Question: Operation Costing: Manufacturer

AusSports Ltd produces sporting equipment in a number of plants across Australia. The Sydney Division's production for November consisted of Batch P25 (1000 professional basketballs) and Batch S33 (3000 scholastic basketballs). Professional basketballs have genuine leather exteriors and are packaged in an attractive cardboard box. Scholastic basketballs use imitation leather and are sold without special packaging. Both products go through identical preparation and finishing operations. Each batch was started and finished during November, and there was no beginning or ending work in process. Costs incurred were as follows:

Direct material:

Batch P25, $20 000, including $1000 for packaging material

Batch S33, $30 000

Conversion costs:

Preparation Department, predetermined rate of $10.00 per unit

Finishing Department, predetermined rate of $7.00 per unit

Packaging Department, predetermined rate of $1.00 per unit

Required:

1 Draw a diagram depicting the Division's batch manufacturing process, using text boxes and arrows.

2 Calculate the November product cost for each type of basketball.

3 Prepare journal entries to record the cost flows during November.