Starr Gifts makes unique western gifts that are sold at souvenir shops. One of the company's more popular products is a ceramic eagle that is produced in a mass production process that entails two manufacturing stages. In the first production stage, ceramic glass is heated and molded into the shape of the eagle by the Compression Department. Finally, color and artistic detail is applied to the eagle by the Finishing Department. The company has just hired a new accountant who will be responsible for preparing the Cost of Production Report for June 2018. The accountant is given the following information from which to prepare his report.
Departmental Cost Information for June:
______________________________Compression Finishing
Costs in beginning inventory................. $ 6,000.................... $ 28,800
Costs added during June:
Materials...................................... 84,000....................... 36,240
Labor...........................................40,000...................... 26,400
Overhead.....................................180,000..................... 124,000
Departmental Product Information for June:
______________________________Compression Finishing
Units in beginning inventory..................10,000........................ 3,600
Units started.................................... 52,000........................46,000
Units in ending inventory... 16,000 (25% complete).... 9,600 (80% complete)
Required
a. Prepare a Cost of Production Report for the Compression Department for June.
b. Prepare a Cost of Production Report for the Finishing Department for June.
c. If 24,000 units are sold in June for $320,000, determine the company's gross margin for June.