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PART 2 (25 marks) All Things Brass produces brass handles for the furniture industry in a four-stage process -Mixing, Moulding, Polishing and Packaging. Costs incurred
PART 2 (25 marks) All Things Brass produces brass handles for the furniture industry in a four-stage process -Mixing, Moulding, Polishing and Packaging. Costs incurred in the Polishing Department during January are summarized as follows: January 1 Bal. WIP - Polishing Process A/C $ 0 Transfer from Moulding 20,000 Direct Materials Added Direct Labour Manufacturing Overhead 1,310,000 391,600 638,000 307,400 Normal losses are estimated to be 21% of input during the period. Inspection takes place during the processing operation, at which point damaged handles are separated from good handles and sold as scrap to local furniture manufacturers at $85 each. At inspection, 2,000 handles were rejected as scrap. These units had reached the following degree of completion: Transfer from Moulding Direct material added Conversion costs 100% 40% 20% Work-in-progress at the end of January was 4,000 handles and had reached the following degree of completion: Transfer from Moulding 100% Direct material added Conversion costs 80% 50% Direct materials added and conversion costs are incurred uniformly throughout the process. Required: (a) (b) 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. (10 marks) Calculate the: Total cost of units completed and transferred to the Packaging Department Cost of the unexpected losses Cost of ending work-in-process inventory in the Polishing Department (3 marks) Complete All Things Brass Work-In-Process Inventory - Polishing Process T-account, clearly showing the ending balance. (c) (d) Prepare the journal entries for the: (5 marks) (e) *assignment of direct materials, direct labour incurred, and the manufacturing overhead applied to the Polishing Process *cost of the units completed and transferred out to the Packaging Process (5 marks) Given that 30% of the unexpected losses were because of pilferage, prepare the abnormal spoilage statement, clearly showing All Things Brass true loss associated with the Polishing Process. (2 marks)
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