38. (Comprehensive; weighted average) Harper Company produces brooms. Department 1 winds and cuts straw into broom heads and transfers these to Department 2 where the broom head is bound and attached to a handle. Straw is added at the beginning of the first process, and the handle is added at the end of the second process.

Normal losses in Department 1 should not exceed 5 percent of the units started; losses are determined at an inspection point at the end of the production process. The AQL in Department 2 is 10 percent of the broom heads transferred in; losses are found at an inspection point located 70 percent of the way through the production process.

The following production and cost data are available for October 2001.

The beginning and ending inventory units in Department 1 are, respectively, 10 percent and 60 percent complete as to conversion. In Department 2, the beginning and ending units are, respectively, 40 percent and 80 percent complete as to conversion.
Using the weighted average method, create a cost of production report for each department for October 2001.

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PRODUCTION RECORD (IN UNITS) Dept. 1 Dept. 2 Beginning inventory Started or transferred in 6,000 3,000 150,000 ? Ending inventory 18,000 15,000 Spoiled units 9,000 6,000 Transferred out ? 111,000 COST RECORD Beginning inventory: Preceding department n/a $ 6,690 Material $ 3,000 0 Conversion 2,334 504 Current period: Preceding department n/a 230,910* Material 36,000 740 Conversion 208,962 52,920 *This is not the amount derived from your calculations. Use this amount so that you do not carry forward any possible cost errors from Department 1.