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Part 2: Process Costing

Intrepid Industries manufactures sterile parts used in medical equipment. The company uses the weighted-average process costing method to account for production costs. It produces parts in three different departments: Forming, Sterilization, and Assembling.

The following information was reported for the Assembling Department for the month of June:

Beginning work-in-progress inventory on June 1 had 250,000 units made up of the following:

Amount Degree of Completion

Prior department costs transferred in from the Forming Department:

$387,600 100%

Costs added by the Sterilization Department:

Direct materials: $317,200 100%

Direct labor: $120,050 40%

Manufacturing O/H:$67,100 30%

$504,350

Work in process, June 1: $891,950

During June, 580,000 units were transferred in from the Forming Department at a cost of $1,870,000.

The Assembling Department added the following costs:

Direct Materials:$974,800.00

Direct Labor:$318,600.00

Manufacturing OH:$202,000.00

Total Costs Added:$1495,400.00

Assembling finished 480,000 units and transferred them to the Sterilization Department. At June 30, the number of units in ending work-in-progress inventory was 350,000.

The degree of completion of work-in-process inventory at June 30 was as indicated below:

Direct Materials:80%

Direct Labor:65%

Manufacturing OH:30%

QUESTION NEEDED HELP WITH:

B)Management wants to lower the costs of manufacturing the parts. It has established the following per unit targets for this product in the Assembling Department: QUESTION: Has the product achieved managements cost targets in the Assembling Department?

Write a short report to management containing your answer(s).

Materials: $1.65

Labor, $.62

Manufacturing O/H $0.48

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