Ghouse company manufactures basketballs. Materials are added at the beginning of

Question

Ghouse company manufactures basketballs. Materials are added at the beginning of the production process and conversion cost are incurred uniformly. Production and cost data for the month of july 2011 are as follows

Production Data-Basketballs Units Percent Complete
Work in procuess units, July 1 500 60%
Units Started into production 1,000
Work in process units, July 31 600 30%

Cost Data - Basketballs

Work in Process, July 1
Materials 750
Conversion Cost 600 $1,350
Direct Materials $2,400
Direct Labor $1,580
Manufacturing Overhead $1,060

A) Calculate the
1) The equilvalent units of production for materials and conversion cost
2) The unit cost of production for materials and conversion cost
3) The assignment of cost to units transferred out and in process at thee end of the accounting period
B) Prepare a production cost report for the month of July for the basketballs

Explanation / Answer

Physical flow of Goods : Physical Conversion Units Materials Costs Units to be accounted for Work in process, May 1 500 Started into production 1,000 Total units 1,500 Units accounted for Transferred out 900 900 900 Work in process, July 31 600 600 180 Total units 1,500 1,500 1,080 Equivalent Units : Opening WIP 500 500 500 Started and complete 400 400 400 Closing WIP 600 600 180 2 Materials cost Conversion costs Beginning work in Beginning work in process $750 process $600 Added during month 2,400 Added during month 2,640 Total $3,150 Total $3,240 Equivalent units 1,500 Equivalent units 1,080 Cost per unit $2.10 Cost per unit $3.00 3 Costs accounted for Transferred out (900 X $5.10) $4,590 Work in process, July 31 Materials (600 X $2.10) $1,260 Conversion costs (180 X $3.00) 540 1,800 Total costs $6,390 Physical flow of Goods : Physical Conversion Units Materials Costs Units to be accounted for Work in process, May 1 500 Started into production 1,000 Total units 1,500 Units accounted for Transferred out 900 900 900 Work in process, July 31 600 600 180 Total units 1,500 1,500 1,080 Equivalent Units : Opening WIP 500 500 500 Started and complete 400 400 400 Closing WIP 600 600 180 2 Materials cost Conversion costs Beginning work in Beginning work in process $750 process $600 Added during month 2,400 Added during month 2,640 Total $3,150 Total $3,240 Equivalent units 1,500 Equivalent units 1,080 Cost per unit $2.10 Cost per unit $3.00 3 Costs accounted for Transferred out (900 X $5.10) $4,590 Work in process, July 31 Materials (600 X $2.10) $1,260 Conversion costs (180 X $3.00) 540 1,800 Total costs $6,390

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