Question
Bakul Mala Manufacturing, which uses the First-In, First-Out costing method, produces a product that passes through two departments: A and B. In the Department A,
Bakul Mala Manufacturing, which uses the First-In, First-Out costing method, produces a product that passes through two departments: A and B. In the Department A, all materials are added at the beginning of the process and all other manufacturing inputs are added uniformly.
The following information relates to Department A for the month of July:
a. Beginning Work-In-Process, 1 July: 400,000 units (20% complete with respect to conversion costs). The costs assigned to this work are as follows:
- Direct Materials = $80,000
- Conversion costs = $40,000
b. Ending Work-In-Process, 31 July: 100,000 units (80% complete with respect to conversion costs).
c. Units completed and transferred out: 500,000 units.
The following costs were added during July:
- Direct Materials = $200,000
- Conversion Costs = $100,000
Required:
SHOW CALCULATION FOR EACH QUESTION IN THE RESPONSE BOX.
1. Prepare a physical flow schedule.
2. Prepare a schedule of equivalent units.
3. Calculate the cost per equivalent unit.
4. Calculate the cost of goods transferred out and the cost of Ending Work-In-Process.
5. Would you recommend Bakul Mala Manufacturing to continue to employ the First-In, First-Out costing method, or should it consider alternative costing methods (i.e. the weighted average method)? Briefly explain and justify your recommendation.
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