(13.4B) Compute abnormal spoilage; prepare a cost of production report when ther
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(13.4B) Compute abnormal spoilage; prepare a cost of production report when there is abnormal 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 Materials Labor Overhead 14,000 7,688 10,000 Costs in Current Department 350,080 184,000 Materials Labor Overheacd Costs Transferred In From Prior Department 392,800 Quantities Beginning Work in Process Transferred In From Prior Department Transferred Out to Next Department Lost in Production-Normal Spoilage Lost in Production-Abnormal Spoilage Ending Work in Process 500 19,200 19,300 20 80 300 Stage of Completion of Work in Process Beginning Materials Labor and Overhead 100% 50% Ending 100% Materials Labor and Overhead 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
Answer 1 & 2. Cost of Production Report Assembly Department Particulars Equivalent Units Physical Units Prior Deptt. Materials Conversion Costs Units to be accounted for Work in process - Beginning 500 Started into production (10,630 - 1,350) 19,200 Total units 19,700 Units accounted for Goods Units Completed & transferred out: From Beginning WIP 500 - - 250 (0% Prior Deptt., 0% materials, 50% conversion costs) Started & Completed (19,300 - 500) 18,800 18,800 18,800 18,800 Normal Spoilage 20 20 20 20 Abnormal Spoilage 80 80 80 80 Work in process, Ending 300 300 300 180 (100% Prior Deptt., 100% materials, 60% conversion costs) Equivalent units accounted for 19,700 19,200 19,200 19,330 Prior Deptt. Materials Conversion Costs Total Total Cost to Account for: WIP, Beginning 20,900.00 14,000.00 17,688.00 52,588.00 Cost added in current period 392,800.00 350,080.00 557,376.00 1,300,256.00 Total cost to be account for 413,700.00 364,080.00 575,064.00 1,352,844.00 Cost added in current period 392,800.00 350,080.00 557,376.00 1,300,256.00 Equivalent Units of work done in current Period 19,200.00 19,200.00 19,330.00 Cost per Equivalent Unit 20.46 18.23 28.83 67.53 Assignment of Costs: Goods Units and Completed out (19,300 Units) WIP, Beginning - 500 Units 20,900.00 14,000.00 17,688.00 52,588.00 Cost added to Beg. WIP in Current period - - 7,208.69 7,208.69 Total of Beginning Inventory before Normal Spoilage 20,900.00 14,000.00 24,896.69 59,796.69 Started and completed before Normal Spoilage - 18,800 Units 384,616.67 342,786.67 542,093.57 1,269,496.91 Normal Spoilage - 20 Units 409.17 364.67 576.70 1,350.53 Total Cost of good units completed & transferred out 405,925.83 357,151.33 567,566.96 1,330,644.13 Abnormal Spoilage - 80 Units 1,636.67 1,458.67 2,306.78 5,402.11 WIP, Ending - 300 Units 6,137.50 5,470.00 5,190.26 16,797.76 Total Cost accounted For 413,700.00 364,080.00 575,064.00 1,352,844.00 Answer 3. Journal Entry Date Particulars Dr. Amt. Cr. Amt. 1 Finished Goods Inventory 1,330,644.13 Abnormal Loss 5,402.11 WIP - Assembly Department 1,336,046.24 (record the transfer of finished goods & Abnornal Loss)
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