Michaels Pottery makes decorative garden pieces using three consecutive processes: Moulding, Baking & Spraying. Quality control check takes place during the process, at which point, rejected units are separated from good units.

The following details relate to production for the month of October 2020, for the Baking Department.

i) Work-in-process, October 1: -0-

ii) Transfer from Moulding: 2,000 units valued at $336.40 each

iii) Other manufacturing costs incurred during October:

Direct material added $202,120

Direct Manufacturing Wages $212,840

Manufacturing Overhead Applied $306,160

iv) Normal losses are estimated to be 5% of the units transferred in during the period. Losses from the Baking Department are deemed to be scrap and sold at $382 each.

v) At inspection 300 decorative pieces were rejected as scrap. These units had reached the following degree of completion:

From Moulding 100%

Direct material added 40%

Conversion costs 12%

vi) 1,200 pieces were completed and transferred out to the Spraying Department.

vii) Work-in-process at the end of October had reached the following degree of completion:

From Moulding 100%

Direct material added 75%

Conversion costs 55%

Direct materials added and conversion costs are incurred uniformly throughout the process.

Required:

(a) Prepare a statement of equivalent production to determine the equivalent units for direct materials (From Moulding & Direct Material Added), and conversion costs and the cost per equivalent unit for direct materials and conversion costs.

(b) Calculate the: - Total cost of units completed and transferred to the Spraying Department - Cost of abnormal losses - Cost of ending work-in-process inventory in the Baking Department

(c) Prepare Michael Potterys Work-In-Process Inventory Baking Department T-account, clearly showing the ending balance.

(d) State the journal entries necessary to record the assignment of direct materials, direct manufacturing wages and manufacturing overhead applied to the Baking Department. Also give the journal entries to record the cost of goods completed and transferred to the Spraying Department.

(e) Given that 25% of the unexpected losses were because of pilferage, prepare the abnormal spoilage statement, clearly showing Michael Potterys true loss.