Delica Corportion is a contract manufacturer for the Mayon Dressing Company. Delica Corporation uses a FIFO method to account for its production of its salad dressing. All materials are added at the start of the process. Mayon provides reusable vats to Delica Corporation for the completed product to be shipped to Mayon for Bottling so Delica Corporation incurs no packaging costs. April 2010 production and cost data for Delica Corporation is as follows: Gallons of dressings in beginning inventory 36,000 Gallons transferred out during April 242,000 Gallons of dressing in ending inventory 23,500 Costs of beginning inventory: Direct materials P 180,000 Direct labor 26,100 Overhead 70,300 Costs incurred in April Direct materials P 1,131,435 Direct labor 451,728 Overhead 773,330 The beginning and ending inventories had the following stages of completion for labor and overhead: Beginning Inventory Ending Inventory Direct labor 35% 25% Overhead 60% 30% Requirement: How many gallons of dressing ingredients were started in April? What is the total cost of the completed beginning inventory? What is the total cost of units completed during April? What is the average unit cost per gallon of all goods completed during April? What is the cost of April’s ending work in process inventory?

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter17: Activity Resource Usage Model And Tactical Decision Making

Section: Chapter Questions

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Delica Corportion is a contract manufacturer for the Mayon Dressing Company. Delica Corporation uses a FIFO method to account for its production of its salad dressing. All materials are added at the start of the process. Mayon provides reusable vats to Delica Corporation for the completed product to be shipped to Mayon for Bottling so Delica Corporation incurs no packaging costs. April 2010 production and cost data for Delica Corporation is as follows:

Gallons of dressings in beginning inventory	36,000
Gallons transferred out during April	242,000
Gallons of dressing in ending inventory	23,500
Costs of beginning inventory:
Direct materials	P 180,000
Direct labor	26,100
Overhead	70,300
Costs incurred in April
Direct materials	P 1,131,435
Direct labor	451,728
Overhead	773,330

The beginning and ending inventories had the following stages of completion for labor and overhead:

	Beginning Inventory	Ending Inventory
Direct labor	35%	25%
Overhead	60%	30%

Requirement:

How many gallons of dressing ingredients were started in April?
What is the total cost of the completed beginning inventory?
What is the total cost of units completed during April?
What is the average unit cost per gallon of all goods completed during April?
What is the cost of April’s ending work in process inventory?

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