A sporting goods manufacturer buys wood as a direct material for badminton racket. The Forming Department processes the badminton rackets, and the rackets are then transferred to the Finishing Department where a sealant is applied. The Forming Department began manufacturing 10,000 "Surefires" during the month of May. There was no beginning inventory. Costs for the Forming department for the month of May were as follows: materials...............................……………………....…….…... ..P33,000 Direct Conversion Costs ........ 17,000 A total of 8,000 rackets were completed and transferred to the Finishing Department; the remaining 2,000 rackets were still in the forming process at the end of the month. All of the Forming Department's direct materials were placed in process, but on average, only 25% of the conversion cost was applied to the ending work-in-process inventory.

A sporting goods manufacturer buys wood as a direct material for badminton racket. The Forming Department processes the badminton rackets, and the rackets are then transferred to the Finishing Department where a sealant is applied. The Forming Department began manufacturing 10,000 "Surefires" during the month of May. There was no beginning inventory. Costs for the Forming department for the month of May were as follows: materials...............................……………………....…….…... ..P33,000 Direct Conversion Costs ........ 17,000 A total of 8,000 rackets were completed and transferred to the Finishing Department; the remaining 2,000 rackets were still in the forming process at the end of the month. All of the Forming Department's direct materials were placed in process, but on average, only 25% of the conversion cost was applied to the ending work-in-process inventory.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Concept explainers

Inventory Accounting

Inventory accounting is that branch of accounting that helps in determining the specific value of assets at different stages of production and development.

Question

Determine the following:
a. The cost of the units transferred to the Finishing Department.
b. The cost of the work-in-process inventory in the Forming Department

A sporting goods manufacturer buys wood as a direct material for badminton racket. The Forming Department
processes the badminton rackets, and the rackets are then transferred to the Finishing Department where a
sealant is applied. The Forming Department began manufacturing 10,000 "Surefires" during the month of May.
There was no beginning inventory.
Costs for the Forming department for the month of May were as follows:
Direct materials..
..P33,000
17,000
Conversion Costs.
A total of 8,000 rackets were completed and transferred to the Finishing Department; the remaining 2,000
rackets were still in the forming process at the end of the month. All of the Forming Department's direct
materials were placed in process, but on average, only 25% of the conversion cost was applied to the ending
work-in-process inventory.

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