Better Choice Foods makes a single product using two processes. Quality control check takes place during the process, at which point, rejected units are separated from good units. The following details relate to production for the month of April 20X9, for Process 2. (i) Work-in-process, beginning inventory: -0- (ii) Transfer from Process 1: 15,000 units valued at $51.40 each (iii) Other manufacturing costs incurred during April: Direct material added $513,000 Direct labour 365,000 Manufacturing overhead 211,000 (iv) Normal losses were estimated to be 5% of input during the period. Losses from Process 2 are deemed to be scrap, and sold at $40 per unit. (v) At inspection 1,750 units were rejected as scrap. These units had reached the following degree of completion: Input material 100% Direct material added 50% Conversion costs 30% (vi) 12,000 units were completed and transferred to Finished Goods Inventory. (vii) Work-in-process at the end of April had reached the following degree of completion: Input material 100% Direct material added 80% Conversion costs 40% Required: (a) Prepare a statement of equivalent production to determine the equivalent units for direct materials (From Process 1 & Direct Material Added), and conversion costs and the cost per equivalent unit for direct materials and conversion costs. (b) Calculate the: - Total cost of units completed and transferred to Finished Goods inventory - Cost of abnormal losses - Cost of ending work-in-process inventory in Process 2 (c) Prepare Better Choice’s Work-In-Process Inventory - Process 2 T-account, clearly showing the ending balance.
Better Choice Foods makes a single product using two processes. Quality control check takes place during the process, at which point, rejected units are separated from good units.
The following details relate to production for the month of April 20X9, for Process 2.
(i) Work-in-process, beginning inventory: -0-
(ii) Transfer from Process 1: 15,000 units valued at $51.40 each
(iii) Other
Direct material added $513,000
Direct labour 365,000
Manufacturing overhead 211,000
(iv) Normal losses were estimated to be 5% of input during the period. Losses from Process 2 are deemed to be scrap, and sold at $40 per unit.
(v) At inspection 1,750 units were rejected as scrap. These units had reached the following degree of completion:
Input material 100%
Direct material added 50%
Conversion costs 30%
(vi) 12,000 units were completed and transferred to Finished Goods Inventory.
(vii) Work-in-process at the end of April had reached the following degree of completion:
Input material 100%
Direct material added 80%
Conversion costs 40%
Required:
(a) Prepare a statement of equivalent production to determine the equivalent units for direct materials
(From Process 1 & Direct Material Added), and conversion costs and the cost per equivalent unit for direct materials and conversion costs.
(b) Calculate the:
- Total cost of units completed and transferred to Finished Goods inventory
- Cost of abnormal losses
- Cost of ending work-in-process inventory in Process 2
(c) Prepare Better Choice’s Work-In-Process Inventory - Process 2 T-account, clearly showing the ending balance.
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