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Case #3 Outlining Inc. manufactures pharmaceutical drugs at a local production facility. The company has two production departments, stamping and packaging. The company uses the
Case #3 Outlining Inc. manufactures pharmaceutical drugs at a local production facility. The company has two production departments, stamping and packaging. The company uses the weighted- average method of process costing. In March, the following data were recorded for the packaging department: Direct materials $0 Conversion Costs $206,250 Physical Transferred- Packaging Dept. units in Costs Work-in-process, March 1* 93,750 $168,750 Started during March 656,250 Good units completed and transferred out 468,750 Spoiled units 93,750 Work-in-process, March 31^ 187,500 Total costs added during March $1,331,250 Degree of completion: direct materials, 0%; conversion costs, 20% Degree of completion: direct materials, 100%; conversion costs, 90% $984,375 $1,503,750 2 Conversion costs are added evenly during the production process. Direct materials are added when production is 85% complete. The inspection point is at the 80% stage of production. Normal spoilage is 10% of all goods that pass inspection. Spoiled units are disposed of at zero net disposal value. Required: For March, summarize the total costs to account for, compute the cost per equivalent unit for transferred-in, direct materials, and conversion costs, and assign costs to units completed and transferred out (including normal spoilage), to abnormal spoilage, and to units in ending work- in-process
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