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Production Cost System for Sweatshirts, Inc: Deluxe and Plai

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Sweatshirts, Inc. Makes two types of sweatshirts: plain and deluxe. Both types of sweatshirts go through two operations: cutting and sewing. The deluxe sweatshirts go through a third operation that prints emblems and words on them. The deluxe sweatshirts also have more expensive material used on them. After manufacture, sweatshirts are warehoused for sale to department stores.

The following data is available for a one month period:

Deluxe Plain
Quantity produced 10,000 12,000
Direct materials $50,000 $48,000

Conversion Costs:
Cutting $22,000
Sewing $22,000
Printing $ 5,000
Total $ 49,000

How much does a deluxe sweatshirt cost to manufacture?

Sweatshirts, Inc. uses what kind of production cost system?

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Solution Summary

Your tutorial shows you how to compute the cost per sweatshirt by allocating the conversion costs based on which product was using the overhead resources. This is activity based costing, a form of job costing. Click in cells to see computations.

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Your tutorial shows you how to compute the cost per sweatshirt by allocating the conversion costs based on which product was using the ...

Solution provided by:
Carol Sargent, PhD
Education
  • BSc, University of Virginia
  • MSc, University of Virginia
  • PhD, Georgia State University
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