The Charley-Davidson Company makes three productsdirt bikes, touring motorcycles, and motorized wheelchairs. The company had the following
Question:
The Charley-Davidson Company makes three products—dirt bikes, touring motorcycles, and motorized wheelchairs. The company had the following work orders for the month of September:
Customer Order Quantity Order Revenue South 40 wheelchairs, 40 dirt bikes $90,000 Central 100 dirt bikes; 80 touring motorcycles 80,000 West 10 wheelchairs, 100 dirt bikes 80,000 Direct materials costs are as follows:
(ouringImMOtOrcyCleSs. sx scsecne ss $200 per unit WheCiChaltics u:.itheetstenudee: 800 per unit Dirt BiIkeSte ers) aarpee e 300 per unit Conversion costs incurred in Work-in-Process—Basic Assembly = $100 per unit for all three types.
Conversion costs incurred in Work-in-Process—Special Assembly = $200 per unit for wheelchairs and $40 per bike for dirt bikes. Touring motorcycles require no special assembly.
Required
a. Compute the product costs for September for each of the three products.
b. Use journal entries to show the flow of costs through inventory accounts. Assume that all products are transferred to Finished Goods when completed, and then to Cost of Goods Sold when sold.
All products in this exercise were sold in September. Use two work-in-process accounts: Work-in-
Process—Basic Assembly and Work-in-Process—Special Assembly.
c. Taking into account the revenue from each customer’s order and the direct materials and conversion costs required to produce the products for each order, compute customer profits for each order
Step by Step Answer:
Cost Management Strategies For Business Decisions
ISBN: 12
4th Edition
Authors: Ronald Hilton, Michael Maher, Frank Selto