Question
Better Value produces brass handles for the furniture industry in a four-stage process Mixing, Forming, Polishing and Packaging. Costs incurred in the Polishing Department during
Better Value produces brass handles for the furniture industry in a four-stage process Mixing, Forming, Polishing and Packaging. Costs incurred in the Polishing Department during January are summarized as follows: WIP - Polishing Process A/C January 1 Bal. Transfer from Forming Direct Materials Added Direct Labour Manufacturing Overhead 20,000 $ 0 1,310,000 391,600 638,000 307,400 Normal losses are estimated to be 2% of input during the period. Inspection takes place during the processing operation, at which point imperfect handles are separated from good handles and sold as scrap to local furniture manufacturers at $85 each. At inspection, 2,000 handles were rejected as scrap. These units had reached the following degree of completion: Transfer from Forming 100% Direct material added 40% Conversion costs 20% Work-in-progress at the end of January was 4,000 handles and had reached the following degree of completion: Transfer from Forming 100% Direct material added 80% Conversion costs 50% Direct materials added and conversion costs are incurred uniformly throughout the process. Required: (a) Compute the equivalent units and cost per equivalent units for direct materials (From Forming & Direct materials added) and conversion costs. (10 marks) (b) Compute the: cost of the unexpected losses total cost of the handles completed and transferred out of the Packaging Department cost of ending work in process inventory in the Polishing Department (3 marks) (c) Complete the Work in Process Inventory Polishing Process T-account, clearly showing the ending balance. (5 marks) (d) Prepare the journal entries for the: assignment of direct materials, direct labour incurred, and the manufacturing overhead applied to the Polishing Process cost of the units completed and transferred out to the Packaging Process (5 marks) (e) After completing the physical count, it was determined that 30% of the unexpected losses were because of pilferage. In view of this finding, determine Better Values true loss associated with the Polishing Process. (2 marks)
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