McKay, Inc., produces a subassembly used in the production of hydraulic cylinders. The subassemblies are produced in
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Question:
McKay, Inc., produces a subassembly used in the production of hydraulic cylinders. The subassemblies are produced in three departments: Plate Cutting, Rod Cutting, and Welding. Materials are added at the beginning of the process. Overhead is applied using the following drivers and activity rates:
Driver | Rate | Actual Usage (by Plate Cutting) | ||
---|---|---|---|---|
Direct labor cost | 120% of direct labor | $330,000 | ||
Inspection hours | $40 per hour | 4,002 hours | ||
Number of moves | $100 per move | 1,680 moves |
During the first quarter, the Plate Cutting Department used 20,000 hours (direct, indirect, and machine hours) to produce the quarter's output. Other quarterly data for the Plate Cutting Department are as follows:
Beginning work in process, January 1 | — |
Units started | 90,000 |
Direct materials cost | $720,000 |
Units, ending work in process (100% materials; 64% conversion), March 31 | 6,000 |
- 1. Prepare a physical flow schedule.
- 2. Calculate equivalent units of production for:
- 3. Calculate unit costs for the following.
- 4. Provide the following information:
a. The total cost of units transferred out - b. The journal entry for transferring costs from Plate Cutting to Welding
- c. The cost assigned to units in ending inventory.
- 5. Suppose the plant manager asked the following questions:
- a. What is the actual cycle time for the conversion cost output for the plate subassembly
- b. What is the conversion cost rate for the first quarter, using total conversion costs and total time
- c. What is the conversion cost per unit, using duration-based costing?
d. According to production engineering, if efficiency were increased to an ideal level, then the cycle time should be 0.20 hours. If this were to occur, what would the cost per plate be?
Related Book For
Cornerstones of Cost Management
ISBN: 978-1285751788
3rd edition
Authors: Don R. Hansen, Maryanne M. Mowen
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