Crane Company has the following production data for March: no beginning work in process, units started and completed 25,000, and ending work in process 3,000 units that are 100% complete for materials and 40% complete for conversion costs. Crane uses the FIFO method to compute equivalent units. If unit materials cost is $4 and unit conversion cost is $10. The total costs to be assigned are $374,000, prepare the cost section of the production cost report for Crane Company using the FIFO approach. CRANE COMPANY

Answer and Explanation :

The preparation of the  cost section of the production cost report is presented below:

As per the data given in the question,

                                  Crane company

                              Production cost report

                           For the month ended March 31

Particulars          Materials          Conversion Costs             Total

Unit Cost:

Total cost          $112,000                  $262,000                       $374,000

Equivalent units 28,000                   26,200

                    (25,000 + 3,000)   (25,000 + 3,000 × 40%)

Unit costs             $4                          $10                                            $14

Cost to be accounted for

In process, March 1 $0.00

Started into production $374,000

Total cost $374,000   ($374,000 - 3,000 units × $10)

Cost accounted for:

Transferred out:

In process, March 1 $0.00

Started and completed $344,000   (A)

In process, March 31:

Materials $18,000     (3,000 × $10 × 60%)

Conversion cost $12,000       (3,000 × $10 × 40%)   $30,000 (B)

Total cost $374,000   ($344,000 + $30,000) (A + B)