Case La is investigating the manufacturing operations of each of its products mp
ID: 2334437 • Letter: C
Question
Case La is investigating the manufacturing operations of each of its products mpany manufactures high-quality leather goods. The company's profits have declined Case 4-39 Weighted-Average Process Costing; Ethics n an attempt to isolate the causes of poor profit performance, management he company's main products is leather belts. The belts are produced in a single, continuous (LO 4-3,4-4, 4-5, 4-6) process in the Dallas Plant. During the process, leather strips are sewn, punched, and dyed. The belts finishing stage to conclude the process. Labor and overhead are applied continuously nufacturing process. All materials, leather strips, and buckles are introduced at the begin- 4. Weighted-average unit cost of completed leath then enter a final ning of th e process. The firm uses the weighted-average method to calculate its unit costs Total cost of October 31 work The leather belts produced at the Dallas Plant are sold wholesale for $9.95 each. Management o compare the current manufacturing costs per unit with the market prices for leather belts. in process: $4,700 Top management has asked the Dallas plant controller to submit data on the cost of manufacturing the leather belts for the month of October. These cost data will be used to determine whether modifications in the production process should be initiated or whether an increase in the selling price of the belts is ustified. The cost per belt used for planning and control is $5.35. The work-in-process inventory consisted of 400 partially completed units on October 1. The belts were 25 percent complete as to conversion. The costs included in the inventory on October 1 were as follows: Leather strips . Buckles Conversion costs Total $ 990 260 300 $1,550 During October 7,600 leather strips were placed into production. A total of 7,000 leather belts ere completed. The work-in-process inventory on October 31 consisted of 1,000 belts, which were 50 percent complete as to conversion. The costs charged to production during October were as follows: $19,900 5,250 20,700 $45,850 Leather strips Buckles... Total....Explanation / Answer
Answer 1
MATERIAL
CONVERSION
Units
(1)
Material %
(2)
Material in Oct
(3)
Equivalent Unit
(4)=(1)*(3)
Conversion %
(5)
Conversion in Oct
(6)
Equivalent Unit
(7)=(6)*(1)
Oct 1 WIP Units
400
100%
0%
0
25%
75%
300
Placed and Completed
(7000-400)
6600
100%
100%
6600
100%
100%
6600
October 31 WIP units
1000
100%
100%
1000
50%
50%
500
7600
7400
Total Equivalent Unit
Material =7600
Conversion=7400
Answer 2
Total Material Cost during Oct
25150
Equivalent Units
7600
Cost per Equivalent Unit
3.31
Total Conversion Cost during Oct
20700
Equivalent Units
7400
Cost per Equivalent Unit
2.80
Answer 3
Oct 1 Inventory Completion cost
Material
1250
Conversion (25%)
300
Conversion in Oct
(300*2.80)
840
Total
2390
Placed and Completed Units
Material (6600*3.31)
21846
Conversion (6600*2.80)
18480
Total
40326
Total Cost of 7000 unit completed and Transfered
Unit
Cost
Per Unit
Material
7000
23096
2.80
Conversion
7000
19620
3.30
Per Unit Cost (42716/7000)
42716
6.10
Oct 31 Inventory
Material(1000*3.31)
3310
Conversion (500*2.80)
1400
Total
4710
Answer 4
Weighted average cost per unit
6.102
planning and control cost
5.35
Total cost
11.452
Selling price
9.95
Loss per unit
1.502
Company Really need to increase the selling price to earn profit.
Answer 5
It will decrease the per unit conversion cost from 3.30 to 2.76.
MATERIAL
CONVERSION
Units
(1)
Material %
(2)
Material in Oct
(3)
Equivalent Unit
(4)=(1)*(3)
Conversion %
(5)
Conversion in Oct
(6)
Equivalent Unit
(7)=(6)*(1)
Oct 1 WIP Units
400
100%
-
0
25%
75%
300
Placed and Completed
(7000-400)
6600
100%
1.00
6600
100%
100%
6600
October 31 WIP units
1000
100%
1.00
1000
60%
60%
600
7600
7500
Total Conversion Cost during Oct
20700
Equivalent Units
7500
Cost per Equivelent Unit
2.76
Total Cost of 7000 unit completed and Transfered
Unit
Cost
Per Unit
Material
7000
23096
3.30
Conversion
7000
19344
2.76
Per Unit Cost (42716/7000)
42440
6.06
MATERIAL
CONVERSION
Units
(1)
Material %
(2)
Material in Oct
(3)
Equivalent Unit
(4)=(1)*(3)
Conversion %
(5)
Conversion in Oct
(6)
Equivalent Unit
(7)=(6)*(1)
Oct 1 WIP Units
400
100%
0%
0
25%
75%
300
Placed and Completed
(7000-400)
6600
100%
100%
6600
100%
100%
6600
October 31 WIP units
1000
100%
100%
1000
50%
50%
500
7600
7400
Related Questions
drjack9650@gmail.com
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.