Group Project Due April 13 BYP17-1 Florida Beach Company manufactures sunscreen,
ID: 2520177 • Letter: G
Question
Group Project Due April 13 BYP17-1 Florida Beach Company manufactures sunscreen, called NoTan, in 11-ounce plastic bottles. NoTan is sold in a competitive market. As a result, management is very cost-conscious. NoTan is manufactured through two processes: mixing and filling Materials are entered at the beginning of each process, and labor and manufacturing overhead occur uniformly throughout each process. Unit costs are based on the cost per gallon of NoTan using the weighted-average costing approach. n June 3 20 7 Mary tzman the chief accountant or he past 2 the area but only limited contact with manufacturing accounting years o te o ake ean re rement. Her replacement Joe Ben ?. ha extens e accounting experience with motes n During July, Joe correctly accumulated the following production quantity and cost data for the Mixing Department. Production quantities. Workin process July 1 8,000 gallons 75% complete, started into production 100,000 gallons, workin process, July 31, 5,000 gallons 20% complete. Materials are added at the beginning of the process. Production costs: Beginning work in process $88,000 comprised of $21,000 of materials costs and $67,000 of conversion costs; incurred in July: materials $573,000, conversion costs $765,000. Joe then prepared a production cost report on the basis of physical units started into production His report showed a production cost of $14.26 per gallon of NoTan. The management of Florida Beach was surprised at the high unit cost The president comes to you, as Mary's top assistant, to review Joe's report and prepare a correct report if necessary. nstructions With the class divided into groups, answer the following questions. (a) Show how Joe arrived at the unit cost of $14.26 per gallon of NoTan. (b) What error(s) did Joe make in preparing his production cost report? (c) Prepare a correct production cost report for July.Explanation / Answer
Weighted average cost Beggining units 8000 Transferred out 1,03,000 Started intro production 100000 Ending units 5,000 Units accounted for 108000 108000 Equivalent units Material Conversion cost Units transferred A 103000 103000 Ending Units 5,000 5,000 Completion 100% 20% B 5000 1000 Total units 108000 104000 Cost per equivalent units Particulars Material Conversion cost total As at beginning 21000 67000 88000 Added during the month 573000 765000 1338000 Cost to be accounted for 594000 832000 1426000 Total eqivalent units 108000 104000 Cost per equivalent unit 5.50 8.00 13.50 Cost per equivalent unit = Cost to be accounted for / Total equivalent units Cost of ending work in progress Conversion cost Particulars Material Total Ending units 5,000 5,000 Cost per equivalent units 5.50 8.00 Completion 100% 20% Total cost 27500 8000 35500 Cost of goods transferred Conversion cost Particulars Material Total Number of units 103000 103000 Cost per equivalent units 5.50 8.00 13.50 Total amount 566500 824000 1390500 Reconciliation report Cost of goods transferred 1390500 Add Work in proress ending Material 27500 Conversion cost 8000 35500 Total cost accounted for 1426000
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