Surf Products Company Uses an Automated Process to Clean and Polish

question 96

Essay

Surf Products Company uses an automated process to clean and polish its souvenir items.For March,the company had the following activities:
$$\begin{array} { | l | r | } \hline \text { Beginning work-in-process inventory } & 3 0 0 0 \text { items, 1/3 complete } \\\hline \text { Units placed in production } & 12000 \text { units } \\\hline \text { Units completed } & \text { 9000 units } \\\hline \text { Ending work-in-process inventory } & 6000 \text { items, 1/2 complete } \\\hline & \\\hline \text { Cost of beginning work in process } & \$ 2500 \\\hline \text { Direct material costs, current } & \$ 9000 \\\hline \text { Conversion costs, curent } &\$ 7 7 0 0 \\\hline\end{array}$$
Direct materials are placed into production at the beginning of the process and conversion costs are incurred evenly throughout the process.
Required:
Prepare a production cost worksheet using the FIFO method.
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Definitions:

Overhead Rate

The rate used to allocate manufacturing overhead to individual units of product, typically based on a standard measure such as labor hours or machine hours.

Normal Costing System

An accounting method that assigns indirect costs based on a predetermined rate and direct costs based on actual values.

Actual Overhead Costs

The real expenses incurred for indirect materials, labor, and other costs that are not directly tied to the production of goods or services.

Predetermined Overhead Rate

The predetermined overhead rate is calculated by dividing estimated total overhead costs by an estimated allocation base, used to allocate overhead to products or job orders.