ORIE_3150_Homework__7_fall_2008_Solutions

ORIE_3150_Homework__7_fall_2008_Solutions - ORIE 3150 2008...

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ORIE 3150 Homework #7 Fall 2008 Due November 11, 2008 1. Ben Stiller Winery manufactures fine wine in two departments, Fermenting and Bottling. Cost and production data for the Fermenting Department for December are presented below: Cost data Beginning work in process inventory $ 46,000 ($30,000 materials) Materials 425,880 Conversion costs 161,240 Total costs $633,120 Production data Beginning work in process (gallons) 10,000 Gallons started into production 55,000 Ending work in process (gallons) 8,000 The beginning WIP is 80% complete for materials, 30% for conversion The ending WIP is 70% complete for materials, 20% for conversion. Using FIFO process costing: a. Compute the equivalent units of production. You simply have to follow the equation sheet: Materials: EUOP = 2000 + 47000 + 5600 = 54600 Conversion: EUOP = 7000 + 47000 + 1600 = 55600 b. Determine the unit production costs (cost per EU). Materials: 425880/54600 = $7.80 per unit Conversion: 161240/55600 = $2.90 per unit c. Determine the costs to be assigned to units transferred out and ending work in process. Materials: 30,000 + 2000(7.80) + 47000(7.80) = 412200 Conversion: 16000 + 7000(2.90) + 47000(2.90) = 172600 Total: $584,800 trans. Materials: 5600(7.80) = 43680 Conversion: 1600(2.90) = 4640 Total: $48,320 ending WIP.
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2. Water Guide Company manufactures boats. Motors and hulls are kept track of separately. The company had 5 motors in Raw Materials Inventory (Motors) at the end of August, carried at a cost of $4,000 each. It also had 10 boat hulls in Raw Materials Inventory (Hulls) at the end of August, carried at a cost of $3,000 each.
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