Question

Pittsburgh Plastics Corporation manufactures a variety of plastic products including a series of molded chairs. The three models of molded chairs, which are all variations of the same design, are Standard (can be stacked), Deluxe (with arms), and Executive (With arms and padding). The company uses batch manufacturing and has an operation costing system. The production process includes an extrusion opertaion and subsequent operations to form, trim and finish the chairs. Plastic sheets are produced by the extrusion operation, some of which are sold directly to other manufacturers. During the forming opertion, the remaining plastic sheets are molded into chair seats and legs are added. The Standard model is sold after this operation. During the trim operation, the arms are added to the Deluxe and Executive models and the chair edges are smoothed. Only the executive model enters the finish operation where the padding is added. All of the units produced receive the same steps within each operation. The production data for the last month are provided below. The first part of table gives units produced and DM cost in each operation. Second part gives the conversion cost for each operation The total manufacturing cost incurred during the month was $1,347,000. Form Materials Trim materials Finish materials Plastic sheets Standard model Deluxe model Executive model Total Units produced 15,000 18,000 9,000 6,000 48,000 Extrusion Materials $90,000 $108,000 $54,000 $36,000 $288,000 $36,000 $18,000 $12,000 $66,000 $13,500 $9,000 $22,500 $18,000 $18,000 Manufacturing cost applied during the month were as follows: Extrusion Operation Form Operation Trim Operation Finish Operation Direct labor Mfg. Overhead $228,000 $360,000 $90,000 $108,000 $45,000 $58,500 $27,000 $36,000 Required: A) For each prdouct produced by Pittsburgh Plastics Corporation during the month, determine (i) unit cost and (ii) total cost. Be sure to account for all costs incurred during the month. Carryout unit costs to 4 decimal places. (8 points) B) Prepare journal entries to record the flow of production costs (8 points)

Answer 1

Solution:

The unit costs and total costs for each of the products manufactured by Plottsburg Plasicks Corporation during the month are calulated as follows:

PARTICULARS	Extrusion	Form	TRIM	FINISH
Unit produced	48000	33000	15000	6000
Material Costs	$     288,000.00	$        66,000.00	$         22,500.00	$      18,000.00
Unit material costs	$                  6.00	$                   2.00	$                    1.50	$                3.00
Conversation Cost**	588000	198000	103000	63000
Unit conversation costs	$                12.25	$                   6.00	$                    6.87	$              10.50

**Direct labor + Manufacturing overhead

UNIT COSTS	Plastic sheets	Standard Model	Delux model	Executive model
Material Costs:
Extruction	$                      6.00	$                       6.00	$                      6.00	$                             6.00
Form		$                       2.00	$                      2.00	$                             2.00
Trim			$                      1.50	$                             1.50
Finish				$                             3.00
Conversation costs:
Extruction	$                    12.25	$                     12.25	$                    12.25	$                          12.25
Form		$                       6.00	$                      6.00	$                             6.00
Trim			$                      6.87	$                             6.87
Finish				$                          10.50
Total unit cost	$                    18.25	$                     26.25	$                    34.62	$                          48.12
Units produced	15000	18000	9000	6000
Total product cost***	$         273,750.00	$          472,500.00	$         311,580.00	$                288,720.00

*** Total unit cost * Units produced

Total Costs Accounts:	TOTAL PRODUCT COST
PRODUCT
Plastic sheets	$     273,750.00
Standard model	$     472,500.00
Delux model	$     311,580.00
Executive model	$     288,720.00
	$ 1,346,550.00