Seagren Industries Inc. manufactures in separate processes furniture for homes.
ID: 2424481 • Letter: S
Question
Seagren Industries Inc. manufactures in separate processes furniture for homes. In each process, materials are entered at the beginning, and conversion costs are incurred uniformly. Production and cost data for the first process in making two products in two different manufacturing plants are as follows.
Cutting Department
Production Data—July Plant 1 T12-Tables Plant 2 C10Chairs
Work in process units, July 1 –0– –0–
Units started into production 19,000 16,000
Work in process units, July 31 3,000 500
Work in process percent complete 60 80
Cost Data—July
Work in process, July 1 –0– –0–
Materials 380,000 288,000
Labor 234,200 110,000
Overhead 104,000 96,700
Total $718,200 $494,700
Instructions:
(a)For each plant:
1. Compute the physical units of production.
2. Compute equivalent units of production for materials and for conversion costs.
3. Determine the unit costs of production.
4. Show the assignment of costs to units transferred out and in process.
(b) Prepare the production cost report for Plant 1 for July 2012.
Explanation / Answer
Solution:
1). Calculation of physical units of production:
As there is no WIP at beginning of the month. only production started & completed during the month need to be seen.
Plant 1 T12-Tables Plant 2 C10Chairs
Units started into production 19,000 16,000
Less : Work in process units, July 31 3,000 500
= 16000 units 15500 units
2). Calculation of equivalent units of production:
Finished goods 16000 15500
WIP 2400 400
(3000 * 60%) =18400 units = 15900 units
(500 * 80%)
3). Units Cost of production:
Materials 380,000 288,000
Labor 234,200 110,000
Overhead 104,000 96,700
Total $718,200 $494,700
(Divide) / /
Equivalent units of production 18400 units 15900 units
unit costs of production = $39.032 =$31.11
4). Assignment of costs to units transferred out and in process:
Units tranferred 624522 4822255
(16000 * $39.032 ) (15500 * $31.11)
WIP 93678 12445
(2400 * $39.032 ) (400 * $31.11)
(b). Production cost report for Plant 1 for July 2012.:
Work in process, July 1(Opening) –0–
Materials 380,000
Labor 234,200
Overhead 104,000 Total $718,200
Opening WIP 0
Production Started & finished (16000 * $39.032 ) 624522
Closing WIP (2400 * $39.032 ) 93678
Total Cost of Production $ 718200
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