Problem 3-4 Production Cost Report [LO 2,3,4,5] Aussie Yarn Co. is a U.S. produc

Question

Problem 3-4 Production Cost Report [LO 2,3,4,5] Aussie Yarn Co. is a U.S. producer of woolen yarn made from wool imported from Australia. Raw wool is processed, spun, and finished before being shipped out to knitting and weaving companies. Material is added in the beginning of processing, and conversion costs are addedd evenly throughout processing.   Aussie began the month of August with 7,000 units in process that were 100 percent complete as to materials and 70 percent complete as to labor and overhead. It started 34,000 units into production during the month of August of which 8,000 remained in ending Work in Process inventory and were 50 percent complete as to conversion costs. The cost data are as follows: Beginning work in process: Direct materials $6,000 Direct labor 2,000 Manufacturing overhead 2,500 $10,500 Costs added during August: Direct materials $26,500 Direct labor 12,350 Manufacturing overhead 14,450 $53,300 Required Prepare a production cost report for the month of August. Problem 3-4 Production Cost Report [LO 2,3,4,5] Aussie Yarn Co. is a U.S. producer of woolen yarn made from wool imported from Australia. Raw wool is processed, spun, and finished before being shipped out to knitting and weaving companies. Material is added in the beginning of processing, and conversion costs are addedd evenly throughout processing.   Aussie began the month of August with 7,000 units in process that were 100 percent complete as to materials and 70 percent complete as to labor and overhead. It started 34,000 units into production during the month of August of which 8,000 remained in ending Work in Process inventory and were 50 percent complete as to conversion costs. The cost data are as follows: Beginning work in process: Direct materials $6,000 Direct labor 2,000 Manufacturing overhead 2,500 $10,500 Costs added during August: Direct materials $26,500 Direct labor 12,350 Manufacturing overhead 14,450 $53,300 Required Prepare a production cost report for the month of August.

Explanation / Answer

Aussie Yearn Co. Prodcution Details Units % Materials Equivalent Units Materils % Conversion Eq Units Convesrion Opening WIP                  7,000 100%                 7,000 70%            4,900         (2,100) Started during Months                34,000 100%               34,000          32,100         (1,900) Total Inputs                  41,000          37,000 Outputs Units Completed & Transferred                33,000 100%               33,000 100%          33,000 Units in Closing WIP                  8,000 100%                 8,000 50%            4,000 Total Output                  41,000               41,000          37,000 Prodcution Cost Details Materials Labor   Manufacturing OH Total Convesrion Cost Total Production Cost Cost of Opening WIP                  6,000                2,000                 2,500          4,500          10,500 Added During Month                26,500              12,350               14,450        26,800          53,300 Total cost of Production                32,500              14,350               16,950        31,300          63,800 Equivalent Units of Production                41,000        37,000 Cost Per Equivalent Unit= $                0.79 $        0.85

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