Goldivar Chocolate produces premium chocolates that pass through different departments - (1) Milling and Pressing department, (2) Ingredient Mixing and Conching Department and (3) Packaging Department. The Company uses the First-In-First-Out (FIFO) process costing method and estimates the normal spoilage to be 1% of the inputs in kg, started in the period. Inspection for deformed, dented outputs or chocolates that started to melt are done when the outputs are completed and awaiting transfer to the Packaging Department.

The production process in the Ingredient Mixing and Conching Department requires the input of three main types of ingredients listed as follows.

(i)the Basic ingredients (milk and sugar);

(ii)the second key ingredient, Cocoa Butter, is transferred from the previous milling and pressing department and;

(iii) the third ingredient is Cocoa Liquor.

100% of the basic ingredients and cocoa butter are added at the beginning of the process. 50% of the required quantities are added at the beginning of the process, 40% are added midway (i.e. 50% of conversion done) through the process and the remainder of the cocoa liquor are added at the end of the process.

The following information relates to the operation of the Ingredient Mixing and Conching Department for October 2019.

Beginning work-in process (BWIP) (1 October 2019): 2,500 kg were 30% completed with respect to conversion costs (CC). Costs pertaining to the BWIP as at 1 October 2019 were: basic ingredients (milk and sugar) - $10,100, cocoa butter - $31,000, cocoa liquor - $12,900 and CC - $12,000.

Units started in the month were 300,000 kg. Costs added to production during the month of October 2019 were: basic ingredients - $1,215,025; cocoa butter - $3,508,250; cocoa liquor -

$1,800,000, and CC - $1,446,960.

Ending WIP as at 31 October 2019 were 3,500 kg and 70% completed with respect to CC. 298,500 kg of outputs were transferred to the Packaging Department.

Required:

(a)Calculate the number of actual spoilage units in kg in the Ingredient Mixing and Conching Department and explain the accounting treatment for these spoilage.Assume that the spoilage are all from the current production units and not the BWIP.

(b)(i) Calculate the equivalent units of production for Goldivar Chocolate in theIngredient Mixing and Conching department and the costs per equivalent unit for each cost category (give your answers to the nearest 2 dec. place of dollar) for the month of October; and

(ii) Calculate the value of completed products transferred to the Packaging Department in the Ingredient Mixing and Conching department at the end of October.

(c)Calculate the cost per kg of completed outputs transferred to Packaging Department, rounding your answer to two decimal places of a dollar.

(d)Prepare journal entries to illustrate the transfer of completed outputs to thenext department.