Motorcycle Inc uses a process cost system for making scooter wheels. Materials are added at the beginning of the process and conversion costs are uniformly incurred. At the beginning of October the work-in-process is 40 percent complete and at the end of the month it is 60 percent complete. Spoilage is detected at the end of the process. Other data for the month include:

Required:

1) Prepare a production cost worksheet assuming that spoilage is recognized and the weighted-average method is used.

2) Prepare journal entries to record transferring out of cost from the work-in-process accounts.

Beginning work-in-process inventory Units started Units placed in finished goods Ending work-in-process inventory Normal spoilage % on all units finished 1,600 units 20,000 units 12,000 units 1,200 units 20 percent Conversion costs Cost of direct materials Beginning work-in-process costs: $40,320 $40,000 Material:s Conversion $4,000 $4,032