(13.4B) Compute equivalent units of production and cost per equivalent unit when

Question

(13.4B) Compute equivalent units of production and cost per equivalent unit when there is abnormal spoilage; prepare a cost of production report when there is abnorma spoilage. (Objs. 2,3, 4,5). The second department in the production process of Knowles Plastic Case Company is the Assembly Department. Data for the department for the month of November 2006 are shown below. Costs Beginning Work in Process Transferred In Costs From Prior Department 20,900 14,000 Materials 7,688 Labor Overhead 10,000 Costs in Current Department Materials 350,080 Labor 184,000 Overhead Costs Transferred In From Prior Department 392,800 Quantities Beginning Work in Proces Transferred In From Prior Department Transferred Out to Next Department Lost in Production- Normal Spoilage Lost in Pr Ending Work in Process 500 19,200 19,300 20 80 300 I Spoilage Stage of Completion of Work in Process Beginning Materials Labor and Overhead 100% 50% Ending Materials Labor and Overhead 100% 60% The abnormal spoilage is discovered at the time of final inspection of the units as they leave the department and are transferred to the next department. It is therefore assumed that the units have been fully processed in the Assembly Department.

Explanation / Answer

1 & 2)

Phy units transf in Mate conver Total B WIP 500 250 Started & Compl 18800 18800 18800 18800 Tranf out 19300 Normal loss 20 Abnor loss 80 80 80 80 E WIP 300 300 300    180 Eq units 19180 19180 19310 total costs: during period 392800 350080 557376 cost per Eq units 20.48 18.25 28.86 Cost of Transferredout: B WIP 20900 14000 17688 Start&Compl 385018 343144 542655 Total cost of transf out: 405918 357144 560343 1323405 Cost of Abnor loss 1638 1460 2309 5408 E WIP 6144 5476 5196 16815 3) JOURNAL ENTRIES: Dr. Cr. Debit Next Process WIP 1323405 Debit Abnormal Loss 5408 Credit Assembly WIP 1328813

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