Question 3

For the month of November, Catherines Charming Cookie Company (CCCC) started 150,000 of their special 8-inch cookies into production in the mixing department. The cookies are mixed and shaped in this department before being transferred to the baking department.

The mixing departments WIP on November 1 consisted of 15,000 cookies that were 50% complete for conversion costs and 90% complete for ingredients. The cost of opening WIP was $8,250, consisting of $3,750 in conversion costs plus $4,500 in ingredients.

CCCCs quality team inspects the cookies before they are transferred to baking. Cookies that do not pass inspection are considered wasted and the cost of normal spoilage is added to good cookies transferred to the baking department. Normal spoilage is 1.5% of good cookies produced.

In November, a total of 152,000 cookies were transferred to baking. Total costs added during the month were $139,000; $85,000 of this was conversion costs, and the rest was ingredients. Ending WIP at November 30 is 10,000 cookies, which are 50% complete for ingredients and 10% complete for conversion costs.

Required:

1. Using either the weighted average or the FIFO method:
   1. Prepare a production report for the mixing department of CCCC.
   2. Prepare the journal entries to record:
      1. the cost of direct materials added to the process during the month
      2. the cost of conversion costs added to the process during the month
      3. the transfer of cookies to the baking department
      4. the cost of abnormal spoilage

Be sure to clearly indicate which method you chose to use.