Question:
WEIGHTED AVERAGE METHOD, PHYSICAL FLOW, EQUIVALENT UNITS, UNIT COSTS, COST ASSIGNMENT, ABC Norton Parts, Inc., manufactures bumpers (plastic or metal, depending on the plant) for automobiles. Each bumper passes through three processes: molding, drilling, and painting. In August, the molding department of the Oklahoma City plant reported the following data:
a. In molding, all direct materials are added at the beginning of the process.
b. Beginning work in process consisted of 27,000 units, 20 percent complete with respect to direct labor and overhead. Costs in beginning inventory included direct materials, $810,000; direct labor, $148,400; and applied overhead, $100,000.
c. Costs added to production during the month were direct materials, $1,710,000 and direct labor, $2,314,100. Overhead was assigned using the following activity information:
|
Activity
|
Rate
|
Actual Driver Usage
|
|
Inspection
|
$100 per inspection hour
|
4,000 inspection hours
|
|
Maintenance
|
$500 per maintenance hour
|
1,600 maintenance hours
|
|
Receiving
|
$200 per receiving order
|
2,000 receiving orders
|
d. At the end of the month, 81,000 units were transferred out to drilling, leaving 9,000 units in ending work in process, 25 percent complete.
Required:
1. Prepare a physical flow schedule.
2. Calculate equivalent units of production for direct materials and conversion costs.
3. Compute unit cost.
4. Calculate the cost of goods transferred to drilling at the end of the month. Calculate the cost of ending inventory.
5. Prepare the journal entry that transfers the goods from molding to drilling.