Question 1 Leslie Limited is a manufacturing company that makes a single product the Whatchamacallit Whatchamacallits go through two processing departments Department 1 and Department 2 The cost to manufacture a Whatchamacallit has historically been in the range of $2 94 to $3 00 , with 80 of the cost being from Department 1 However, due to increased competition putting a squeeze on sales prices, Leslies management has realized that the cost to manufacture Whatchamacallits must be reduced In recent months, several cost cutting strategies have been put into place, particularly in Department 1 Leslie s senior management team is anxiously awaiting the production report for Department 1 for the month of January to see whether the cost cutting strategies have worked Leslie Limited hired a new accountant in January of 2014 Her name is Emma Emma, a Dal co op student, only has a little experience with Process Costing, recently prepared a report that summarizes production and costs for Department 1 for January Here it Emmas report Work in progress inventory Jan 1 st 8,000 units materials 100 complete, conversion costs 80 complete $20,000 (of which $5,000 is materials and $15,000 is conversion costs) Materials costs added in January $27,000 Conversion costs added in January $75,000 Total costs of Department 1 $122,000 Department 1 costs assigned to Units completed and transferred to Dept 2 50,000 units at $2 44 each $122,000 Work in progress inventory, Jan 31 st 5,000 units materials 100 complete, conversion 75 complete The President of Leslie Limited reads the above report and becomes quite frustrated and confused He does not understand how unit costs assigned in Dept 1 could have increased despite the cost cutting efforts that have been made Required 1 Prepare a report for Department 1 showing how much cost should have been assigned to the units completed and transferred to Department 2 and to the ending WIP inventory Required 2 Explain to the President why the unit cost appearing on Emmas report was higher than anticipated Have the cost cutting strategies worked

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Question #1: Leslie Limited is a manufacturing company that makes a single product the Whatchamacallit Whatchamacallits go through two processing departments Department #1 and Department

Question #1:

Leslie Limited is a manufacturing company that makes a single product the Whatchamacallit Whatchamacallits go through two processing departments Department #1 and Department #2.

The cost to manufacture a Whatchamacallit has historically been in the range of $2.94 to $3.00, with 80% of the cost being from Department #1. However, due to increased competition putting a squeeze on sales prices, Leslies management has realized that the cost to manufacture Whatchamacallits must be reduced. In recent months, several cost-cutting strategies have been put into place, particularly in Department #1. Leslies senior management team is anxiously awaiting the production report for Department #1 for the month of January to see whether the cost cutting strategies have worked.

Leslie Limited hired a new accountant in January of 2014. Her name is Emma. Emma, a Dal co-op student, only has a little experience with Process Costing, recently prepared a report that summarizes production and costs for Department #1 for January.

Here it Emmas report:

Work in progress inventory Jan 1^st 8,000 units: materials 100% complete, conversion costs 80% complete	$20,000 (of which $5,000 is materials and $15,000 is conversion costs)
Materials costs added in January:	$27,000
Conversion costs added in January:	$75,000
Total costs of Department #1:	$122,000

Department #1 costs assigned to:
Units completed and transferred to Dept #2: 50,000 units at $2.44 each.	$122,000
Work in progress inventory, Jan 31^st 5,000 units: materials 100% complete, conversion 75% complete	_

The President of Leslie Limited reads the above report and becomes quite frustrated and confused. He does not understand how unit costs assigned in Dept. #1 could have increased despite the cost cutting efforts that have been made.

Required #1: Prepare a report for Department #1 showing how much cost should have been assigned to the units completed and transferred to Department #2 and to the ending WIP inventory.

Required #2: Explain to the President why the unit cost appearing on Emmas report was higher than anticipated. Have the cost cutting strategies worked?