Part I Given The Following Information: Prepare A Cost Of Pr

Part Igiven The Following Information Prepare A Cost Of Produc

Given the following information, prepare a cost of production report for Department B for July. Johnstone Chemicals manufactures its products in two departments [A and B]. Data for Department B is listed below: Units transferred from Department A: 40,000. Per unit cost: $3.20. Units transferred to finished goods: 26,000. Units still in process [1/3 complete]: 6,000. Costs added by Department B: Labor: $31,500. Factory overhead: $23,100. All lost units are considered to be normal.

Determine the factory overhead rates. Round money to the nearest cent and rates to the nearest percent. Label your answers.

The XYZ Co. estimates its factory overhead for the year to be $58,000. They further estimate they will produce 38,000 units at a material cost of $48,000. Production will require 20,000 direct labor hours at an estimated cost of $100,000. Machines will work 1,500 hours. Find the following predetermined rates: material cost per unit, per unit cost, machine hour cost, direct labor cost, direct labor hour cost.

Answer the following questions: 1. What is the purpose of equivalent units? How do they differ from good units? 2. Explain the use of a quantity schedule. Who gives us the information regarding the percentage of units completed in a department? 3. How do applied factory overhead rates differ from applied factory overhead itself?

Paper For Above instruction

The assignment encompasses preparing detailed cost reports, calculating overhead rates, understanding key manufacturing concepts, and analyzing a company's financial data for strategic proposals. This comprehensive task involves applying managerial accounting principles to real-world scenarios, requiring proficiency in cost accounting, rate calculations, and data interpretation to support decision-making and strategic planning.

Part 1: Cost of Production Report for Department B

The first part focuses on preparing a cost of production report for Department B of Johnstone Chemicals for July. Based on the provided data, the report should detail the costs incurred, units transferred, and the ending work-in-process inventory. The report begins with cost data including units transferred from Department A, the unit cost, units transferred to finished goods, and units remaining in process. The calculations involve allocating costs accurately to produce a clear view of the department's production costs, applying appropriate costing methods such as FIFO or weighted average, depending on company practice.

The report should include the calculation of total costs (including direct materials, labor, and factory overhead), the equivalent units of production for incomplete units, and the cost per equivalent unit. The final section presents the cost assigned to units transferred out and units remaining in inventory, providing a basis for managerial control and financial reporting.

Part 2: Factory Overhead Rate Calculations

The second part entails determining the factory overhead rates. Using the estimated factory overhead of $58,000, and production data such as the number of units produced, material costs, direct labor hours, and machine hours, the task involves calculating various predetermined overhead rates. These rates include the material cost rate per unit, unit cost, machine hour rate, direct labor cost rate, and direct labor hour rate. Each rate assists in allocating overhead costs accurately to products and helps in pricing, budgeting, and cost control.

Calculations should convert the estimated overhead and other data into per-unit or per-hour rates, rounded to the nearest cent or percent as specified. These calculations provide managers with essential metrics to monitor costs and improve operational efficiency.

Part 3: Conceptual Questions on Manufacturing and Costing

The final segment involves answering conceptual questions on managerial accounting topics. The first question explores the purpose of equivalent units, emphasizing their role in allocating costs accurately between completed and in-process units, and contrasting them with fully completed units. The second question explains the use of a quantity schedule, which indicates the percentage of completion for units in process, usually provided by process engineers or production supervisors. The third question differentiates applied factory overhead rates, which are predetermined estimates, from applied factory overhead, which reflects actual overhead costs assigned to products during manufacturing.

These questions aim to deepen understanding of production costing techniques, cost allocation, and their implications for financial analysis and decision-making.

References

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