Annabelle needs to make a production cost report for For Rover's Sake, which produces custom-designed dog products. She's going to do so by following these steps (Warren & Taylor, 2019):

1. She'll determine which units need costs assigned to them.

2. She'll calculate equal units of production.

3. She'll figure out the cost per unit.

4. She'll allocate the costs to units transferred out and partially completed units.

For Rover's Sake uses a first-in-first-out, or FIFO method to describe the cost flow (Warren & Taylor, 2019).

In the case of For Rover's Sake and this report, a unit is a dog automobile harness, size medium. The total units are 100,000.

However, not all of them are done at the time Annabelle runs this report, so she needs to calculate equal units of production. Of those 100,000 harnesses, 15% of them are in-process. Annabelle multiplies this percentage by the total number of units to get 15,000 harnesses in conversion costs.

Next, Annabelle will figure out the cost per unit; she does this for the harnesses and determines the total product cost to be $586,700 by combining the direct materials and conversion costs for direct labor and factory overhead (Warren & Taylor, 2019).

Finally, she'll allocate the costs to the proper accounts.

how do managerial accountants might use the production cost report.