Cost of Production Report

The Cutting Department of Karachi Carpet Company provides the following data for January. Assume that all materials are added at the beginning of the process.

Work in process, January 1, 7,600 units, 80% completed $82,688*

    *Direct materials (7,600 × $8.00)$60,800

    Conversion (7,600 × 80% × $3.60)21,888

$82,688

Materials added during January from Weaving Department, 117,200 units $949,320

Direct labor for January 181,613

Factory overhead for January 221,972

Goods finished during January (includes goods in process, January 1), 118,600 units —

Work in process, January 31, 6,200 units, 45% completed —

a. Prepare a cost of production report for the Cutting Department. If an amount is zero or a blank, enter in "0". For the cost per equivalent unit computations, round your answers to two decimal places.

Karachi Carpet Company

Cost of Production Report-Cutting Department

For the Month Ended January 31

Unit Information

Units charged to production:

Inventory in process, January 1

Received from Weaving Department

Total units accounted for by the Cutting Department

Units to be assigned costs:

Equivalent Units

Whole UnitsDirect MaterialsConversion

Inventory in process, January 1

Started and completed in January

Transferred to finished goods in January

Inventory in process, January 31

Total units to be assigned cost

Cost Information

Cost per equivalent unit:

Direct MaterialsConversion

Total costs for January in Cutting Department$$

Total equivalent units

Cost per equivalent unit$$

Costs assigned to production:

Direct MaterialsConversionTotal

Inventory in process, January 1$

Costs incurred in January

Total costs accounted for by the Cutting Department$

Costs allocated to completed and partially completed units:

Inventory in process, January 1 balance$

To complete inventory in process, January 1$$

Cost of completed January 1 work in process$

Started and completed in January

Transferred to finished goods in January$

Inventory in process, January 31

Total costs assigned by the Cutting Department$

b. Compute and evaluate the change in the costs per equivalent unit for direct materials and conversion from the previous month (December). If required, round your answers to two decimal places.

Increase or DecreaseAmount

Change in direct materials cost per equivalent unit $

Change in conversion cost per equivalent unit $

Leno Manufacturing Company prepared the following factory overhead cost budget for the Press Department for October of the current year, during which it expected to require 10,000 hours of productive capacity in the department:

Assuming that the estimated costs for November are the same as for October, prepare a flexible factory overhead cost budget for the Press Department for November for 8,000, 10,000, and 12,000 hours of production. Round your interim computations to the nearest cent, if required. Enter all amounts as positive numbers.

One of the operations in the Wonderland Post Office is a mechanical mail sorting operation. In this operation, letter mail is sorted at a rate of one letter per second. The letter is mechanically sorted from a three-digit code input by an operator sitting at a keyboard. The manager of the mechanical sorting operation wants to determine the number of temporary employees to hire for December. The manager estimates that there will be an additional 34,596,000 pieces of mail in December, due to the upcoming holiday season.

Assume that the sorting operators are temporary employees. The union contract requires that temporary employees be hired for one month at a time. Each temporary employee is hired to work 155 hours in the month.

a. How many temporary employees should the manager hire for December?
___________ employees

b. If each temporary employee earns a standard $14 per hour, what would be the labor time variance if the actual number of additional letters sorted in December was 35,640,000? Enter a favorable variance as a negative number using a minus sign and an unfavorable variance as a positive number.
$ ________

Thank you so much!

Marigold, Inc. manufactures ergonomically designed computer furniture. Marigold uses a job order costing system. On November 30, the Work in Process Inventory consisted of the following jobs: Job No. Item Units Accumulated Cost CC723 Computer caddy 22,000 $970,000 CH291 Chair 15,000 440,000 PS812 Printer stand 26,000 286,000 $1,696,000 On November 30, Marigold’s Raw Materials Inventory account totaled $685,000, and its Finished Goods Inventory totaled $3,486,400. Marigold applies manufacturing overhead on the basis of machine hours. The company’s manufacturing overhead budget for the year totaled $4,850,000, and the company planned to use 970,000 machine hours during the year. Through the first eleven months of the year, the company used a total of 880,000 machine hours, total manufacturing overhead amounted to $4,274,500, and Cost of Goods Sold was $8,790,250. For the pursposes of this problem, ignore year-end disposition of over / under applied overhead. Marigold purchased $638,000 in raw materials in December and incurred the following costs for jobs in process that month: Job No. Materials Issued Machine Hours Direct Labor Hours Direct Labor Cost CC723 $196,000 20,000 12,000 $127,400 CH291 $17,800 5,000 3,800 $45,200 PS812 $238,000 22,400 18,300 $224,500 DS444 $256,000 20,000 16,700 $141,000 The following jobs were completed in December and transferred to the Finished Goods Inventory: Job No. Item Units CC723 Computer caddy 22,000 CH291 Chair 15,000 DS444 Desk 7,000

