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Tooys Company, makes children's bath toys. Their production process adds all of the direct materials at the start of the process and incurs conversion
Tooys Company, makes children's bath toys. Their production process adds all of the direct materials at the start of the process and incurs conversion costs evenly throughout the process. In June, Tooys reported the following data: a. Beginning work-in-process consisted of 5,000 units that were 45 percent complete. Costs in beginning inventory included direct materials, $850; and conversion costs, $208. b. Costs added to production during the month were direct materials, $1,540; and conversion costs, $3,503. c. Inspection for spoiled units occurs at the end of the process. Malformed units are discarded. During normal operations, 0.8% of the units started will end up being malformed and discarded. d. During the month, 10,000 units were started and 11,000 good units were transferred out to Finishing. All other units finished were malformed and discarded. There were 2,700 units that remained in ending work in process, 35 percent complete. e. Remember to round your decimal points to four places for cost/EU rates. Required: A. Prepare a physical unit flow schedule. B. Calculate the 1) cost of goods transferred out, 2) ending work-in-process, and 3) loss due to spoilage using the weighted average method. C. Prepare the journal entries to record 1) and 3) above. Start with beginning work-in- process and use these journal entries to reconcile beginning and ending work-in-process based on your number in B). D. Calculate the 1) cost of goods transferred out, 2) ending work-in-process, and 3) loss due to spoilage using the FIFO method. E. Prepare the journal entries to record 1) and 3) above. Start with beginning work-in- process and use these journal entries to reconcile beginning and ending work-in-process based on your number in E). F. Assume instead that inspection takes place when units are 40 percent complete. How does this change the number of units spoiled? How does this change the number of units that were abnormal spoilage v. normal spoilage?
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