Question
Wood Glow Manufacturing Co. produces a single product, a wood refinishing kit that sells for $17.95. The final processing of the kits occurs in
Wood Glow Manufacturing Co. produces a single product, a wood refinishing kit that sells for $17.95. The final processing of the kits occurs in the Packaging Department. An internal quilted wrap is applied at the beginning of the packaging process. A compartmented outside box printed with instructions and the company's name and logo is added when units are 60% through the process. Conversion costs consisting of direct labor and applied overhead occur evenly throughout the packaging process. Conversion activities after the addition of the box involve package sealing, testing for leakage, and final inspection. Rejections in the Packaging Department are rare and may be ignored. The following data pertain to the activities of the Packaging Department during the month of October: Beginning work-in-process inventory was 10,000 units, 40% complete as to conversion costs. 30,000 units were started and completed in the month. There were 10,000 units in ending work-in-process, 80% complete as to conversion costs. The Packaging Department's October costs were Quilted wrap Outside boxes Direct labor Applied overhead ($3.00 per direct labor dollar) $80,000 50,000 22,000 66,000 The cost of goods sold for the month was $240,000, and the ending finished-goods inventory was $84,000. Wood Glow uses the first-in, first-out method of inventory valuation. Wood Glow's controller, Mark Brandon, has been asked to analyze the activities of the Packaging Department for the month of October. Brandon knows that in order to properly determine the department's unit cost of production, he must first calculate the equivalent units of production.
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