Question
A manufacturer uses process costing . It has one direct material cost pool and one conversion cost pool. Information for the month is as follows:
A manufacturer uses process costing. It has one direct material cost pool and one conversion cost pool. Information for the month is as follows:
Beginning of Month End of Month
Work in process: 22,000 units 10,000 units
Conversion (% of completion in WIP): 35% 85%
Costs of Materials in WIP: $ 80,000 ?
Costs of Conversion in WIP: $114,000 ?
During the month:
Units started during the month: 70,000 units
Costs incurred for Materials: $280,000
Costs incurred for Conversion: $270,000
Total Spoiled Units detected: 4,400 units
Other Income Statement Information:
Sales: $920,000
Admin expenses $200,000
95% of direct materials is added at the beginning of the process, and the remaining 5% of direct materials (for packaging) is added immediately after inspection.
Inspection occurs when units are 90% converted, and inspection determines if the units are acceptable or spoiled. Normal Spoilage is based on 6% of units started.
There were no finished goods or raw material inventories at any point of the process.
Required:
Part A: Prepare an Income Statement for the month and show the value of ending inventory, assuming that inventory is based on modified FIFO,
Part B: Prepare an Income Statement for the month and show the value of ending inventory, assuming that inventory is based on Weighted Average.
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started