Husky Ltd. manufactures toys using a continuous production process that flows through two departments: Forming and Finishing.
Question:
Husky Ltd. manufactures toys using a continuous production process that flows through two departments: Forming and Finishing. In the forming department, various components are built and are transferred to the finishing department. In the finishing department, those components are assembled into Husky’s final product and once finished, are transferred to Husky’s Finished Goods Inventory. Any spoilage is detected at the end of the process (i.e. when the toys are 100% complete).
Husky uses the FIFO method of accounting for costs.
In the Finishing Department, Direct materials are added at 70% of conversion and conversion costs are added evenly throughout the process.
Finishing Department | ||||
Physical Units | Transferred In | Direct Materials | Conversion | |
Work in Process January 1 | 37,000 | $ 76,400 | $ 0 | $ 30,062 |
Degree of Completion in beginning WIP | 65% | |||
Units Transferred in from Forming in January | 232,500 | |||
Good Units Transferred Out | 240,000 | |||
Work In Process January 31 | 24,000 | |||
Normal Spoilage as a percentage of good units | 2% | |||
Degree of Completion in Ending WIP | 50% | |||
Costs added in November | $ 488,250 | $ 26,400 | $ 288,375 |
Required:
Complete a Cost of Production Worksheet for the Finishing Department for the Month of January.
Management And Cost Accounting
ISBN: 9781292232669
7th Edition
Authors: Alnoor Bhimani, Srikant M. Datar, Charles T. Horngren, Madhav V. Rajan