P5.37 LO 5.4 Process costing with spoilage; journal entries: manufacturer Steelworx Ltd accumulates costs for its single product using weighted average process costing. Direct material is added at the beginning of the production process, and conversion occurs uniformly throughout the process. All spoilage is detected at the quality inspection point, which occurs after production is 25 per cent complete. A partially completed production report for April follows:

Required 1. Prepare a schedule of equivalent units for Steelworx. 2. Calculate the costs per equivalent unit. 3. Calculate the cost of goods completed and transferred out during April. 4. Calculate the cost of spoiled units during April. 5. Calculate the cost remaining in the work in process inventory on 30 April. 6. Prepare journal entries to record the transfer of the cost of goods completed and transferred out during April, assuming:

(a) spoiled units represent normal spoilage

(b) spoiled units represent abnormal spollage. 7. How would the production report above be different if the company used FIFO process costing?

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Work in process, 1 April Production report, April Physical Percentage of completion Equivalent units units with respect to conversion Direct material Conversion 100000 60% Units started during April 200000 Total units to account for 300000 Units completed and transferred out during April 220000 ? ? Units spoiled during production 60000 ? ? Work in process, 30 April 20000 80% ? Total units accounted for 300000 Work in process, 1 April Costs incurred during April Total costs to account for Direct material Conversion $ 58500 114000 $ 24000 76400 $172500 $100400 Total $ 82500 190400 $272900