Elliott Company produces large quantities of a standardized product. The following information is avail-able for its production activities for March.
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Additional information about units and costs of production activities follows.
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Elliott Company produces large quantities of a standardized product. TheDuring March, 10,000 units of finished goods are sold for $ 120 cash each. Cost information regarding finished goods follows.
Beginning finished goods inventory . . . . . . . . . $ 150,000
Cost transferred in . . . . . . . . . . . . . . . . . . . . . 572,390
Cost of goods sold . . . . . . . . . . . . . . . . . . . . . (592,390)
Ending finished goods inventory . . . . . . . . . . . $ 130,000
Required:
1. Prepare journal entries dated March 31 to record the following March activities:
(a) Purchase of raw materials,
(b) Direct materials usage,
(c) Indirect materials usage,
(d) Factory payroll costs,
(e) Direct labor costs used in production,
(f) Indirect labor costs,
(g) Other overhead costs credit Other Accounts,
(h) Overhead applied,
(i) Goods transferred to finished goods,
(j) Sale of finished goods.
2. Prepare a process cost summary report for this company, showing costs charged to production, units cost information, equivalent units of production, cost per EUP, and its cost assignment and reconciliation. Analysis Component:
3. The company provides incentives to its department managers by paying monthly bonuses based on their success in controlling costs per equivalent unit of production. Assume that the production department underestimates the percentage of completion for units in ending inventory with the result that its equivalent units of production in ending inventory for March are understated. What impact does this error have on the March bonuses paid to the production managers? What impact, if any, does this error have on April bonuses?