China Manufacturing Company applies process costing in the manufacture of its sole product, SARS-NCOV-2. Manufacturing starts...

 

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China Manufacturing Company applies process costing in the manufacture of its sole product, "SARS-NCOV-2". Manufacturing starts in Laboratory 1 where materials are all added at the start of processing. The good units are then transferred to Laboratory 2 where all the incremental materials needed for its completion are added after final inspection. In Laboratory 1, units are inspected at the end of processing while in Laboratory 2, inspection takes place when the units are 90% completed. Laboratory 1 uses FIFO costing, while Laboratory 2 uses weighted average costing. The production for the month of May show the following: Beginning work in process (May 1) Work to be done Laboratory 2 10,000 Laboratory 1 20,000 80% 20% Ending work in process (May 31) 30,000 17,500 Work completed Started in process during the month of May 2/3 150,000 5/7 Normal spoilage 4% of units started in process 2,500 Abnormal spoilage 1/4 of normal spoilage 1,250 Laboratory 1 Laboratory 2 Work in process, May 1: Transferred in Materials Conversion costs Current Costs: Transferred in: Materials Conversion costs 285,450 135,000 214,875 97,500 280,725 ? 1,980,000 3,088,800 840,000 1,282,500 Required: 1. Equivalent Units of Production a. Laboratory 1 - Materials b. Laboratory 1 - Conversion Costs c. Laboratory 2 - Transferred-in d. Laboratory 2 - Materials e. Laboratory 2 - Conversion Costs 2. Cost per EUP a. Laboratory 1 - Materials b. Laboratory 1 - Conversion Costs c. Laboratory 2 - Transferred-in d. Laboratory 2 - Materials e. Laboratory 2 - Conversion Costs 3. Total costs transferred to Laboratory 2 4. Ending work in process inventory in Laboratory 1 5. Total costs transferred to finished goods inventory 6. Ending work in process inventory in Laboratory 2 China Manufacturing Company applies process costing in the manufacture of its sole product, "SARS-NCOV-2". Manufacturing starts in Laboratory 1 where materials are all added at the start of processing. The good units are then transferred to Laboratory 2 where all the incremental materials needed for its completion are added after final inspection. In Laboratory 1, units are inspected at the end of processing while in Laboratory 2, inspection takes place when the units are 90% completed. Laboratory 1 uses FIFO costing, while Laboratory 2 uses weighted average costing. The production for the month of May show the following: Beginning work in process (May 1) Work to be done Laboratory 2 10,000 Laboratory 1 20,000 80% 20% Ending work in process (May 31) 30,000 17,500 Work completed Started in process during the month of May 2/3 150,000 5/7 Normal spoilage 4% of units started in process 2,500 Abnormal spoilage 1/4 of normal spoilage 1,250 Laboratory 1 Laboratory 2 Work in process, May 1: Transferred in Materials Conversion costs Current Costs: Transferred in: Materials Conversion costs 285,450 135,000 214,875 97,500 280,725 ? 1,980,000 3,088,800 840,000 1,282,500 Required: 1. Equivalent Units of Production a. Laboratory 1 - Materials b. Laboratory 1 - Conversion Costs c. Laboratory 2 - Transferred-in d. Laboratory 2 - Materials e. Laboratory 2 - Conversion Costs 2. Cost per EUP a. Laboratory 1 - Materials b. Laboratory 1 - Conversion Costs c. Laboratory 2 - Transferred-in d. Laboratory 2 - Materials e. Laboratory 2 - Conversion Costs 3. Total costs transferred to Laboratory 2 4. Ending work in process inventory in Laboratory 1 5. Total costs transferred to finished goods inventory 6. Ending work in process inventory in Laboratory 2

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China Manufacturing Company Process Costing Analysis 1 Equivalent Units of Production EUP a Laboratory 1 Materials FIFO Units started in process May 10 FIFO assumes all materials are added at the beginning Units started during the month20000 Normal spoilage23 20000 13333 reduce good units by normal spoilage Abnormal spoilage 57 13333 9524 reduce good units by abnormal spoilage Good units completed20000 13333 9524 7143 EUP Units started Normal spoilage FIFO assumes all materials are added at the beginning EUP 0 13333 b Laboratory 1 Conversion Costs FIFO Same as materials FIFO assumes all costs are added at the beginning EUP 13333 c Laboratory 2 Transferredin Units started in Laboratory 230000 Normal spoilage23 30000 20000 reduce good units by normal spoilage Abnormal spoilage57 20000 14286 reduce good units by abnormal spoilage Good units completed30000 20000 14286 5714 Work in processMay 1 90 complete09 Units in WIP May 1 information not provided EUP Units started Normal spoilage Work in process May 1 ... View the full answer