Edge Company produces power drinks. The Mixing Department, the first process department, mixes the ingredients required for the drinks. The following data are for April:
Work in process, April 1–
Quarts started 30,000
Quarts transferred out 25,000
Quarts in EVVIP 5,000
Direct materials cost $28,000
Direct labor cost $56,000
Overhead applied $112,000
Direct materials are added at the beginning of the process. Ending inventory is 60 per-cent complete with respect to direct labor and overhead.
Required: 1. Why would a manager want a production report?
2. Prepare a production report for the Mixing Department for April.
Cornerstone Exercise 6-6 NONUNIFORM INPUTS
Dulce Company produces premium chocolate candy bars. Conversion costs are, added uniformly. For March, EWIP is 40 percent complete with respect to conversion costs.
The following information is provided for March: :
Physical flow schedule:
Units to account for:
Units in BWIP 0
Units started 50,000 •
Total units to account for 50,000
Units accounted for:
• Units completed:
From BWIP .Started.and completed Units in EWIP. ‘Total units accounted for
Direct Materials Conversion CoS.ts
40,000 10,000 50,000
I. Calculate the equivalent units for each input category.
2. Calculate the unit cost for each category and in total. What ifa different type of materials is also added at the end of the process (a candy wrapper), costing $4,000? Calculate the new unit cost.
Cornerstone Exercise 6-7 UNIT INFORMATION WITH BWIP, FIFO METHOD Jackson Products produces a barbeque sauce using three departments: Cooking, Mixing, and Bottling. In the Cooking Department, all materials are added at the beginning of the process. Output is measured in ounces. The production data for July are as follows:
Production: . Units in process, July 1, 60% complete* Units completed and transferred out Units in process, July 31, 80% compiete* With respect to conversion costs.
. . 1. …Prepare a physical flow schedule for July..:,:. ‘Prepare an equivalent units schedule for July using the FIFO method. .TVhat if 60 percent of the materials were added at the beginning of the process and 40 percent were added at the end of the process (all ingredients used are treated as the same type or .category of materials)? How many .equivalent units of materials would there be? •
Cornerstone Exercise 6-9 UNIT INFORMATION WITH BWIP, WEIGHTED AVERAGE METHOD Jackson Products produces a barbeque sauce using three departments: Cooking, Mixing, and Bottling. In the Cooking Department, all materials are added at the beginning of the process. Output is measured in ounces. The production data for July are as follows:
.10,000 . 80,000 Yis.000
Production: Units in process, July 1,60% complete* Units completed and transferred out Units in process, July 31, 80% Complete* *With respect to conversion costs.
Required: • Prepare a physical flow schedule for July. Prepare an equivalent units schedule for July using the weighted average method. What if you were asked to calculate the FIFO units beginning with the weighted average equivalent units? Calculate the weighted average equivalent units by sub-tracting out the prior-period output found in BWIR
Exercise 6-12 PROCESS COSTING, SERVICE ORGANIZATION ..A.local barbershop cuts the hair 01,000 customers per month. The Clients are men, and the barbers offer no special styling. During the month of March, 1,000 customers were :serviced. The cost of haircuts inclOcles the following:
Direct labor Direct materials Overhead Total
$ 7,000 1,000 2,000 $10,000
Required: I. Explain why process costing is appropriate for this haircutting operation. 2. Calculate the cost per haircut. 3. Can you identify some possible direct materials used for this haircutting service? Is the usage of direct materials typical of services? If so, provide examples of services that use direct materials. Can you think of some services that would not use direct materials?