Wood Glow Manufacturing Co. produces a single product, a wood refinishing kit that sells for $17.95. The final processing of the kits occurs in the Packaging Department. An internal quilted wrap is applied at the beginning of the packaging process. A compartmented outside box printed with instructions and the company's name and logo is added when units are 60% through the process. Conversion costs consisting of direct labor and applied overhead occur evenly throughout the packaging process. Conversion activities after the addition of the box involve package sealing, testing for leakage, and final inspection. Rejections in the Packaging Department are rare and may be ignored. The following data pertain to the activities of the Packaging Department during the month of October: 1. Beginning work-in-process inventory was 10,000 units, 40% complete as to conversion costs. 2. 30,000 units were started and completed in the month. 3. There were 10,000 units in ending work-in-process, 80% complete as to conversion costs. The Packaging Department's October costs were Quilted wrap Outside boxes $80,000 50,000 22,000 Applied overhead ($3.00 per direct labor dollar)66,000 Direct labor The cost of goods sold for the month was $240,000, and the ending finished-goods inventory was $84,000. Wood Glow uses the first-in, first-out method of inventory valuation. Wood Glow's controller, Mark Brandon, has been asked to analyze the activities of the Packaging Department for the month of October. Brandon knows that in order to properly determine the department's unit cost of production, he must first calculate the equivalent units of production. Questions: A. Prepare an equivalent units of production schedule for the October activity in the Packaging Department. Be sure to account for the beginning work-in-process inventory, the units started and completed during the month, and the ending work-in-process inventory. B. Determine the cost per equivalent unit of the October production. C. Assuming that the actual overhead incurred during October was $5,000 more than the overhead applied, describe how the value of the ending work-in-process inventory would be determined.

Wood Glow Manufacturing Co. produces a single product, a wood refinishing kit that sells for $17.95. The final processing of the kits occurs in the Packaging Department. An internal quilted wrap is applied at the beginning of the packaging process. A compartmented outside box printed with instructions and the company's name and logo is added when units are 60% through the process. Conversion costs consisting of direct labor and applied overhead occur evenly throughout the packaging process. Conversion activities after the addition of the box involve package sealing, testing for leakage, and final inspection. Rejections in the Packaging Department are rare and may be ignored. The following data pertain to the activities of the Packaging Department during the month of October: 1. Beginning work-in-process inventory was 10,000 units, 40% complete as to conversion costs. 2. 30,000 units were started and completed in the month. 3. There were 10,000 units in ending work-in-process, 80% complete as to conversion costs. The Packaging Department's October costs were Quilted wrap Outside boxes $80,000 50,000 22,000 Applied overhead ($3.00 per direct labor dollar)66,000 Direct labor The cost of goods sold for the month was $240,000, and the ending finished-goods inventory was $84,000. Wood Glow uses the first-in, first-out method of inventory valuation. Wood Glow's controller, Mark Brandon, has been asked to analyze the activities of the Packaging Department for the month of October. Brandon knows that in order to properly determine the department's unit cost of production, he must first calculate the equivalent units of production. Questions: A. Prepare an equivalent units of production schedule for the October activity in the Packaging Department. Be sure to account for the beginning work-in-process inventory, the units started and completed during the month, and the ending work-in-process inventory. B. Determine the cost per equivalent unit of the October production. C. Assuming that the actual overhead incurred during October was $5,000 more than the overhead applied, describe how the value of the ending work-in-process inventory would be determined.

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter6: Process Costing

Section: Chapter Questions

Problem 38P: Healthway uses a process-costing system to compute the unit costs of the minerals that it produces....

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Transcribed Image Text:Wood Glow Manufacturing Co. produces a single product, a wood refinishing kit that sells for $17.95. The final processing of the kits occurs in the Packaging Department. An internal quilted wrap is applied at the beginning of the packaging process. A compartmented outside box printed with instructions and the company's name and logo is added when units are 60% through the process. Conversion costs consisting of direct labor and applied overhead occur evenly throughout the packaging process. Conversion activities after the addition of the box involve package sealing, testing for leakage, and final inspection. Rejections in the Packaging Department are rare and may be ignored. The following data pertain to the activities of the Packaging Department during the month of October: 1. Beginning work-in-process inventory was 10,000 units, 40% complete as to conversion costs. 2. 30,000 units were started and completed in the month. 3. There were 10,000 units in ending work-in-process, 80% complete as to conversion costs. The Packaging Department's October costs were Quilted wrap $80,000 50,000 22,000 Applied overhead ($3.00 per direct labor dollar)66,000 Outside boxes Direct labor The cost of goods sold for the month was $240,000, and the ending finished-goods inventory was $84,000. Wood Glow uses the first-in, first-out method of inventory valuation. Glow's controller, Mark Brandon,1 Packaging Department for the month of October. Brandon knows that in order to properly determine the department's unit cost of production, he must first calculate the equivalent units of production. asked to analyze the activities of the Questions: A. Prepare an equivalent units of production schedule for the October activity in the Packaging Department. Be sure to account for the beginning work-in-process inventory, the units started and completed during the month, and the ending work-in-process inventory. B. Determine the cost per equivalent unit of the October production. C. Assuming that the actual overhead incurred during October was $5,000 more than the overhead applied, describe how the value of the ending work-in-process inventory would be determined.

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