Question
DRINK COKE Manufacturing Company applies process costing in the manufacture of its sole product, vitamix. Manufacturing starts in Department 1 where materials are all added
DRINK COKE Manufacturing Company applies process costing in the manufacture of its sole product, vitamix. Manufacturing starts in Department 1 where materials are all added at the start of processing. The good units are then transferred to Department 2 where all the incremental materials needed for its completion are added after final inspection. In Department 1, units are inspected at the end of processing while in Department 2, inspection takes place when the units are 90% completed. Department 1 uses FIFO costing while Department 2 uses the weighted average costing.
The production data for the month of July show the following:
_______________________________________________________________________________
Department 1 Department 2
UNITS
Beginning work in process, July 1 8, 000 4, 000
Work done 1/5 4/5
Ending work in process, July 31 12, 000 7, 000
Work to be done 1/3 2/7
Started in process during July 60, 000
Normal spoilage 2, 400 1, 000
Abnormal spoilage 600 500
COST
Work in Process, July 1
Transferred in P - P 19, 030
Materials 9, 000 14, 325
Conversion costs 6, 500 18, 715
Current costs:
Transferred in P - P ?
Materials 132, 000 56, 000
Conversion costs 205, 920 85, 500
Required: For both departments:
- Compute equivalent units of production.
- Compute unit costs.
- Compute cost of units finished and transferred.
- Compute costs of units in process, end.
- Compute cost of abnormal spoiled units.
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