Gunnison Company had the following equivalent units schedule and cost information for its Sewing Department for the month of December:
Required:
- 1. Calculate the unit cost for December, using the FIFO method.
- 2. Calculate the cost of goods transferred out, calculate the cost of EWIP, and reconcile the costs assigned with the costs to account for.
- 3. What if you were asked for the unit cost from the month of November? Calculate November’s unit cost and explain why this might be of interest to management.
1.
Ascertain the unit cost for December using First-in-first-out (FIFO) method for company G.
Explanation of Solution
Cost per unit: Total unit cost is the cost incurred by the company to produce one unit of product. The unit cost is calculated by dividing the units produced with the total cost.
Compute unit cost using FIFO method:
Thus, the cost per equivalent unit for company G is $12 per equivalent unit.
2.
Determine the cost of EWIP, compute the cost of goods transferred out, and reconcile the cost assigned with the costs to account for.
Explanation of Solution
Ascertain the cost of EWIP (Ending Work-In Process):
Calculate the cost of goods transferred out:
Particulars | Amount ($) |
From BWIP | $ 45,000 |
To complete BWIP | |
$ 10,000 | |
Started and completed | |
$ 480,000 | |
Total cost of goods transferred out | $ 535,000 |
Table (1)
Determine the total cost assigned.
Reconcile the cost assigned with the costs to account for:
Particulars | Amount ($) |
Cost to account for: | |
BWIP | $ 45,000 |
Current (December) | $ 584,000 |
Total | $ 629,000 |
Table (2)
3.
Determine the unit cost for November and determine in what manner it might be of interest to management.
Explanation of Solution
There are 5,000 equivalent units of materials (100% complete) and 2,500
Therefore, November unit cost will be,
The managers can obtain the trends in cost and thereby they can implement better control over costs by recognizing last month’s unit cost. If costs are diminishing, it may disclose that continuous development effort is succeeding. If increasing, it may show obstacles that can be corrected.
Want to see more full solutions like this?
Chapter 6 Solutions
Bundle: Cornerstones of Cost Management, Loose-Leaf Version, 4th + CengageNOWv2, 1 term Printed Access Card
- question is in image. Required: Prepare a schedule of cost of goods manufactured. Prepare a schedule of cost of goods sold. Prepare an income statement. Build a spreadsheet: Construct an Excel spreadsheet to solve all of the preceding requirements. Show how both cost schedules and the income statement will change if the following data change: direct labor is $390,000 and utilities cost $35,000.arrow_forward(a) Calculate the unit cost for the assembly department for the month of April. (b) Calculate the cost of units transferred out and the cost of EWIP inventorarrow_forwardRecording manufacturing costs in a JIT costing system Gateway produces electronic calculators. Suppose Gateway’s Standard cost per calculator is $25 for direct materials and $68 for conversion costs. The following data apply to August activities: Requirements Prepare summary journal entries for August using JIT costing, including the entry to adjust the Conversion Costs account. The beginning balance of Finished Goods Inventory was $1,300. Use a T-account to find the ending balance of Finished Goods Inventory.arrow_forward
- Computing cost of goods sold, manufacturing company Use the following information to calculate the cost of goods sold for The Ellis Cam. pant for the month or June:arrow_forwardPlease answer the cost accounting problem from the attached photo below.The requirements are: 1: Compute equivalent units of production for Assembling Department for the month of June 2018. 2: Prepare a cost of production report for the Assembling Department for the month of June 2018.arrow_forwardPlease show your computations using good accounting form through excel. Thank you! Problem: Average Costing Using the weighted average method, how many were the equivalent units for July for conversion cost?arrow_forward
- Analyzing cost data, recording completion and sales of jobs Sutherland Manufacturing makes carrying cases for portable electronic devices. It’s costing records yield the following information: Requirements Which type of costing system is Sutherland using? What piece of data did you base your answer on? Use the dates in the table to identify the status of each job at October 31 and November 30. Compute Sutherland’s account balances at October 31 for Work-in-Process Inventory, Finished Goods Inventory, and Lost of Goods Sold. Compute, by Job, account balances at November 30 for Work-in-Process Inventory, Finished Goods Inventory, and Cost of Goods Sold.arrow_forwardTracey Packaged Snax reports the following information for November: Units produced and sold Per unit revenue and costs: Sales revenue Direct materials costs Direct labor costs Variable manufacturing overhead Fixed manufacturing overhead (at 320,000 units) Variable marketing and administrative costs Fixed marketing and administrative costs (at 320,000 units) Required: a. Prepare a gross margin income statement. b. Prepare a contribution margin income statement. Complete this question by entering your ansivers in the tabs below. Required A Required B Prepare a contribution margin income statement. Contribution Margin Income Statement 320,000 $9.60 1.65 0.90 0.80 1.55 0.75 1.15arrow_forwardSchedules of Cost of Goods Manufactured and Cost of Goods Sold Primare Corporation has provided the following data concerning last month’s manufacturing operations. Required: a. Prepare a schedule of cost of goods manufactured for the month. b. Prepare a schedule of cost of goods sold for the month. Assume the underapplied or overapplied overhead is closed to Cost of Goods Sold.arrow_forward
- Use the following information for Short Exercises S21-4 and S21-5. Dracut Company reports the following information for June: Calculating gross profit and operating income, absorption costing Calculate the gross profit and operating income for June using absorption costing.arrow_forwardHartley Uniforms produces uniforms. The company allocates manufacturing overhead based on the machine hours each job uses. Hartley Uniforms reports the following cost data for the past year: E (Click the icon to view the cost data.) Read the requirements. Data table Requirement 1. Compute the predetermined manufacturing overhead rate. Enter the formula for predetermined manufacturing overhead rate, then compute the rate. Budget Actual Estimated yearly overhead costs Estimated yearly machine hours Predetermined overhead rate Direct labor hours. 7,600 hours 6,100 hours 194,400 7,200 $ 27 per machine hour Machine hours. 7,200 hours 6,300 hours Requirement 2. Calculate the allocated manufacturing overhead for the past year. Depreciation on salespeople's autos 23,000 $ 23,000 Indirect materials.. $ 48,500 $ 50,500 Manufacturing Depreciation on trucks used to deliver uniforms to customers $ 13,000 $ 11,000 Actual machine hours Predetermined overhead rate overhead allocated Depreciation on…arrow_forwardPlymouth Company reports the following information for June.Calculate the gross profit and operating income for June using absorption costing .arrow_forward
- Cornerstones of Cost Management (Cornerstones Ser...AccountingISBN:9781305970663Author:Don R. Hansen, Maryanne M. MowenPublisher:Cengage LearningManagerial Accounting: The Cornerstone of Busines...AccountingISBN:9781337115773Author:Maryanne M. Mowen, Don R. Hansen, Dan L. HeitgerPublisher:Cengage LearningPrinciples of Accounting Volume 2AccountingISBN:9781947172609Author:OpenStaxPublisher:OpenStax College
- Principles of Cost AccountingAccountingISBN:9781305087408Author:Edward J. Vanderbeck, Maria R. MitchellPublisher:Cengage LearningManagerial AccountingAccountingISBN:9781337912020Author:Carl Warren, Ph.d. Cma William B. TaylerPublisher:South-Western College PubFinancial And Managerial AccountingAccountingISBN:9781337902663Author:WARREN, Carl S.Publisher:Cengage Learning,