Riverside Company Manufactures Two Sizes of T-Shirts, Medium and Large

question 118

Essay

Riverside Company manufactures two sizes of T-shirts, medium and large.Both sizes go through cutting, assembling and finishing departments.The company uses operation costing.
Riverside Company's conversion costs applied to products for the month of June were: Cutting Department $60,000, Assembling Department $60,000, and Finishing Department $30,000.June had no beginning or ending work-in-process inventory.
The quantities and direct materials costs for June follow: $$\begin{array} { c c c c } \text { Job No. } & \text { Size } & \text { Quantity } & \text { Direct Materials } \\601 & \text { Medium } & 10,000 & \$ 50,000 \\602 & \text { Large } & 20,000 & 110,000\end{array}$$ Each T-shirt, regardless of size, required the same cutting, assembling and finishing operations.
Required:
(1) Compute both unit cost and total cost for each shirt size produced in June.
(2) Prepare journal entries to record direct materials and conversion costs incurred in the three departments, and the finished goods costs for both shirt sizes.

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Definitions:

Gallons Per Day

A measure of flow rate used to quantify volumes of liquid (such as water or fuel) moved or used within a 24-hour period.

U.S. Per Capita Consumption

The average amount of goods and services consumed per person within the United States over a specified period.

Energy

The capacity to do work or produce power, manifested in various forms such as heat, light, motion, and chemical energy.

Commodity Prices

The market prices for raw materials and primary agricultural products that are traded on exchanges.