Question

Business Inc. produces all of its products in one department, The Production Department, and transfers the costs to finished goods. The production department adds all direct materials at the beginning of the process. Inspection takes place at the end of the process and is considered abnormal spoilage.

In March the department reported the following data:

Beginning work in process as of March 1st 200 units

30% Complete

Cost of Direct materials $500

Conversion costs $140

Costs added during March

Cost of Direct materials $1,625

Conversion costs $2,163.00

During March:

6,500 units Started

7000 Good units were transferred out to Finished goods.

500 units remained in ending work in process.

45% Complete

Needed

5. Calc ending Work in process.

6. Calc the loss due to abnormal spoilage.

7. Prep the journal entry that transfers the goods from the production department to Finished goods.

8. Prepare the journal entry to record abnormal spoilage.

Answer 1

Answer:

Answer-5:
Cost of Ending WIP:
Direct material (500 × $0.25)	$           125
Conversion cost (500 × 45% × $0.28)	63	$           188
Answer-6:
Cost of Abnormal loss:
Direct material (1000 × $0.25)	$           250
Conversion cost (1000 × $0.28)	280	$           530
Answer-7:
General Journal	Debit	Credit
Finished goods inventory	$ 3710
Production process		$ 3710
Answer-8:
General Journal	Debit	Credit
Abnormal loss	$ 530
Production process		$ 530

Explanation:

Quantity Schedule:
Beginning WIP		2000
Units started		6500
Units transferred to FG	7000
Ending WIP (all material, 45% conversion)	500
Abnormal loss	1000	8500
	Direct material	Conversion cost
Cost of beginning WIP	$           500	$           140
Cost incurred this period	1625	2163
Total costs	2125	2303
Equivalent units of production	8500	8225
Cost per equivalent units of production	$          0.25	$          0.28