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    prepare a production report, compute unit cost

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    Assume Music Makers has begun to produce blank CDs for its use and for sale to outside customers, because the CDs are produced in a continuous process and are identical, management at Music Makers uses process costing. The unit of measure for Mucic Makers is a box of CDs. Management has gathered the following information from the molding department for January:

    Units (boxes) in beginning inventory = 10,000
    Units (boxes) started into production = 40,000
    Units (boxes) transferred out = 35,000
    Units (boxes) remaining on work-in process inventory = 15,000

    Cost of beginning inventory:
    Materials = $60,000
    Conversion = 80,000

    Costs added during the period:
    Material = $240,000
    Conversion = 320,000

    Ending inventory-percentage of completion:
    Material = 50%
    Conversion = 30%

    Use a spreadsheet to prepare a production report for the molding department for the month of January.

    Once completed, the spreadsheet can be used to compute costs for later accounting periods. For example, suppose Music makers reported the following during February.

    Units in beginning inventory = 15,000
    Units started into production = 29,000
    Units transferred out = 39,000
    Units remaining in work in process inventory = 5,000

    Assume all production costs remain unchanged from January. Calculate the unit cost for February. Compare your January and February spreadsheets. What do you observe? Fill in the yellow spaces with formulas.

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    Solution Summary

    The solution explains how to prepare the production cost report and calculate the unit costs