Question

Nally & Gibson produces crushed limestone, among other products, used in highway construction. To produce the crushed limestone, the company starts with limestone rocks from its quarry in Georgetown, Kentucky, and puts the rocks through a crushing process. Suppose that on May 1, Nally & Gibson has 24 tons of rock (75% complete) in the crushing process. The cost of that beginning WIP inventory was $6,000. During May, the company added 288 tons of rock from its quarry, and at the end of the month 15 tons remained in process, on average one-third complete. The cost of rocks from the quarry for the last 5 months has been $120 per ton. Labor and overhead cost during May in the rock-crushing process were $40,670. Nally & Gibson uses weighted-average process costing.
1. Compute the cost per ton of crushed rock for production in May.
2. Compute the cost of the WIP inventory at the end of May.
3. Suppose the flexible budget for labor and overhead was $16,000 plus $80 per ton. Evaluate the control of overhead and labor costs during May.



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  • CreatedNovember 19, 2014
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