(a) Calculate the total cost of each of the four jobs worked on in December. CC723 CH291 PS812 DS444 Total Cost $ $ $ $

(b) Calculate the total manufacturing cost for December. Total manufacturing cost $

(c) Calculate the cost of goods manufactured for December. Cost of goods manufactured $

(d) Calculate the balance in the Work in Process Inventory account on December 31. Balance in work in process $

(e) Assume that Marigold sold 15,000 computer caddies, 12,000 chairs, and 4,500 desks in December. Calculate Cost of Goods Sold for the month of December and the ending Finished Goods Inventory balance on December 31. (For computation purpose round per unit rates to 2 decimal places, e.g. 3.54. Round final answers to 0 decmial places, e.g. 45,000.)

Cost of goods sold $

Finished goods inventory $

Cost of Production Report

Hana Coffee Company roasts and packs coffee beans. The process begins by placing coffee beans into the Roasting Department. From the Roasting Department, coffee beans are then transferred to the Packing Department. The following is a partial work in process account of the Roasting Department at July 31:

ACCOUNT Work in Process—Roasting DepartmentACCOUNT NO.

DateItemDebitCreditBalance

DebitCredit

July1Bal., 4,800 units, 4/5 completed  18,336  

31Direct materials, 216,000 units691,200  709,536  

31Direct labor136,400  845,936  

31Factory overhead34,096  880,032  

31Goods transferred, 216,000 units ?   

31Bal., ? units, 1/5 completed  ?  

Required:

1. Prepare a cost of production report, and identify the missing amounts for Work in Process—Roasting Department. If an amount is zero, enter "0". When computing cost per equivalent units, round to two decimal places.

Hana Coffee Company

Cost of Production Report-Roasting Department

For the Month Ended July 31

Unit Information

Units charged to production:

Inventory in process, July 1

Received from materials storeroom

Total units accounted for by the Roasting Department

Units to be assigned costs:

Equivalent Units

Whole UnitsDirect MaterialsConversion

Inventory in process, July 1

Started and completed in July

Transferred to Packing Department in July

Inventory in process, July 31

Total units to be assigned costs

Cost Information

Cost per equivalent unit:

Direct MaterialsConversion

Total costs for July in Roasting Department$$

Total equivalent units

Cost per equivalent unit$$

Costs assigned to production:

Direct MaterialsConversionTotal

Inventory in process, July 1$

Costs incurred in July

Total costs accounted for by the Roasting Department$

Costs allocated to completed and partially completed units:

Inventory in process, July 1 balance$

To complete inventory in process, July 1$$

Cost of completed July 1 work in process$

Started and completed in July

Transferred to Molding Department in July$

Inventory in process, July 31

Total costs assigned by the Roasting Department$

2. Assuming that the July 1 work in process inventory includes $14,880 of direct materials, determine the increase or decrease in the cost per equivalent unit for direct materials and conversion between February and July. If required, round your answers to the nearest cent.

Increase or DecreaseAmount

Change in direct materials cost per equivalent unit $

Change in conversion cost per equivalent unit $

Management has decided to reduce direct material and ordering costs by purchasing sub-assembled components and not individual parts. you must do the following.

Requirements:

Using the Revised Category Costs tab, make the following changes under " Changes" Category. Other categories' costs remain same.
- Reduce direct labor rate from $30.00 to $28.00 per unit
- Reduce direct labor quantity from 3.00 to 2.65 hours per unit
- Reduce receiving and shipping ordering quantity from 100 to 90 units.
- Reduce testing and inspection from $2.00 to $1.75 per unit
- Reduce rework costs from $20 to $18 per unit
- Compute total costs for each category
- Complete Revised Cost Information tab
- Calculate total costs
- Calculate cost per unit for each category, round to two decimal points

Show all calculations within the cells. This means that you must use formulas and links so that your thought process can be examined. You must also include a detailed explanation of each journal entry that you make or do not make on each date to convey your thought process.

