70.2K

Verified Solution

Link Copied!

Under the Stars, Inc. manufactures sleeping bags in two sequential production departments: machining and packaging. Two direct materials, fabric and insulation, are used in the machining department. The fabric is added at the beginning of the production process and accounts for 30% of the direct material input. The insulation is added when the conversion process is 50% complete. Conversion costs are incurred uniformly throughout production in the machining department.

The machining department began July with 250 sleeping bags in process and started another 525 sleeping bags during the month. At month end, 255 sleeping bags remained in process in the department and were assigned a cost of $12,444 on the department's July production cost report, $3,570 of which was for direct material costs. Management estimates that the units in ending inventory are 60% complete with respect to conversion costs.

Given the above information, which of the following statements is incorrect with regard to the machining departments July operations?

A.

The cost to complete a bag in the machining department during July equals $72.

B.

Physical units in ending inventory each receive $34.80 of conversion costs at month end.

C.

Machining worked on 775 physical units during July.

D.

The costs transferred to the packaging department during July equal $37,440.

E.

The total costs to account for in machining during July equals $55,800.

Answer & Explanation Solved by verified expert

See Answer