Problem Set: Due Dec 15

Ward, Inc. manufactures a single product that passes through two departments: Extruding and Finishing-Packing. The product is shipped at the end of the day in which it is packed. The production in the Extruding and Finishing-Packing Departments does not increase the number of units started.

The cost and production data for the month of October are as follows:

Production Data

October production statistics. Extruding Department Finishing-Packing Department

Units in process, 10/1 Units in process, 10/31 Units started or received from preceding dept Units completed and transferred or shipped

10,000 8,000 20,000 22,000

29,000 6,000 22,000 44,000

Cost Data

Work In Progress, October 1. Extruding Department Finishing-Packing Department

Cost from preceding department Materials Labor Factory Overhead

$5,900 1,900 1,400

$60,200 1,500 2,000

Costs added during October: Extruding Department Finishing-Packing Department

Materials Labor Factory Overhead

$20,100 10,700 8,680

$4,400 7,720 11,830

% of completion of work in process: Extruding Department Finishing-Packing Department

10/1	10/31	10/1	10/31
70%	50 %	0%	0%
50 %	40 %	30 %	35 %
50 %	40 %	30 %	35 %

Materials

Labor

Factory Overhead

In the Extruding Department materials are added at various stages throughout the process.

In the Finishing-Packing Department, the materials added consist only of packing supplies. These materials are added at the midpoint of the process when the packing operation begins. Cost studies have disclosed that one half of the labor and overhead costs apply to the finishing operation and one half of the packing operation. All lost units occur at the end of the finishing operation when the product is inspected. All of the work in process in this department at October 1^st & 31^st was in the finishing operation stage of the manufacturing process. The company uses the average costing method.

Required: (1) Units lost, if any, for each department during October.

(2) The equivalent production for the calculation of unit costs for each department for October.

(3) A cost of production report for both departments for October. The report should disclose the departmental total cost and cost per unit (for materials, labor, and overhead) of the units (a) transferred to the Finishing-Packing Department and (b) shipped. Carry unit costs to three decimal places.