Process Costing

On the production line direct materials are added at two different points of the conversion process. It contains two forms of Direct Material: (1) the raw ingredients, and (2) the aluminium tray or can packaging of the final product. The addition of raw ingredients occurs at the commencement of the process and the addition of the trays or cans occurs after 20% of the conversion process has occurred.

All raw ingredient materials are added at the commencement of the manufacturing process . After the products are blended and mixed together the combined raw ingredients are added into their aluminium trays or cans with lids and sealed after 20% of the conversion process has taken place. The remaining 80% of the conversion process occurs as the ingredients are steam cooked and then moved into Finished Goods inventory.

At shut down on August 31st 2020 'Cat'n'Kitty' had 130,000 units in Work-in-Process (WIP) which are completed to Direct Materials Ingredients ($43,500) and Direct Materials Packaging ($2,780) and 40% complete for Conversion ($97,600).

4,375,000 units are commenced during September and units completed and transferred to Finished Goods amounted to 4,420,000 units. The units in closing WIP are 15% completed.

The following costs were incurred during September:

Direct Materials:

Ingredients $1,847,000

Packaging $550,670

Conversion Costs $5,270,500

Using Excel prepare spreadsheet models to answer the following questions:

i. Using the Weighted Average Cost Method determine the cost value of closing WIP and the cost value of goods transferred out during the period

ii. Using the FIFO method determine the cost value of closing WIP and the cost value of goods transferred out during the period