Question
Hybrid costing WrapAround makes one-size-fits-most capes. Each cape goes through the same conversion process, but three types of fabric (Dacron, denim, and cotton) are available.
Hybrid costing
WrapAround makes one-size-fits-most capes. Each cape goes through the same conversion process, but three types of fabric (Dacron, denim, and cotton) are available. The company uses a standard costing system, and standard costs for each type of cape follow.
| Dacron | Denim | Cotton | |
| Material (2 yards) | $8 | $8 | $14 |
| Direct labor (1 hour) | 9 | 9 | 9 |
| Overhead (based on 1.5 machine hours) | 7 | 7 | 7 |
| Total | $24 | $24 | $30 |
Material is added at the start of production. In March 2013, there was no beginning WIP Inventory and 2,430 capes were started into production. Of these, 270 were Dacron, 490 were denim, and 1,670 were cotton. At the end of March, 120 capes (40 Dacron, 25 denim, and 55 cotton) were not yet complete. The stage of completion for each cost component for the 120 unfinished capes is as follows:
| Material | 120% complete |
| Direct labor | 25% complete |
| Overhead | 50% complete |
a. Determine the total cost of the capes completed and transferred to Finished Goods Inventory. $
b. Determine the total cost of the capes in the ending WIP Inventory. $
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Accounting
Authors: Carl S. Warren, James M. Reeve, Jonathan E. Duchac
22nd Edition
324401841, 978-0-324-6250, 0-324-62509-X, 978-0324401844
