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The Sanding Department of Quik Furniture Company has the following production and manufacturing cost data for March 2017, the first month of operation. Production: 7,000 units finished and transferred out; 3,000 units started that are 100% complete as to materials and 20% complete as to conversion costs. Manufacturing costs: Materials $33,000; labor $21,000; overhead $36,000.
Prepare a production cost report. (Round unit costs to 2 decimal places, e.g. 2.25.)

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anthougo

Answer:

Quik Furniture Company

The Sanding Department

Production Cost Report

For the month of March 2017:

                                          Materials    Conversion   Total Costs

Cost of finished units        $23,100       $52,500         $75,600

Ending Work in process       9,900            4,500          $14,400

Total Costs                       $33,000        $57,000        $90,000

Explanation:

a) Data and Calculations:

Finished and transferred out = 7,000 units

Units started but not completed:

Materials              3,000  100%

Conversion costs   600    20%

Equivalent units                  Materials      Conversion   Total Costs

Started and completed          7,000            7,000

Started but not completed    3,000               600

b) Computation of equivalent units:

Equivalent units                    10,000            7,600

Costs:                                 $33,000       $57,000         $90,000

Cost per equivalent unit     $3.30             $7.5               $10.80

c) Calculation of costs:

Cost of finished units        $23,100       $52,500         $75,600

Ending Work in process       9,900            4,500          $14,400

Total costs                         $33,000       $57,000        $90,000

d) The costs of finished units and Ending WIP for materials are obtained by multiplying the units by the cost per equivalent unit.  The same is also done for conversion cost.  The conversion cost is the addition of labor and overhead costs.

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