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. (vi) 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%
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. (vi) 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%
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text: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
$365,000
$211,000
Direct labour
Manufacturing overhead
(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%
Transcribed Image Text: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
Prepare Better Choice's Work-In-Process Inventory - Process 2 T-account, clearly showing the
ending balance.
(c)
(d)
State the journal entries necessary to record the assignment of direct materials, direct
manufacturing wages and manufacturing overhead applied to Process 2. Also give the journal
entries to record the cost of goods completed and transferred to finished goods.
(e)
Given that 20% of the unexpected losses were as a result of pilferage, prepare the abnormal
spoilage statement, clearly showing Better Choice's true loss.
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