Reference no: EM133424655
Question: Marsy's Industries manufactures car parts used in auto equipment. The company uses the weighted-average process costing method to account for production costs. It produces parts in three different departments: Forming, Sterilization, and Assembling. The following information was reported for the Assembling Department for the month of June: Beginning work-in-progress inventory on June 1 had 250,000 units made up of the following: Amount Degree of Completion Prior department costs transferred in from the Forming Department $387,600 100% Costs added by the Sterilization Department: Direct materials 317,200 100% Direct labor 120,050 40% Manufacturing overhead 67,100 30% $504,350 Work in process, June 1 $891,950 During June, 580,000 units were transferred in from the Forming Department at a cost of $1,870,000. The Assembling Department added the following costs: Direct materials $974,800 Direct labor 318,600 Manufacturing overhead 202,000 Total costs added $1,495,400 Assembling finished 480,000 units and transferred them to the Sterilization Department. At June 30, the number of units in ending work-in-progress inventory was 350,000. The degree of completion of work-in-process inventory at June 30 was as indicated below: Direct materials 80% Direct labor 65 Manufacturing overhead 30
A. Prepare a correctly formatted (including heading) production cost report (see Exhibit 8.11 as a example report) using the weighted-average method.
B. Management wants to lower the costs of manufacturing the parts. It has established the following per unit targets for this product in the Assembling Department: materials, $1.65; labor, $.62; and manufacturing overhead $0.48. Has the product achieved management's cost targets in the Assembling Department? Write a short report to management containing your answer(s). © PENN FOSTER, INC. 2017 COST ACCOUNTING PAGE 5 Graded Project
C. Prepare a correctly formatted (including heading) production cost report (see Exhibit 8.12 as a example report) using the FIFO method using the data given in Question A with one exception: the beginning direct materials costs as of June 1 listed in work-in-process should be $315,700 instead of $317,200.
D. Using data from the FIFO report, write a short report to management addressing the issues raised in Question B.