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Equivalent Production and Cost Computations; Report Evaluation. The Moderna Company employs departmental budgets and performance reports in planning and controlling its operations. Department A's budget for January was for the production of 1,000 units of equivalent production, a normal month's
volume.
volume.
The following performance report was prepared for January by the company's accountant:
Variable costs: Budget Actual Variances
Direct materials $20,000 23100 3100
Direct labor 10,000 10,500 500
Indirect labor 1,650 1790 140
Power 210 220 10
Supplies 320 330 10Total $32,180 $35,940 $3,760
Fixed costs:
Rent $ 400 400 0
Supervision 1,000 1000 0
Depreciation 500 500 0
Other 100 100 0
Total $ 2,000 2000 0
Grand total $34,180 37940 3760
Direct materials are introduced at various stages of the process. All conversion costs are incurred uniformly throughout the process. Because production fluctuates from month to month, the fixed overhead is applied at the rate of $2 per equivalent unit as to conversion costs. Actual variable costs are applied monthly as incurred.
There was no opening inventory at January 1. Of the 1,100 new units started during January, 900 were completed and shipped. There was no finished goods inventory at January 31. Units in process at January 31 were estimated to be 75% complete as to direct materials and 80% complete as to conversion costs. There was no shrinkage, spoilage, or waste of materials during January.
Required: (1) A schedule of equivalent production for January.
(2) A schedule computing the amount of under- or overapplied overhead at January 31.
(3) A schedule computing the cost of goods shipped and the cost of the work in process inventory at January 31 at actual cost.
(4) Comments on the performance report. Specific conclusions, if any, to be drawn from the report.
(2) A schedule computing the amount of under- or overapplied overhead at January 31.
(3) A schedule computing the cost of goods shipped and the cost of the work in process inventory at January 31 at actual cost.
(4) Comments on the performance report. Specific conclusions, if any, to be drawn from the report.