Sambha Dog Food uses the weighted-average process costing method of accounting f
ID: 2463503 • Letter: S
Question
Sambha Dog Food uses the weighted-average process costing method of accounting for production. Three primary ingredients included in each blend are vitamins, soya, and grain. Other components like food colouring and salt are insignificant in cost and are considered as indirect material elements in establishing the overhead allocation formulas. Factory overhead is applied on the basis of direct labour cost. The entire production process is completed within one department. All raw materials are introduced at the beginning of the production process, while conversion costs occur uniformly throughout the production cycle. Beginning work in process, at February 1, consisted of 90,000 pounds that were 80% complete, and had assigned costs as follows: Direct material `45,000 Direct labor `20,000 Factory overhead `15,000 February's production cycle resulted in the introduction of an additional 340,000 pounds. At the end of February, 100,000 pounds were still in process, and were judged to be 40% complete. The cost of raw materials introduced during the month of February had the same per pound cost as the goods in beginning inventory. Direct labor on the February cost of production report (weighted-average method) revealed a cost per equivalent unit of `0.25. The factory overhead application rate was consistent with that evident in the beginning work in process. Finished goods inventory increased by `9,375, and sales were `500,000. (a) How many units were transferred to finished goods? (b) What are February's equivalent units of production for direct materials, direct labor, and factory overhead? (c) How much was the cost of direct material introduced into production during February? (d) How much was the cost of direct labor introduced into production in February? (e) What is the factory overhead application rate? (f) Of the total cost (beginning inventory plus additional production cost), how much is allocated to ending work in process? (g) Of the total cost (beginning inventory plus additional production cost), how much is transferred to finished goods inventory? (h) How much is February's gross profit? (i) As the factory cost manager would you continue with the same production and costing techniques.
Explanation / Answer
c) Cost of Direct Material Introduced = Material Introduce X Material Rate
= 340,000 X 0.50
= 170,000
Material Rate = Beginning material cost / Beginning Units = 45,000 / 90,000 = 0.5
d) Labor cost = Labor Equvivalent Unit X Labor rate
= 308,000 X 0.25
= 77,000
e) Factory Overhead application Rate
= Factory Cost / Equivalent unit
= 57,750 / 308,000
= 0.19 per unit
Note : ask other parts separately by providing above as solution.
a) Units transferred to Finished goods Particulars Units ( In pounds) Beginning WIP 90,000.00 Units Introduced 3,40,000.00 Less : Closing WIP -1,00,000.00 Units Transferred 3,30,000.00Related Questions
drjack9650@gmail.com
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.