Question
1. Lemonade Company produces shirts and shorts. It has two departments that process all products. During February, the beginning Work in Process in the first
1. Lemonade Company produces shirts and shorts. It has two departments that process all products. During February, the beginning Work in Process in the first department was 1/2 completed as to conversion, and complete as to direct materials. The beginning inventory included $40,000 for materials and $60,000 for conversion cost. Ending Work in Process inventory in department 1 was 40% complete. Direct materials are added at the end of the process. Beginning Work in Process in department 2 was 20% incomplete as to conversion. Direct materials for department 2 are added near the end of the process. Beginning inventories included $24,000 for transferred-in cost and $28,000 for conversion costs. Ending inventory was 70% incomplete. Additional data about the two department are as follows:
Department 1 | Department 2 | |
Transferred-out Cost | 128,000 | 68,500 |
Conversion Cost | 28,000 | 68,500 |
Materials Added | 48,000 | 34,000 |
Beginning, In Process in units | 20,000 | 24,000 |
Units Started this Period | 60,000 | 68,000 |
Units Transferred this Period | 64,000 | 20,000 |
Under average method, how much is the cost of work-in process, ending?
2.
Service Used By | |||||||
Dep't | Cost | Personnel | Security | Maintenance | Cutting | Sewing | Finishing |
Personnel | 1,000,000 | 10% | 10% | 30% | 40% | 10% | |
Security | 400,000 | 10% | 10% | 30% | 20% | 30% | |
Maintenance | 100,000 | 10% | 10% | 40% | 20% | 20% | |
Cutting | 800,000 | ||||||
Sewing | 1,200,000 | ||||||
Finishing | 660,000 | ||||||
Direct Material | 1,850,000 | 50,000 | 780,000 | ||||
Direct Labor | 700,000 | 2,550,000 | 1,740,000 | ||||
Actual Factory Overhead | 300,000 | 500,000 | 700,000 |
a. Using Direct Method, how much is the total service cost allocated to Finishing Department? b. Using reciprocal method, how much is the factory overhead rate of cutting department assuming the producing department uses direct labor hours with 40,000 for cutting, 60,000 for sewing and 20,000 for finishing department? c. How much is the total service cost allocated to cutting department using Reciprocal Method?
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