PROBLEM 3-18. You Get What You Measure! The Plastic Glow Company makes glow sticks. It uses a process costing system and has had a just-in-time inventory policy. The plant has a capacity to produce 500,000,000 units a year but currently operates at 300,000,000 units per year. Direct material and direct labor costs are variable, and manufacturing overhead is primarily fixed. Production costs for 2017 are as follows:

REQUIRED E Q a. Compute the cost per equivalent unit for material and for 118 b. Compute the costs of units completed during May. + OOO c. Compute the cost of work in process at the end of May. d. Prepare a journal entry to record the cost of goods completed. PROBLEM 3-17. Journal Entries in Process Costing [LO 1] Douglas Basket produces a specialty basket used by a gift basket company, Yours Truly Gifts. Douglas uses a just-in-time system and has very little inventories of material, work in process, or finished goods. Since the balances are so small, the company carries them at zero for purposes of accounting. During August, the company produced and shipped 150,000 baskets at a cost of $1.75 per basket. The cost was made up of 55 percent material cost, 25 percent labor cost, and 20 percent manufacturing overhead. REQUIRED Prepare journal entries to record: a. The issuance of direct material. b. The cost of direct labor ( use wages payable). c. The application of manufacturing overhead. d. The completion of units in process and their transfer to finished goods. e. Cost of goods sold. PROBLEM 3-18. You Get What You Measure! The Plastic Glow Company makes glow sticks. It uses a process costing system and has had a just-in-time inventory policy. The plant has a capacity to produce 500,000,000 units a year but currently operates at 300,000,000 units per year. DirectI T-Mobile '9 \"II ll ll LO "P H II e 119 L0 material and direct labor costs are variable, and manufacturing overhead is primarily xed. Pro duction costs for 2017 are as follows: Number of units produced and sold 300,000,000 Direct materials $ 15,000,000 Direct labor 30,000,000 Manufacturing overhead 105.000.000 Total costs $150,000,000 Equivalent cost per unit $0.50 Iim Taylor. the president. receives a bonus each year based on net operating prot and would like to reduce costs in 2018 so that profit will increase. He decides to take advantage of the excess plant capacity and increase production to 350,000,000 even though he expects the company will be unable to increase unit sales in 2018. REQUIRED a. If Iim increases production to 350,000 units per year, what will be the new equivalent cost per ooh? I). Would increasing the production level be a good idea? Why or why not? JETS DRINK [LOI 2, 3] impany is marketing a new 3 Drink Syrup. The product sells nt months the companyr has had ions per month. Consumers mix to make a drink that \"replenishes rtion.\" vere 200,000 gallons in beginning was 100 percent complete with ent complete with respect to con- J,000 gallons were started. Of the 00,000 gallons remained in pro um'ts w cent complete perce 'th respect to conversion costs; 300,000 gallons were completed duringApril and, unfortunately1 300,000 gallons were lost owing to worker error. The production process calls for sodium to be added at the start of the process. On two separate occasions, a new worker added too much sodium, and batches were ruined. The errors were not identied until the end of the production process when batches were tested for quality assurance. Needless to say, the worker was red. The controller of Western Beverage, Gunther Bergman, is considering two ways to treat the cost of the \"lost" units. One approach is to "bury" the cost in the units completed and the units in process. This would result in cost of units completed of $1,669,000 and cost ofending Work in Process 0 cal- culated as follows. Tee - onic Sports Drink Syrup Pmril mtinn {inlet nannri