Problem 2 (Textbook Reference: P3-1A) - Prepare a production cost report Pure Aq

Question

Problem 2 (Textbook Reference: P3-1A) - Prepare a production cost report Pure Aqua Company is a producer of flavored miner water. These data are for its March production: Work in Process Inventory March 1. 3,000 units (units equal cases Direct materials Direct labor Manufacturing overhead applied (1,500 machine hours at $6 per hour) $ 12,600 S 6,000 S 9,000 $ 27,600 Units started in March 9,000 Costs incurred in March: Direct materials Direct labor Manufacturing overhead applied (13,800 machine-hours) S 36,360 s 55,200 #82,800 The ending inventory at March 3 l consisted of 4,500 units (100% complete as to materials, 60% complete as to conversion) Required: Prepare a production cost report for the month ended March 31, using the average cost method.

Explanation / Answer

Pure Aqua Company Given Information Units in beginning WIP 3000 Units started into production 9000 Units in ending WIP 4500 Percentage complete for material cost in beginning WIP 100% Percentage complete for conversion cost in beginning WIP 100% Percentage complete for Material cost in ending WIP 100% Percentage complete for conversion cost in ending WIP 60% Beginning Inventory cost Material $               12,600.00 Conversion cost=($6000+$9000) $               15,000.00 Cost added during the month Material $               36,360.00 Conversion($55200+$82800) $           1,38,000.00 Total Cost $           2,01,960.00 Production Report for the for the month ended 31st,March Physical Units Beginning WIP 3000 Units started into prodcution 9000 12000 Units transferred out 7500 Units in Ending WIP 4500 Equivalent Units Direct Material conversion Units transferred out=(A) 7500 7500 1) Ending WIP=(4500*100%) for material,(4500*60%) for conversion=(B) 4500 2700 Equivalent Units=(A)+(B) 12000 10200 Cost per Equivalent Units Direct Material conversion Total Cost 2) Cost in beginning WIP $               12,600.00 $      15,000.00 Cost added during the month $               36,360.00 $ 1,38,000.00 Total Cost=(A) $               48,960.00 $ 1,53,000.00 Equivalent Units=(B) 12000 10200 Cost per Equivalent Units=(A)/(B) $                          4.08 $              15.00 $             19.08 Cost accounted for (A) (B) (A)*(B) Units cost Total Cost 3) Transferred out=(A) 7500 $              19.08 $ 1,43,100.00 Ending WIP Materail=(B) 4500 $                4.08 $     18,360.00 Conversion=(C ) 2700 $              15.00 $     40,500.00 Total cost accounted for=(A)+(B)+(C ) $ 2,01,960.00

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