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Castellanos Foods is a Greek producer of world-renowned spanakopita. The company uses a first-in, first-out (FIFO)...

Castellanos Foods is a Greek producer of world-renowned spanakopita. The company uses a first-in, first-out (FIFO) process costing system to cost its production of spanakopita in trays through three departments: filo pastry preparation, filling preparation and baking. Inspection takes place just before the last 20% of the filling is added to the final product in the filling preparation department. The company cost accountant has estimated that this is at 60% incurrence of conversion costs. The remaining direct ingredients are added to all trays that pass inspection. Normal spoilage is 1% of good units that pass inspection in the period.

The following details pertain to the month of December for the filling preparation department (in units):

Beginning work-in-process inventory (trays) 37,500

Trays transferred in from filo pastry preparation 150,000

Trays transferred out to baking 126,000

Ending work-in-process inventory (trays) 60,000

Costs    Transferred Direct Ingredients Conversion

Beginning inventory $174,375 $26,250    $28,275

Costs added $705,000 $89,775 $151,830

Percentage completion    Direct Ingredients Conversion

Beginning inventory 100% 65%

Ending Inventory 50%    40%

Note: Read the question carefully with respect to when the inspection for spoilage takes place.

4. What is the total value of the product transferred from the filling preparation department to baking in December? (Round final answer to the nearest dollar.)

a) $333,300

b) $760,513

c) $838,503

d) $984,805

Solutions

Expert Solution

Transferred Direct Ingredients Conversion
% gets completed
OP Wip 37500
Added 150000
Total 187500
Transferred 126000
From OP. WIP 37500 0 0 0 0 35% 13125
Started and Finished 88500 100% 88500 100% 88500 100% 88500
Cl. WIP 60000 100% 60000.00 50% 30000 40% 24000
Total Eq. Units 186000 148500.00 118500.00 125625.00
Spoilage 1500 Spoilage is within normal range, therefore no cost will be allocated to spoiled units.
Current Period Cost 705000 89775 151830
Cost per Eq Unit 705000/148500 4.747 89775/118500 0.75 151830/125625 1.21
Transferred Direct Ingredients Conversion
Cost in OP. WIP 174375 26250 28275
Cost Added 705000 89775 151830
Total Cost 879375 116025 180105
Cost allocated to Transferred Units Transferred Direct Ingredients Conversion Total
From Op. WIP 174375 26250 28275 228900
Completed in current period 0 0 15881.25 15881.25
(1.2085*13125)
Started and Finished 420109.5 66375 107085 593569.5
Total 594484.5 92625 151241.25 838350.8

ekkarill92 answered 1 year ago
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