Polk Company manufactures basketballs. Materials are added at the beginning of the production process and conversion costs are incurred uniformly.
Production and cost data for the month of July 2017 are as follows:
Production Data: Basketballs
Units Percent Complete
Work in process units, July 1 400 60%
Units started into production 1,090
Work in process units, July 31 540 40%
Cost Data: Basketballs
Work in process, July 1
Materials $760
Conversion costs 590
$1,350
Direct materials 2,630
Direct labor 1,590
Manufacturing overhead 1,110
Required:
1. Calculate the equivalent units of production for materials and conversion costs.
2. Calculate the unit costs of production for materials and conversion costs.
(Round unit costs to 3 decimal places)
3. Calculate the assignment of costs to units transferred out and in process at the end of the accounting period.
(Round answers to 0 decimal places)
4. Prepare a production cost report for the month of July for the basketballs.
(Round unit costs to 3 decimal places and all other answers to 0 decimal places)

1. Material $1,490

Conversion $1,490

2. Material $1,490

Conversion $1,166

3.Cost of units transferred out $4,842

Cost of ending Work in process $1,838

4. $6,680

Explanation:

1.Computation of the Equivalent unit of production for material

Beginning Work In Process400

Add Started during the year1,090

Units to be accounted1,490

Computation of the Equivalent unit of production for Conversion cost

Completed and transferred950

(1,090+400 -540)

Add ending work in process540

Units to be accounted for 1,490

2)Calculation for the unit costs of production for materials

Production units Materials

Completed& transferred950100% =950

Add Ending work in process540100%=540

Total 1,490 1,490

Calculation for the unit costs of production for conversion costs

Completed& transferred950100%=950

Add Ending work in process54040%=216

Total 1,490 1,166

3)Calculation for the assignment of costs to units transferred out and in process

Equivalent cost per unit Materials Conversion Cost Total

Beginning work in process

760 590 =1,350

Cost added during the year

2,630 2,700=5,330

(1,590+1,110=2,700)

Total cost

3,390 3,2906,680

÷Equivalent unitsof production 1,490 1,166

=Equivalent cost per unit

2.275 2.822

Cost of units transferred out=

950× (2.275+2.822)

Cost of units transferred out=950×5.097

Cost of units transferred out=4,842

Cost of ending Work in process

Direct materials540×2.275=1,228

Conversion cost 216×2.822=610

Total (1,228+610)= 1,838

4)Preparation of a production cost report for the month of July for the basketballs.

Production Cost Report

Direct Materials 1,350

Add cost added during the year5,330

Cost to be accounted for 6,680

Cost to be accounted for

Cost transferred out 4,842

950× (2.275+2.822)

Add cost of ending WIP 1,838

Total 6,680

y=mx+b is the right slope of velocity carry the 4 over