What is the production cost report using FIFO?

Sharpe Flavored Water Company

The Sharpe Flavored Water Company makes high quality Flavored Water. Management is ready to close the books for the end of the first quarter in 2019 and your supervisor has presented you with the following information.

1. Total sales in gallons of flavored flavored water for January 2019 through March 2019 are as follows:

January 15,000

February 14,000

March 18,000

Each gallon of flavored water is packaged in eight 16 ounce bottles and sold in a case that sells for $15.00 per case. The company produced 49,000 units during the first quarter of 2019.

2. The company’s Variable Costs include the following

Direct Materials of $1.50 per gallon

Direct Labor of $____ per gallon (Each gallon of flavored water requires 15 minutes of direct labor time and the wage rate is $8.00 per hour)

Variable MOH $_____per gallon (The variable overhead rate is $2.00 per machine hour and processing one gallon of flavored water takes 45 minutes of machine time)

Variable Selling and Administrative costs of $1.50 per gallon

3. The company’s Fixed Costs for the quarter include the following:

Manufacturing Overhead $49,000

Selling and Administrative $31,000

The company’s fixed manufacturing overhead per gallon is $______. (The Fixed Manufacturing Overhead rate is based on Fixed Costs for the quarter and the units produced for the quarter.)

4. The company’s manufacturing overhead is applied based on the number of gallons produced using the Variable Manufacturing Overhead Rate per gallon calculated in ‘b’ and the Fixed Manufacturing Overhead Rate per gallon calculated in ‘c’.

5. Raw Materials Inventory consists entirely of direct materials and, at the beginning of the year, consists of 700 units of direct material at a cost of $1.50 per unit. The company purchased 48,500 units of direct material at a cost of $1.50 per unit. Each gallon of flavored water requires one unit of direct materials.

6. Beginning Work in process inventory consists of 800 gallons of partially processed flavored water. All raw materials are added at the beginning of the production process and these partially completed units are 70% complete with respect to conversion costs. Ending work in process consists of 900 gallons of partially processed flavored water that are 60% complete with respect to conversion costs. The company completed and transferred out 49,000 units this quarter.

The beginning work in process and current period costs are as follows

Beginning WIP

Direct Materials $1,250

Conversion Costs $2,135

Current period Costs

Direct Materials $74,850

Conversion Costs $220,775

7. There are 300 gallons of flavored water in Finished Goods Inventory at the beginning of the year carried at a cost of $6.00. There are 2,000 gallons in ending Finished Goods Inventory carried at a cost of $6.00 per unit.

Answer rating: 100% (QA)

IMPORTANT NOTE 1 THE DATA GIVEN IN THE QUESTION ARE NOT CORRECTLY QUOTED IN THE CURRENT PERIOD COSTS THE DIRECT MATERIAL COSTS HAS BEEN QUOTED AS 74850 WHEREAS THE CUREENT PERIOD MATERIAL IS INVOLVED ... View the full answer