Problem:
Prepare a Production Cost Report: Weighted-Average Method
Douglas Toys is a manufacturer that uses the weighted-average process costing method to account for costs of production. It produces a plastic toy in three separate departments: Molding, Assembling, and Finishing. The following information was obtained for the Assembling Department for the month of September.
Work in process on September 1 had 100,000 units made up of the following:
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Degree of
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Amount
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Completion
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Prior department costs transferred in from the Molding Department
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$128,000
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100%
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Costs added by the Assembling Department
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Direct materials
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80,000
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100%
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Direct labor
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28,800
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60%
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Manufacturing overhead
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18,400
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50%
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$127,200
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Work in process, September 1
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$255,200
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During September, 500,000 units were transferred in from the Molding Department at a cost of $640,000. The Assembling Department added the following costs:
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Direct materials
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$384,000
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Direct labor
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144,000
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Manufacturing overhead
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75,600
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Total costs added
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$603600
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Assembling finished 400,000 units and transferred them to the Finishing Department. At September 30, 200,000 units were still in work-in-process inventory. The degree of completion of work-in-process inventory at September 30 was as follows:
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Direct materials
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90%
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Direct labor
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70
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Manufacturing overhead
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35
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Required
a. Prepare a production cost report using the weighted-average method.
b. Management would like to decrease the costs of manufacturing the toy. In particular, it has set the following per unit targets for this product in the Assembling Department: Materials, $0.80; labor, $0.40; and manufacturing overhead, $0.18. Has the product achieved management's cost targets in the Assembling Department? Write a short report to management stating your answer(s).