The Boozoo company has two departments -– the Preparation Department and the Pro
ID: 2469717 • Letter: T
Question
The Boozoo company has two departments -– the Preparation Department and the Processing Department. Bonzoo uses the Weighted Average cost method for the Preparation Department and FIFO for the Processing Department. To handle this cheap product, plastics are molded into the different formations by the Preparation Department. All formations cost the same. The Processing Department puts the pieces together, adds special additional parts along the way, and puts the finishing touches on the product.
Preparation Department
The Preparation Department does a preliminary process to adjust the existing molds and melting equipment into the proper formation to be ready to build the product. Plastic is then added at the 10% point as to conversion. The plastic is framed and molded. Conversion occurs evenly throughout the process. The units in process in the Preparation Department at the beginning of June are 25 percent complete as to conversion. The beginning inventory includes $60,500 for materials (plastics) and $89,000 for conversion costs. At the end of June, work in process is 5 percent complete.
There are two inspections done in the Preparation Department. This first takes place at the 30% point (as measured by conversion progress). Once the components (plastic shapes) are completed, a second inspection occurs at the end of the Preparation Process to make sure the products are ready for the next stage of the process. the normal spoilage for the Preparation Department during the first inspection is 6% of the total good units completed and transferred out. For the second inspection at the end of the process, there is normal spoilage of 1% of the total good units completed and transferred out.
Preparation Department
In Units:
Work in process, June 1 80,000
Units started in June 227,450
Successfully completed in June 243,050
Work in process, June 30 47,000
Discovery of units spoiled at the first inspection 12,000
Discovery of units spoiled at the second inspection 5,400
Dollars:
A total of $74,500 worth of the plastic was withdrawn from the inventory warehouse by signing the Material Acquisition Document for use by the Preparation Department in June. The plastic has been moved to the work floor. The conversion cost incurred in June was $375,300.
Using EXCEL, construct spreadsheets that will generate the process cost reports for the Preparation department.
I know this is a long and complex question and I would be really appreaciated if anyone can answer it or just give some outline for it!!
Explanation / Answer
Working Note
Statement showing equivalent Unit Equivalent Units Physical Units Material Conversion Cost WIP (beginning) 80000 Started During Current Period 227450 Total 307450 Units Completed 243050*100%, 243050* 100% 243050 243050 243050 Work in process, ending (given) 47000*0%; 47000*5% 47000 0 2350 Units spoiled at the first inspection: 12000*100%; 12000*30% 12000 12000 3600 Units spoiled at the second inspection: 5400*100%, 5400*100% 5400 5400 5400 Accounted for 307450 Work done in current period only (equivalent Unit) 260450 254400 Particulars Material Conversion Total Cost WIP 60500 89000 149500 Cost incurred during the year 74500 375300 449800 Total Cost 135000 464300 599300 Equivalent Units 260450 254400 Cost per Equivalent Unit 0.52 1.83 Total costs to account for 599300 Good Units Completed: (243050*0.52); (243050*1.83) 125981 443585 569566 Cost of Normal Spoilage: (17014*0.52)+(6806*1.83) 8818.928777 12421.48506 21240.41384 Cost Transferred to Loss Account Abnormal Shortage: (386*0.52)+(2194*1.83) 200.0767902 4004.222484 4204.299274 WIP ending : (0*0.52)+(2350*1.83) 0 4288.934748 4288.934748 599300Related Questions
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