Question

Appendix: Normal and Abnormal Spoilage in Process Costing, Changes in Output Measures, Multiple Departments Grayson Company produces an industrial chemical used for cleaning and lubricating machinery. In the Mixing Department, liquid and dry chemicals are blended to form slurry. Output is measured in gallons. In the Baking Department, the slurry is subjected to high heat, and the residue appears in irregular lumps. Output is measured in pounds. In the Grinding Department, the irregular lumps are ground into a powder, and this powder is placed in 50-pound bags. Output is measured in bags produced. In April, the company reported the following data: The Mixing Department transferred 50,000 gallons to the Baking Department, costing $250,000. Each gallon of slurry weighs two pounds. The Baking Department transferred 100,000 pounds (irregular lumps) to the Grinding Department. At the beginning of the month, there were 5,000 gallons of slurry in process, 25 percent complete, costing $35,000 (transferred-in cost of $25,000 plus conversion cost of $10,000). No additional direct materials are added in the Baking Department. At the end of April, there was no ending work in process. Conversion costs for the month totaled $205,000. Normal loss during baking is 5 percent of good output. All transferred-in materials are lost, but since loss occurs uniformly throughout the process, only 50 percent of the conversion units are assumed to be lost. The Grinding Department transferred 2,500 bags of chemicals to its finished goods warehouse. Beginning work in process for this department was 25,000 pounds, 40 percent complete with the following costs: transferred-in cost, $132,500; conversion cost, $15,000. Bags are used at the end of the process and cost $1.50 each. During bagging, normally one out of every 11 bags is torn and must be discarded. No powder is lost (the tearing occurs when the bag is being attached to a funnel). Conversion costs for the month's production are $172,500. There is no ending work in process. Required: 1. Using FIFO, calculate the cost per bag of chemicals transferred to the finished goods warehouse. Round per-unit costs to the nearest cent. Round all other answers to the nearest unit or dollar, if required. Baking Department (to obtain the cost of goods transferred out): Units to account for: Beginning work in process fill in the blank ed6055ffd07c073_1 10,000 Units started fill in the blank ed6055ffd07c073_2 100,000 Total units to account for fill in the blank ed6055ffd07c073_3 110,000 Units accounted for: Units transferred out fill in the blank ed6055ffd07c073_4 Normal spoilage fill in the blank ed6055ffd07c073_5 Abnormal spoilage fill in the blank ed6055ffd07c073_6 Total units accounted for fill in the blank ed6055ffd07c073_7 Equivalent Units Conversion Costs Transferred In Total equivalent units fill in the blank ed6055ffd07c073_8 fill in the blank ed6055ffd07c073_9 Total unit cost $fill in the blank ed6055ffd07c073_10 Cost of units transferred out: Started and competed $fill in the blank ed6055ffd07c073_11 Prior period costs $fill in the blank ed6055ffd07c073_12 Costs to finish fill in the blank ed6055ffd07c073_13 fill in the blank ed6055ffd07c073_14 Normal spoilage fill in the blank ed6055ffd07c073_15 Total $fill in the blank ed6055ffd07c073_16 Grinding Department: Total units accounted for fill in the blank ed6055ffd07c073_17 Note: (For direct materials: 11 bags are used to get 10 good bags). Unit cost of units started and completed: Direct Materials Conversion Costs Transferred In Total Costs added $fill in the blank ed6055ffd07c073_18 $fill in the blank ed6055ffd07c073_19 $fill in the blank ed6055ffd07c073_20 Total equivalent units fill in the blank ed6055ffd07c073_21 fill in the blank ed6055ffd07c073_22 fill in the blank ed6055ffd07c073_23 Cost per equivalent unit $fill in the blank ed6055ffd07c073_24 $fill in the blank ed6055ffd07c073_25 $fill in the blank ed6055ffd07c073_26 $fill in the blank ed6055ffd07c073_27 Unit cost of units from beginning work in process: Prior period costs $fill in the blank ed6055ffd07c073_28 Costs to finish: Direct materials fill in the blank ed6055ffd07c073_29 Conversion costs fill in the blank ed6055ffd07c073_30 Total $fill in the blank ed6055ffd07c073_31 Unit cost $fill in the blank ed6055ffd07c073_32 per unit

Answer 1