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Chapter 6 Question 4: (25 marks: allow about 45 minutes) Chips For You manufactures microchips for computers. They use the weighted average method of
Chapter 6 Question 4: (25 marks: allow about 45 minutes) Chips For You manufactures microchips for computers. They use the weighted average method of process costing. All their manufacturing activities are treated as a single process for accounting purposes. The following data refers to the first two months of 2014: Direct material used: Direct labour incurred: Total manufacturing costs: January $420,000 380,000 $800,000 February $420,000 380,000 $800,000 There was no WIP inventory at the beginning of January. In January 10,000 chips were started into production and 10,000 good chips were produced and sold. There was no closing inventory at the end of January. There was no opening WIP inventory at the beginning of February. In February 10,000 chips were started into production, but only 9,000 were completed. The remaining 1,000 chips were complete in respect of materials, but only 50% complete in respect of conversion costs. Required: a) Prepare a production report for January 2014 (10 marks) b) Prepare a production report for February 2014 (15 marks)
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