Wizards Skateboard shop sells premium skateboards for use in skate parks. The shop uses a process-costing system to compute the unit costs of the skateboards that it produces and sells for $450. Customers place orders online for skateboards where they can customize the decks and griptape with a choice of patterns and colours. The parts are purchased and assembled, customized with the customers choice of grip tape for the deck, trucks and wheels, and packaged to be sent by courier directly to the customer. Wizards Skateboard shop has three distinct departments: Assembly, Customization, and Packaging/Shipping.

The production process works as follows: all major parts have been assembled and the skateboard is tested before it is transferred from Assembly to Customization, the Customization department adds some materials to meet customers preference, and finally, the Packaging/Shipping department places the skateboard in a cardboard box and makes arrangements for shipping to the customer. Overhead in each department is applied based on direct labour costs at a rate of 130% for assembly and 115% for customization.

During March, the following results are available for the first two departments:

	Assembly	Customization
Beginning inventories:
Physical units	22 skateboards	15 skateboards
Costs:
Materials	$4,600	$4,900
Labour	$3,400	$4,250
Overhead	?	?
Transferred in		$1,000
Current production:
Transferred out	220 skateboards	240 skateboards
Ending inventory	14 skateboards	12 skateboards
Costs incurred in March:
Materials	$17,040	$1,300
Transferred in		?
Labour	$14,650	$1,180
Overhead	?	?
Percentage of completion:
Beginning inventory	65%	75%
Ending inventory	Material 50%	Material 100%
	Conversion 50%	Conversion 25%

1. Physical flow analysis

2. Calculations of equivalent units

3. Calculation of unit costs

4. Valuation of inventories

5. Cost reconciliation

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