Reference no: EM131912990
Problem
Maxx, Inc. produces capes and caps for boxers. It has three processing departments: a cutting department, a sewing department and a finishing department. Maxx, Inc. uses the weighted average method of production costing.
At the beginning of July, the Finishing Department had 600 units in beginning inventory (25% complete) with the following costs:
Transferred in Costs from the Sewing Department $60,000
Materials 1,800
Direct Labor 2,600
Manufacturing Overhead 3,900
$68,300
The processing assumption in the Finishing Department is that 100% of materials are added at the beginning of production, and conversion costs are added continuously.
During the month of July the following costs were incurred in the Finishing Department:
Transferred in Costs from Sewing Department $769,250
Materials 11,200
Direct Labor 30,750
Manufacturing Overhead 51,800
$863,000
Production information:
a. Because of our Finishing Department equipment, our materials transferred-in experiences a 10% decrease in units. In July, 7,600 units were transferred in.
b. The department has three inspection points: at 25% of production; at 60% of production and at the end of production in the department.
c. Another factor in Finishing Department production is that a normal loss rate of 1% exists for all units worked on in the current period.
d. In July a breakdown of equipment occurred at several points in the production process which caused several issues along the production line:
i. Prior to the first inspection point, 20 units of Beginning Inventory were lost due to the breakdowns.
ii. Prior the the second inspection point 50 current units were lost because of the breakdowns
iiii. At the final inspection point (due to calibration issues)70 more current units were lost, however, 15 units of these units were deemed salvagable and transferred to Scrap Product Inventory.
e. At the end of the period it was determined that 480 units remained in ending inventory and they were deemed to be 55% complete.
Prepare the cost of production report for the Finishing Department in July. Round equivalent unit costs to four decimal places.