In: Accounting
Materials are added at the beginning of the process in McKay Company's blending department, the first stage of the production cycle. The inspection point is at the end of the process. The following information is available for the month of July:
Units |
|
Work in process, July 1 (35% complete as to conversion costs) |
50,000 |
Started in July |
200,000 |
Completed and transferred to the next department |
195,000 |
Work in process, July 31 (40% complete as to conversion costs) |
45,000 |
Costs in beginning work in process |
|
Direct materials |
$125,600 |
Conversion |
$104,300 |
Costs added in July |
|
Direct materials |
$349,400 |
Conversion |
$397,500 |
1.) McKay estimates that normal spoilage is 2% of the good units completed. Using the weighted average cost method, what is the cost of the units transferred out of the blending department?
2.) McKay estimates that normal spoilage is 2% of the good units completed. Using the weighted average cost method, what amount will be identified as abnormal spoilage?
Physical | Material | Conversion | ||||
UNITS | Units | Equiv. Units | Equiv. Units | |||
Units to account for: | ||||||
Beginning work in process | 50000 | |||||
Started in production | 200000 | |||||
Total Units to account for | 250000 | |||||
Units Accounted for: | ||||||
Completed and transferred | 195000 | 195000 | 195000 | |||
Normal Spoilage | 3900 | 3900 | 3900 | |||
Abnormal Spoilage | 6100 | 6100 | 6100 | |||
Ending work in process | 45000 | 45000 | 18000 | |||
Total Units to be accounted for | 250000 | 250000 | 223000 | |||
Material | Conversion | Total | ||||
COSTS | Cost | Cost | Cost | |||
Costs to account for: | ||||||
Beginning work in process | 1,25,600 | 104300 | 2,29,900 | |||
cost added during the period | 3,49,400 | 3,97,500 | 7,46,900 | |||
Total cost to account for | 4,75,000 | 5,01,800 | 9,76,800 | |||
Divided by: Total EUP | 250000 | 223000 | ||||
Cost per equivalent unit | 1.9 | 2.25 | 4.15 | |||
Cost Accounted for: | ||||||
Good Units completed: | ||||||
Cost before Normal Spoilage (195000 units @4.15) | 809250 | |||||
Normal Spoilage (3900 units @$4.15) | 16185 | |||||
Total cost of Good unit | 825435 | |||||
Abnormal Spilage (6100 units @$4.15) | 25315 | |||||
Cost of good units transferred to Blending: | 825435 | |||||
Cost of Abnormal spoilage | 25315 |