Physical Flow, Equivalent Units, Unit Costs, No Beginning WIP Inventory, Activity-Based Costing, DBC

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		170% of direct labor		$87,840
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 23,100 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

Required:

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2. Calculate equivalent units of production for:

	Equivalent Units
a. Direct Materials	90,000
b. Conversion Costs	87,840

3. Calculate unit costs for the following. Round your answers to the nearest cent.

a. Direct materials	$8	per unit
b. Conversion costs	?	per unit
c. Total manufacturing	?	per unit

4. Provide the following information: a. The total cost of units transferred out $_____?

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b. The journal entry for transferring costs from Plate Cutting to Welding

blank	Work in Process-Welding	?
	Work in Process-Plate Cutting		?

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c. The cost assigned to units in ending inventory. Round your answers to the nearest cent. $____?

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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 (round to four decimal places)? $___? hours per unit

b. What is the conversion cost rate for the first quarter, using total conversion costs and total time (round to the nearest cent)? $____?per hour

c. What is the conversion cost per unit, using duration-based costing (round to the nearest cent)? $___?

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? (round to the nearest cent)? $___?