Question

In: Accounting

In its Department R, Recyclers, Inc., processes donated scrap cloth into towels for sale in local...

In its Department R, Recyclers, Inc., processes donated scrap cloth into towels for sale in local thrift shops. It sells the products at cost. The direct materials costs are zero, but the operation requires the use of direct labor and overhead. The company uses a process costing system and tracks the processing volume and costs incurred in each period. At the start of the current period, 600 towels were in process and were 60 percent complete. The costs incurred were $1,752.

During the month, costs of $23,100 were incurred, 4,200 towels were started, and 300 towels were still in process at the end of the month. At the end of the month, the towels were 20 percent complete.

Required:

a. Prepare a production cost report; the company uses weighted-average process costing.

b. Show the flow of costs through T-accounts. Assume that current period conversion costs are credited to various payables.

Solutions

Expert Solution

a). Product cost Report - weighted average

Flow of production Compute equivalent units. Units.

Physical units Conversionunits. Units to be accounted:

Beginning work in progress. 600

Units started this period. 4200

Total units to be accounted. 4800

units accounted for:

units completed & transferred.   4500   4500

units in ending work in progress. 300 60

Total units accounted for. 4800 4560

Costs

Total costs Conversion costs

Costs to be accounted for.

In beginning work in progress 1752 1752

Current period costs 23100 23100

Total costs to be accounted 24852 24852

Cost per equivalent unit:

Conversion costs(24852/4560). 5.45

Costs accounted for:

Assigned to units transfered:

Conversion costs. (4500*5.45) 24525

Assigned to ending inventory

Conversion costs. (60*5.45) 327

Total costs accounted for. 24852

b). Work in progress

Beginning inventory 1752  

This period costs:

Direct materials 0 24525 completedgoods

Conversion costs 23100

Ending inventory 327

Various payables

Beginning balance. 0 23100 conversion costs

Finished goods inventory

Beginning inventory 0

Completed goods. 24525

Ending inventory 24525

  

ekkarill92 answered 1 year ago
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