Question:
(Hybrid costing) Batwings makes one-size-fits-most capes. Each cape goes through the same conversion process, but three types of fabric (Dacron, denim, and cotton) are available. The company uses a standard costing system, and standard costs for each type of cape follow.
|
Dacron
|
Denim
|
Cotton
|
|
Material (2 yards)
|
$10
|
$ 8
|
$12
|
|
Direct labor (1 hour)
|
9
|
9
|
9
|
|
Overhead (based on 1.5 machine hours)
|
6
|
6
|
6
|
|
Total
|
$25
|
$23
|
$27
|
Material is added at the start of production. In March 2010, there was no beginning WIP Inventory and 2,500 capes were started into production. Of these, 300 were Da-cron, 500 were denim, and 1,700 were cotton. At the end of March, 100 capes (50 Dacron, 20 denim, and 30 cotton) were not yet complete. The stage of completion for each cost component for the 100 unfinished capes is as follows:
|
Material
|
100% complete
|
|
Direct labor
|
25% complete
|
|
Overhead
|
35% complete
|
a. Determine the total cost of the capes completed and transferred to Finished Goods Inventory.
b. Determine the total cost of the capes in the ending WIP Inventory.