and completed 100% 14,450
Ending Work in Process 80% 280
Total Equivalent units 14,730
TOTAL COST TO ACCOUNT FOR:
Total
Beginning work in Process 2,524
Cost Added during May
Material 47,000
Direct labour 124000
OH (8500*3.50) 29750
Total cost added during the year 203,274
Equivalent Units 14,730
Cost per Equivalent unit 13.8
Note:
OH rate:
estimated OH of deptt (400000*87.50%) 350000
divide: MH 100000
OH rate per MH 3.5
Answer is B. 13.80

ekkarill92 answered 8 months ago
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