Question
Beaux Cheveux is a large hair products company specializing in organic, salon quality, and innovative hair products that appeal to both beauty junkies and health-conscious
Beaux Cheveux is a large hair products company specializing in organic, salon quality, and innovative hair products that appeal to both beauty junkies and health-conscious consumers. Beaux Cheveux grows all the raw materials that goes into their hair products and has a state-of-the-art lab where they constantly try to create innovative formulas. The company has a premium image in the market and most of its customers are loyal and willing to pay a bit extra. Beaux Cheveax products are made in a series of processes which begin with sorting, cleaning, preparing, and inspecting the direct materials. The materials are then mixed and processed for consistency, followed by final inspection, and packaging. All materials are added only at the beginning of the first process. The inspection in the first and final processes is made at the end of those respective processes, so all direct materials and conversion costs are lost for defective units detected at the inspection point. The company uses FIFO process costing and accounts for all waste as normal spoilage.
The following data is for the first process for the current month. All output is measured in Litres.
Beginning WIP 9,000 L 40% complete for conversion
Ending WIP 15,000 L 35% complete for conversion
Spoilage 2,500 L
Litres added this month 40,000 L
The cost information for the first process is as follows:
Direct Materials
Conversion
Total
Beginning WIP
$14,500
$35,900
$50,400
Current costs
$45,020
$112,050
$157,070
Prepare a production cost report for the first process using the FIFO method.
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