Question
Durall Company manufactures a plastic gasket that is used in automobile engines. The gasket go through three processing departments: mixing, forming, and stamping. The company's
Durall Company manufactures a plastic gasket that is used in automobile engines. The gasket go through three processing departments: mixing, forming, and stamping. The company's accountant prepared a summary of production for the Forming Dept. for Oct. as follows:
Forming Dept. Costs | |
Work in process inventory, Oct. 1, 8,000 units: materials 100% complete; conversion 7/8 complete | $22,420 |
Costs transferred in from the Mixing Dept. | 81,480 |
Material added during Oct. (added when processing is 50% complete in the forming dept. ) | 27,600 |
Conversion costs added during Oct. | 96,900 |
Total Dept. Costs | $228,400 |
Forming Dept. Cost Assigned to: | |
Units completed and transferred to the Stamping Dept., 100,000 at $2.284 each | $228,400 |
Work in process inventory, Oct. 31, 5,000 units: convensrion 2/5 complete | - |
Total Dept. Costs Assigned | $228,400 |
*Consists of cost transferred in, $8,820; materials cost $3,400; and conversion costs, $10,200. |
The company uses the weighted-average method in its process costing.
1. Prepare a report for the Forming Dept. for Oct. showing how much cost should have been assigned to the units completed and transferred to the Stamping Dept. and to the edning work in process inventory.
2. Explain to the president why the unit cost appearing on the report prepared by the accountant is so high.
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