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Intrepid Industries manufactures sterile parts used in medical equipment. The company uses the weighted-average process costing method to account for production costs. It produces parts in three different departments: Forming, Sterilization, and Assembling. The following information was reported for the Assembling Department for the month of June: Beginning work-in-progress inventory on June 1 had 250,000 units made up of the following: Amount Degree of Completion Prior department costs transferred in from the Forming Department $387,600 100% Costs added by the Sterilization Department: Direct materials 317,200 100% Direct labor 120,050 40% Manufacturing overhead 67,100 30% $504,350 Work in process, June 1 $891,950 During June, 580,000 units were transferred in from the Forming Department at a cost of $1,870,000. The Assembling Department added the following costs: Direct materials $974,800 Direct labor 318,600 Manufacturing overhead 202,000 Total costs added $1,495,400 Assembling finished 480,000 units and transferred them to the Sterilization Department. At June 30, the number of units in ending work-in-progress inventory was 350,000. The degree of completion of work-in-process inventory at June 30 was as indicated below: Direct materials 80% Direct labor 65 Manufacturing overhead 30.

A. Prepare a correctly formatted (including heading) production cost report (see Exhibit 8.11 as a example report) using the weighted-average method.

B. Management wants to lower the costs of manufacturing the parts. It has established the following per unit targets for this product in the Assembling Department: materials, $1.65; labor, $.62; and manufacturing overhead $0.48. Has the product achieved managements cost targets in the Assembling Department? Write a short report to management containing your answer(s).

Part II CU F Exhibit 8.11 Production Cost Report Production Cost Report: Weighted Average Process Costing B C D E TORRANCE TAPE, INC. Compounding Department For the Month Ending March 31 (Section 2) Equivalent Units Conversion (Section 1) Physical Units Materials Costs Costs T- 20,000 10 Flow of Units 11 Units to be accounted for: 12 In work-in-process beginning inventory 13 Units started this period 14 Total units to account for 92,000 112,000 16 Units accounted for: 17 Completed and transferred out 18 In work-in-process ending inventory 19 Total units accounted for 96,000 16,000 112,000 96,000 16,000 112,000 96,000 4,800 100,800 Costs (Sections 3 through 5 ) Materials Costs Conversion Costs Total $ 24,286 298,274 $ 322,560 $ 16,160 84,640 900,800 $ 8,1261 213,634 $ 221,760 0.90 $ 2.200 26 Flow of Costs 27 Costs to be accounted for (Section 3): 28 Costs in work-in-process beginning inventory 29 Current period costs 30 Total costs to be accounted for 31 32 Costs per equivalent unit (Section 4) 33 34 Costs accounted for (Section 5): 35 Costs assigned to transferred-out units 36 Costs assigned to work-in-process ending inventory 37 Total costs accounted for 38 $ 211,200 $ 297,600 24,960 $322,560 $ 86,400 14,4009 $ 100,800 10,560 $ 221,760 a 100% complete with respect to materials. b 30% complete with respect to conversion. $0.90 = $100,800 - 112,000 equivalent units (EU) d $2.20 = $221,760 - 100,800 EU $86,400 = 96,000 EU $0.90 per EU + $211,200 = 96,000 EU x $2.20 per EU 9 $14,400 = 16,000 EU X $0.90 per EU $10,560 = 4,800 EU X $2.20 per EU Moronoihin

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