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part b

part c

part d

Pacific Siding Incorporated produces synthetic wood siding used in the construction of residential and commercial buildings. Pacific Siding's fiscal year ends on March 31, and the weighted average method is used for the company's process costing system Financial results for the first 11 months of the current fiscal year (through February 28) are well below the expectations of management, owners, and creditors. Halfway through the month of March, the chief executive officer (CEO) and the chief financial officer (CFO) ask the controller to estimate the production results for the month of March in the form of a production cost report (the company has only one production department). This report is shown as follows Data Entry Section Unit Information Units (board Teet Percent Complete Direct Direct Materials Labor Overhead 250,000 Units in beginning WIP Inventory (all completed this period) Units started and completed during the period Units started and partially completed during the period n/a 100% 100% 100% 70,000 30 Cost Information Costs in beginning WIP Inventory Costs incurred during the period Direct materials $76,000 55,000 60 Direct labor $90,000 75,000 Overhead $150,000 135,000 PACIFIC SIDING INCORPORATED Preliminary Production Cost Report Month Ending March 31 Step 1: Summary of Physical Units and Equivalent Unit Calculations Physical Units to be accounted for: Units Units in beginning WIP inventory 250,000 Units started during the period 210,000 Total units to be accounted for 460, eee Units accounted for: Units completed and transferred out Units in ending WIP inventory Total units accounted for Physical Units 390,000 70,000 460,000 Equivalent Units Direct Direct Materials Labor Overhead 390,000 390,000 390,000 28,600 42,00 21,000 418,000 432,000 411,000 Step 2: Summary of Costs to Be Accounted for Costs to be accounted for: Costs in beginning WIP inventory Costs incurred during the period Total costs to be accounted for Direct Direct Materials Labor Overhead Total $ 76,000 $90,000 $150,000 $316,000 55,000 25,000 135,000 265,000 $ 131,000 $165,000 $285,000 $581,000 Step 3: Calculation of cost per Equivalent Unit Total costs to be accounted for (a) Total equivalent units accounted for (b) Cost per equivalent unit (a) + (6) Direct Direct Materials Labor Overhead Total $ 131,000 $165,000 $285,000 418.000 432,000 411,000 $ 0.3134 $ 0.3819 $ 0.6934 $ 1.3888 Step 4: Assign Costs to Units Transferred Out and Units in Ending WIP Inventory Direct Direct Materials Labor Overhead Total Costs assigned to units transferred out $ 122,225 $148,958 $270,438 $541,621 Costs assigned to ending WIP inventory 8,775 16,042 14,562 39,379 Total costs accounted for $581,000 Armed with the preliminary production cost report for March, and knowing that the company's production is well below capacity, the CEO and CFO decide to produce as many units as possible for the last half of March, even though sales are not expected to increase any time soon. The production manager is told to push his employees to get as far as possible with production, thereby increasing the percentage of completion for ending WIP inventory. However, since the production process takes three weeks to complete all of the units produced in the last half of March will be in WIP inventory at the end of March Required: b. Using the following assumptions, prepare a revised estimate of production results in the form of a production cost report for the month of March. Assumptions based on the CEO and CFO request to boost production 1. Units started and partially completed during the period will increase to 225.000 (from the initial estimate of 70,000). This is the projected ending WIP inventory at March 31. 2. Percentage of completion estimates for units in ending WIP inventory will increase to 80 percent for direct materials, 85 percent for direct labor, and 90 percent for overhead 3. Costs incurred during the period will increase to $95.000 for direct materials, $102,000 for direct labor, and $150,000 for overhead (recall that most overhead costs are fixed). 4. All units completed and transferred out during March are sold by March 31 c. Compare your new production cost report with the one prepared by the controller. How much do you expect profit to increase as a result of increasing production during the last half of March? d. Is the request made by the CEO and CFO ethical? Month Ending March 31 Physical Units Direct Materials Equivalent Uhr Direct Labor Overhead Total Units to be accounted for Units in beginning WIP Inventory Units started during the period Total units to be accounted for Units accounted for Units completed and transferred out Units in ending WIP inventory Total units accounted for Costs to be accounted for Costs in beginning WIP inventory Costs incurred during the period Total costs to be accounted for 0 S 01 Cost per Equivalent Unit Total costs to be accounted for Total equivalent units accounted for Cost per equivalent unit 0 $ 0.0000 Costs assigned to units transferred out Costs assigned to ending WIP Inventory Total costs accounted for 5 05 SOS Next > Complete this question by entering your answers in the tabs below. Required B Required c Required D Compare your new production cost report with the one prepared by the controller. How much do you expect profit to increase as a result of increasing production during the last half of March?..... increasing profit Is the request made by the CEO and CFO ethical? Yes No

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