Two-period, two-department comprehensive process cost reports Blue Water Fishing Sup- ply, Inc. makes a variety of fishing and boating products which it markets nationwide. A recent management analysis of product offerings indicated a need for a top of the line double-tray tackle box. Company product engineers designed the new tackle box which is manufactured in a two-process-center production system. In the first process center, Fabricating, the top and bottom housing of the tackle box is cut and formed from rolled aluminum. The units are buffed and holes are drilled for the hinges and latches that are installed later. In the second process center. Assembly, hinges, latches, and tackle box trays are installed. These parts are purchased from vendors.

Management believes the tackle box will sell quite favorably at a retail price of $35 each. The company sells its products to retailers at a discount of 30 percent and variable marketing costs typically average 8 percent of the company's product revenue. The company's product policy is to earn a minimum gross margin on product sales revenue of 45 percent.

Production of the tackle boxes began on October 1 and below are production quantity and cost data for the first two months of production. The company uses FIFO to account for produc- tion cost flows.

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October Production Beginning work in process Units started during the month Current period costs: Transferred in Direct materials Conversion Units completed & transferred out Ending work in process Fabricating 0 Assembly 0 15,000 units - ? $90,900 $24,600 49,920 35,200 12,000 units 8,000 units 3,000 units 4,000 units Materials percent complete 100% 100% Conversion percent complete 33 1/3% 75%