In its Department R, Recyclers, Inc., processes donated scrapcloth into towels for sale in local thrift shops. It sells theproducts at cost. The direct materials costs are zero, but theoperation requires the use of direct labor and overhead. Thecompany uses a process costing system and tracks the processingvolume and costs incurred in each period. At the start of thecurrent period, 450 towels were in process and were 60 percentcomplete. The costs incurred were $160.
During the month, costs of $15,600 were incurred, 3,900 towelswere started, and 225 towels were still in process at the end ofthe month. At the end of the month, the towels were 20 percentcomplete.
Required:
a. Prepare a production cost report: thecompany uses FIFO process costing. (Round "Cost perequivalent unit" to 2 decimal places.)
b. Show the flow of costs through T-accounts.Assume that current period conversion costs are credited to variouspayables.
