MINI- CASE 5 (Process Costing) Cyclo Cap Inc. began business making cycling helmets several years ago and uses the weighted average method to account for inventories. The company has two depanments: Forming and Finishing. The Forming department produces the foam structure of the helmet and the hard printed shell and pairs the parts, but does not glue the pieces together. The Finishing department inspects the parts received from Forming ensuring a perfect fit and glues the parts together. The finishing process is completed following the installation of a chin strap to the glued helmet. The Finishing department has direct materials costs and conversion costs. You are being asked to focus on the Finishing department. As soon as the foam structures and hard shells are ready to be glued and the straps are ready to be added, they are transferred directly to the Finishing department. Direct materials are added at a point when the Finishing process is at least 85% complete. Conversion costs, however, are added evenly throughout the Finishing process. When all processing is complete, the helmets are immediately transferred to Finished Goods. The following is a summary of the January 2018 operations of the Finishing department. Cyclo Cap uses the weighted average method. Finishing Department Beginning work in process Degree of completion, Beginning WIP Transferred in during January 2018 Completed and transferred out during Jan. Ending work in process (Jan. 3 1 ) Degree of completion, Ending WIP Total costs added during January Required: Helmets Phvsical Units 1,400 2,800 3,200 1,000 Costs Direct Transferred In Materials S42,050 100% 100% S 148,000 so S27,392 Conversion Costs S15,780 45% 65% S72,ooo 1. 2. 3. 4. Calculate the equivalent units and assign the January costs to units completed (and transferred out) and to units in ending work in process. Prepare a cost reconciliation. Analyze the Numbers: Have your team play the role of a managerial accountant consultant and explain to Joyce what the numbers really mean for their business. Creative Consulting: Use your team's creativity to analyze the business problem and come up with various solutions for the business going forward. (ie. How to increase profits, customer satisfaction, make processes more efficient, people/staff happier, short, mid term and long term strategy).