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Holiday Company 500

Price: $2.50


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 below.


Production Data - Basketballs Units % Complete
Work in process units, August 1   500 60%
Units started into production   2,000
Work in process units, August 31   600 50%
 
Cost Data - Basketballs Units % Complete
Work in process, August 1   1,125
Direct materials   1,600
Direct labor   1,280
Manufacturing overhead   1,000
 
Production Data - Soccer Balls Units % Complete
Work in process units, August 1   200 80%
Units started into production   2,000
Work in process units, August 31   150 70%
 
Cost Data - Soccer Balls 
Work in process, August 1   450
Direct materials   2,800
Direct labor   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.

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