Problem:
Holiday Company manufactures basketballs and soccer balls. For both products, materials are added at the beginning of the production process and conversion costs are incurred uniformly. Holiday uses the FIFO method to compute equivalent units. Production and cost data for the month of August are shown on the next page.
|
|
Percent
|
|
|
Percent
|
|
Production Data-Basketballs
|
Units
|
Complete
|
Production Data-Soccer Balls
|
Units
|
Complete
|
|
Work in process units, August 1
|
500
|
60%
|
Work in process units, August 1
|
200
|
80%
|
|
Units started into production
|
2,000
|
|
Units started into production
|
2,000
|
|
|
Work in process units, August 31
|
600
|
50%
|
Work in process units, August 31
|
150
|
70%
|
|
|
|
|
|
|
|
Cost Data-Basketballs
|
|
|
Cost Data-Soccer Balls
|
|
|
|
Work in process, August 1
|
|
$1,125
|
Work in process, August 1
|
$450
|
|
|
Direct materials
|
|
1,600
|
Direct materials
|
2,800
|
|
|
Direct labor
|
|
1,280
|
Direct labor
|
1,000
|
|
|
Manufacturing overhead
|
|
1,000
|
Manufacturing overhead
|
1,394
|
|
Instructions
(a) Calculate the following for both the basketballs and the soccer balls.
(1) The equivalent units of production for materials and conversion costs.
(2) The unit costs of production for materials and conversion costs.
(3) The assignment of costs to units transferred out and in process at the end of the accounting period.
(b) Prepare a production cost report for the month of August for the basketballs only.