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Critical Thinking II Swasey Fabrication, Inc., manufactures frames for bicycles. Each frame passes through three processes: Cutting, Welding, and Painting. In September, the Cutting Department

Critical Thinking II

Swasey Fabrication, Inc., manufactures frames for bicycles. Each frame passes through three processes: Cutting, Welding, and Painting. In September, the Cutting Department of the Tulsa, Oklahoma, plant reported the following data:

a. In Cutting, all direct materials are added at the beginning of the process.

b. Beginning work in process consisted of 40,500 units, 100 percent complete for DM and 20 percent complete with respect to direct labor and overhead. Costs in beginning inventory included direct materials, $1,215,000; direct labor, $222,600; and applied overhead, $150,000.

c. Costs added to production during the month were direct materials, $2,565,000; direct labor, $3,471,150. Overhead was assigned using the following information:

Activity

Rate

Actual Driver Usage

Inspection

$150 per inspection hour

4,000 inspection hours

Maintenance

$750 per maintenance hour

1,600 maintenance hours

Receiving

$300 per receiving order

2,000 receiving orders

d. At the end of the month, 121,500 units were transferred out to Welding, leaving 13,500 units in ending work in process, 100 percent complete for DM and 25 percent complete for conversion.

Assume that the FIFO method is used

1) Prepare a physical flow schedule.

2) Calculate equivalent units of production for direct materials and conversion costs.

3) Compute the unit cost. Round to three decimal places

4) Calculate the cost of goods transferred to Welding at the end of the month. Calculate the cost of ending inventory.

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