13A) Compute equivaent units of production and cost per equivalent unit when the

Question

13A) Compute equivaent units of production and cost per equivalent unit when there is ab normal spoilage; prepare a cost of production report when there is abnormal spoilae (Objs. 2, 3,4, 5). The third department in the production process of Miller Fan Company is the Finishing Department. Data for the department for the month of April 2007 are given below Costs Beginning Work in Proces 6,000 4,200 5,760 1,080 Transferred In Costs From Prior Department Materials Labor Overhead Costs in Current Department 259,000 300,000 170,000 Materials Labor Overhead Costs Transferred in From Prior Department 334,200 1,000 Beginning Work in Process Transferred In From Prior Department Transferred Out to Finished Goods Lost in Production-Normal Spoilage Lost in Production--Abnormal Spoilage Ending Work in Process 36,800 34,500 200 100 3,000 Stage of Completion of Work in Proces Beginning Materials Labor Overhead 100% 50% 50% Ending Materials Labor Overhead 100% 60% 60% The abnormal spoilage is discovered at the time of final inspection of the units as they leave the department and are transferred to finished goods, It is therefore assumed that the units have been fully processed in the Finishing Department.

Explanation / Answer

1 & 2)

3) Journal entry:

Debit Finished Goods transferred out $999065

Debit Abnormal Loss $2407

Credit Production Process $1001472

(being good transferred out and abnormal loss booked)

Production process report for April month: Phy units prior process material Labor Overhead Total B WIP 1000 500 500 started and completed 33500 33500 33500 33500 33500 Transferred out 34500 Normal loss 200 Abnormal loss 100 100 100 60 60 CWIP 3000 3000 3000 1800 1800 Equivalent units 36600 36600 35860 35860 cost during April 334200 259000 300000 170000 1063200 Cost per Eq unit 9.13 7.08 8.37 4.74 Cost of transfer out: B WIP 6000 4200 5760 1080 17040 Started and compl 305893 237063 280257 158812 982025 Total cost of Transferred out 311893 241263 286017 159892 999065 cost lost in Abnormal loss 913 708 502 284 2407 Cost of C WIP 27393 21230 15059 8533 72215

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