Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Kostadin Chemicals makes plant fertilizers to sell to nurseries across the country. It uses a process costing system to cost the production of its fertilizer.

image text in transcribedimage text in transcribed
image text in transcribedimage text in transcribed
Kostadin Chemicals makes plant fertilizers to sell to nurseries across the country. It uses a process costing system to cost the production of its fertilizer. The fertilizer which consists of all dry ingredients is made in two departments: Mixing and Packaging. In the Mixing Department direct ingredients are added when 20% of the production has taken place. The first 20% of the process involves setting up the measuring, pouring and mixing equipment. Conversion costs are added evenly throughout the process. The cost accountant is completing the production report for the month of April. At the beginning of the month there was 4,000 kilograms of fertilizer ingredients that had 25% of the work completed in March. 24,000 kilograms of fertilizer ingredients were added to production in the month of April. During the month, 23,000 kilograms of fertilizer were transferred out to the Packaging Department leaving 5,000 kilograms of fertilizer ingredients in ending inventory. At the end of the month the production team had just completed the setup and started a new batch to be completed in May. As such, the ending inventory was at 30% completion. The cost accountant must determine how much of the following costs should be transferred to the Packaging Department and how much remains in ending inventory in the Mixing Department at the end of April. Cost of beginning work-in-process: - Direct fertilizer ingredients $ 5,560 0 Conversion costs $ 920 Cost added during April: - Direct fertilizer ingredients $31,440 - Conversion costs $21,150 Required: a. Using the rst-in, first-out (FIFO) method determine the assignment of the cost of fertilizer transferred-out to the Packaging Department and ending inventory for the Mixing department for the month of April. Use the form on the next page of this exam. (10 marks) b. Kostadin has used First in First out costing for the last 15 years. The controller wants to know if it is beneficial to continue using this method instead of the weighted average method. Provide the controller with your recommendation. Include appropriate calculations to back up your recommendation. (4 marks) Quantity Production report Units to be accounted for: Schedule Work in process, beginning Started into production Total units E u uivalent units Units accounted for: In_ redients Conversion STEP 2: Total Prod. Total costs Cost to be accounted for: Costs Ingredients Conversion Total cost a Equivalent units of production (b) (Step 1 above) Cost per equivalent unit (a / b) STEP 3: Cost Reconciliation Equivalent units Ingredients Conversion Total cost of goods completed Total ending work in process Total cost

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image_2

Step: 3

blur-text-image_3

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Accounting For Decision Making And Control

Authors: Jerold Zimmerman

10th Edition

1259969495, 978-1259969492

More Books

Students also viewed these Accounting questions

Question

1.2 What is the role of the investment banker in the M&A process?

Answered: 1 week ago

Question

What is the formula to calculate the mth Fibonacci number?

Answered: 1 week ago