GOAL: A Production Cost Report using both the weighted average and FIFO methods of assigning costs to goods transferred out and ending inventory. Thank you in advance!

Management is ready to close the books for the end of the first quarter in 2015 and your supervisor has presented you with the following information.

Total sales in gallons of flavored lemonade for January 2015 through March 2015 are as follows:

January14,000

February15,000

March17,000

Each gallon of lemonade is packaged in eight 16 ounce bottles and sold in a case that sells for $15.00 per case.The company produced 47,500 units during the first quarter of 2015.

The companys Variable Costs include the following

Direct Materials of $1.50 per gallon

Direct Labor of $____ per gallon (Each gallon of lemonade requires 15 minutes of direct labor time and the wage rate is $8.00 per hour)

Variable MOH $_____per gallon (The variable overhead rate is $2.00 per machine hour and processing one gallon of lemonade takes 45 minutes of machine time)

Variable Selling and Administrative costs of $1.50 per gallon

The companys Fixed Costs for the quarter include the following:

Manufacturing Overhead$47,500

Selling and Administrative$28,900

The companys fixed manufacturing overhead per gallon is $______. (The Fixed Manufacturing Overhead rate is based on Fixed Costs for the quarter and the units produced for the quarter.)

The companys manufacturing overhead is applied based on the number of gallons produced using the Variable Manufacturing Overhead Rate per gallon calculated in b and the Fixed Manufacturing Overhead Rate per gallon calculated in c.

Raw Materials Inventory consists entirely of direct materials and, at the beginning of the year, consists of 500 units of direct material at a cost of $1.50 per unit. The company purchased 48,000 units of direct material at a cost of $1.50 per unit. Each gallon of lemonade requires one unit of direct materials.

Beginning Work in process inventory consists of 700 gallons of partially processed lemonade. All raw materials are added at the beginning of the production process and these partially completed units are 60% complete with respect to conversion costs. Ending work in process consists of 800 gallons of partially processed lemonade that are 50% complete with respect to conversion costs. The company completed and transferred out 47,500 units this quarter.

The beginning work in process and current period costs are as follows

Beginning WIP

Direct Materials$1,225

Conversion Costs$1,995

Current period Costs

Direct Materials$71,250

Conversion Costs$213,750

There are 300 gallons of lemonade in Finished Goods Inventory at the beginning of the year carried at a cost of $6.00. There are 1,800 gallons in ending Finished Goods Inventory carried at a cost of $6.00 per unit.