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Equivalent Production calculation and Cost Computations

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.

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.
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