31. Houseal Corporation has provided the following data from its activity-based costing system:

Data concerning one of the company's products, Product W58B, appear below:

According to the activity-based costing system, the product margin for product W58B is:

2. Doede Corporation uses activity-based costing to compute product margins. In the first stage, the activity-based costing system allocates two overhead accounts--equipment depreciation and supervisory expense--to three activity cost pools--Machining, Order Filling, and Other--based on resource consumption. Data to perform these allocations appear below:

Distribution of Resource Consumption Across Activity Cost Pools:

In the second stage, Machining costs are assigned to products using machine-hours (MHs) and Order Filling costs are assigned to products using the number of orders. The costs in the Other activity cost pool are not assigned to products.

Activity:

Finally, sales and direct cost data are combined with Machining and Order Filling costs to determine product margins.

Sales and Direct Cost Data:

The activity rate for the Machining activity cost pool under activity-based costing is closest to:

3. In time-based activity-based costing, the practical capacity percentage is an estimate of the company’s capacity in relation to its closest competitor. true or false

DiveIn, Inc. manufactures two products, Goggles and Snorkels. Goggles are the more complex of the two products, requiring more direct labor time and more machine time per unit than Snorkels. Manufacturing overhead is currently assigned to the products on the basis of direct labor hours. The company has gathered some activity information and is interested in the differences between its present costing method and activity-based costing. All overheard costs should be allocated to the products. The overhead cost pools and activity drivers are as follows: Activity Pool Overhead Costs Total Driver Usage Setup $256,000 3,200 setups Materials Purchasing 110,000 2,750 purchase orders Machining/Fabricating 136,000 27,200 machine hours Total Overheard Costs $502,000 Other product information is as follows: Snorkels Goggles Number of units produced 40,000 10,000 Direct materials cost $ 15.00 per unit $ 30.00 per unit Direct labor cost $ 5.25 per unit $ 14.00 per unit Direct labor hours 30,000 20,000 Setups 400 2,800 Purchase orders 2,070 680 Machine hours 8,000 19,200 Required a. Using the traditional method of allocating overhead based on direct labor hours, compute the unit product cost of Goggles and Snorkels: i. Determine the overhead rate per direct labor hour. ii. Allocate overhead to each product based on the direct labor hours used by each. iii. Divide the total overhead allocated to each product by the number of products produced to obtain the overhead cost per unit. iv. Add the overhead cost per unit to the direct materials and direct labor costs per unit to obtain the unit product cost. b. Using an activity-based costing approach, compute the unit product cost of Goggles and Snorkels: i. Determine the three activity rates. ii. Allocate overhead to each product based on the activity drivers used by each. Total the three activity allocations to arrive at the total overhead allocated to each product. iii. Divide the total overhead allocated to each product by the number of products produced to obtain the overhead cost per unit. iv. Add the overhead cost per unit to the direct materials and direct labor costs per unit to obtain the unit product cost. c. Why do your answers to a(iv) and b(iv) differ? Be specific

On a graph, draw all the following

a. The average fixed cost curve (AFC)

b. The average total cost curve (ATC)

c. The average Variable cost curve (AVC)

d. The marginal cost curve (MC)

EXPLAIN THE REASONING BEHIND THE SHAPE AND LOCATION OF EACH CURVE

Exercise 2-12 Applying Overhead; Cost of Goods Manufactured [LO2-2, LO2-6, LO2-7]

Morning Dove Company manufactures one model of birdbath, which is very popular. Morning Dove sells all units it produces each month. The relevant range is 0–1,600 units, and monthly production costs for the production of 1,200 units follow. Morning Dove’s utilities and maintenance costs are mixed with the fixed components shown in parentheses.   

Required:
1. Identify each cost as variable, fixed, or mixed, and express each cost as a rate per month or per unit (or combination thereof). (Round your per unit value to 2 decimal places.)



2. Determine the total fixed cost per month and the variable cost per unit for Morning Dove. (Round your variable cost per unit to 2 decimal places.)



3. State Morning Dove’s linear cost equation for a production level of 0–1,600 units. Enter answer as an equation in the form of y = a + bx. (Round your variable cost per unit to 2 decimal places.)



4. Calculate Morning Dove’s expected total cost if production increased to 1,400 units per month. Enter answer as an equation in the form of y = a + bx. (Round Variable cost per unit to 2 decimal places.)