Leons Furniture Limited (LFL) is a manufacturing company that manufactures kitchen tables. LFL uses a Process costing where Materials are added at the beginning of the process, and Conversion costs are uniformly incurred throughout the manufacturing process. Normal spoilage is detected only at the end of the process. Abnormal spoilage is detected after 100% of the Materials have been added but when only 50% of the Conversion costs have been added. The following information is available for LFL:

The following information is available for LFL at the beginning of January:

Physical Direct Conversion

Units Materials Costs

Work in process inventory: 168 $50,400 $30,240

80% 40%

The following information is available at the end of the month of January:

Units started during the month 480

Units completed and transferred to finished goods 400

Ending work in process inventory (units) 210

Total spoiled units 38

Normal spoilage percentage of completed units 5%

Cost of direct materials added during the month $165,820

Cost of conversion during the month $108,151

The work in process inventory at the end of January was 70% complete for Materials, but only 60% complete for Conversion costs.

REQUIRED:

Account for the physical flow the Units (2mks)

Calculate equivalent units (6mks)

Summarize Total Costs (2mks)

Calculate cost per Equivalent unit (6mks)

Allocate Total costs to Finished Goods, Abnormal Spoilage & Ending Work-in-Process.

(6mks)