McKay, Inc., produces a subassembly used in the production of hydraulic cylinders. The subassemblies are produced in three departments: Plate Cutting, Rod Cutting, and Welding. Materials are added at the beginning of the process. Overhead is applied using the following drivers and activity rates:

Driver	Rate	Actual Usage (by Plate Cutting)
Direct labor cost	120% of direct labor	$330,000
Inspection hours	$40 per hour	4,002 hours
Number of moves	$100 per move	1,680 moves

During the first quarter, the Plate Cutting Department used 20,000 hours (direct, indirect, and machine hours) to produce the quarters output. Other quarterly data for the Plate Cutting Department are as follows:

Beginning work in process, January 1
Units started	90,000
Direct materials cost	$720,000
Units, ending work in process (100% materials; 64% conversion), March 31	6,000

Required:

1. Prepare a physical flow schedule.

2. Calculate equivalent units of production for:

   1. Direct materials

   2. Conversion costs

3. Calculate unit costs for:

   1. Direct materials

   2. Conversion costs

   3. Total manufacturing

4. Provide the following Information:

   1. The total cost of units transferred out

   2. The journal entry for transferring costs from Plate Cutting to Welding

   3. The cost assigned to units in ending inventory

      Answer

      Check Figures:

5. Suppose the plant manager asked the following questions:

   1. What is the actual cycle time for the conversion cost output for the plate subassembly (round to four decimal places)?

   2. What is the conversion cost rate for the first quarter, using total conversion costs and total time (round to the nearest cent)?

   3. What is the conversion cost per unit, using duration-based costing (round to the nearest cent)?

   4. According to production engineering, if efficiency were increased to an ideal level, then the cycle time should be 0.20 hours. If this were to occur, what would the cost per plate be?