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		150% 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 21,600 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	$540,000
Units, ending work in process (100% materials; 64% conversion), March 31	6,000

Required:

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1. Prepare a physical flow schedule. If an answer is zero, enter "0".

Units to account for:
Units, beginning WIP Units completed Units, ending WIP Units, beginning WIP	Units, beginning WIP
Units completed Units, ending WIP Units started Units started	Units started
Total units to account for	fill in the blank 40c870fb000d050_5
Units accounted for:
Units, beginning WIP Units completed Units started Units completed	Units completed
Units, beginning WIP Units, ending WIP Units started Units, ending WIP	Units, ending WIP
Total units accounted for	fill in the blank 40c870fb000d050_10

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1. A physical flow schedule shows the units to account for and what happened to them.

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2. Calculate equivalent units of production for:

	Equivalent Units
a. Direct Materials	fill in the blank 729aaeff5fdff9e_1
b. Conversion Costs	fill in the blank 729aaeff5fdff9e_2

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

a. Direct materials	$fill in the blank 729aaeff5fdff9e_3	per unit
b. Conversion costs	fill in the blank 729aaeff5fdff9e_4	per unit
c. Total manufacturing	$fill in the blank 729aaeff5fdff9e_5	per unit

4. Provide the following information: a. The total cost of units transferred out $fill in the blank 729aaeff5fdff9e_6

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2. The equivalent units schedule measures the output of the period. A fully completed unit is counted as a unit of output. Output for a unit in ending work in process is counted by its degree of completion.

3. Unit cost = Costs of the period Output of the period

4 a. The cost of goods (services) transferred out is the unit cost multiplied by the units completed. The cost of EWIP is the unit cost multiplied by the equivalent units found in EWIP. The partially completed units and all their associated costs are transferred to the next process (department) by debiting the WIP account of the process (department) receiving the unit and crediting the WIP account of the transferring process (department).

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

	Cash Materials Overhead Work in Process-Plate Cutting Work in Process-Rod Cutting Work in Process-Welding Work in Process-Welding	Work in Process-Welding
	Cash Materials Overhead Work in Process-Plate Cutting Work in Process-Rod Cutting Work in Process-Plate Cutting		Work in Process-Plate Cutting

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4 b. Unit cost = Costs of the period Output of the period

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c. The cost assigned to units in ending inventory. Round your answers to the nearest cent. $fill in the blank 071161017f9bfc7_1

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4 c. The cost of goods (services) transferred out is the unit cost multiplied by the units completed. The cost of EWIP is the unit cost multiplied by the equivalent units found in EWIP. The partially completed units and all their associated costs are transferred to the next process (department) by debiting the WIP account of the process (department) receiving the unit and crediting the WIP account of the transferring process (department).

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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)? $fill in the blank 5f6ff2027f9b04a_1 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)? $fill in the blank 5f6ff2027f9b04a_2 per hour

c. What is the conversion cost per unit, using duration-based costing (round to the nearest cent)? $fill in the blank 5f6ff2027f9b04a_3

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)? $fill in the blank 5f6ff2027f9b04a_4

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