Question
In its Department R, Recyclers, Inc., processes donated scrap cloth into towels for sale in local thrift shops. It sells the products at cost. The
In its Department R, Recyclers, Inc., processes donated scrap cloth into towels for sale in local thrift shops. It sells the products at cost. The direct materials costs are zero, but the operation requires the use of direct labor and overhead. The company uses a process costing system and tracks the processing volume and costs incurred in each period. At the start of the current period, 500 towels were in process and were 60 percent complete. The costs incurred were $162.
During the month, costs of $18,000 were incurred, 4,000 towels were started, and 250 towels were still in process at the end of the month. At the end of the month, the towels were 20 percent complete.
Required:
a. Prepare a production cost report: the company uses FIFO process costing.
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b. Show the flow of costs through T-accounts. Assume that current period conversion costs are credited to various payables.
Work in Progress
Beginning Inventory. ____ ____
________________ ____ ____
________________ ____ ____ ________________
This Period's cost:
________________ ____ ____ ________________
________________ ____ ____ ________________
Ending inventory
________________ ____ ____ ________________
Finished goods inventory
Beg. bal. ____ ____
____ ____
____ ____
End. bal. ____ ____
Various Payable
Beg. bal. ____ ____
____ ____
____ ____
End. bal. ____ ____
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