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.

FINANCIAL ACCOUNTING
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ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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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.

  • Work-in-process, beginning inventory: -0-
  • Transfer from Process 1: 15,000 units valued at $51.40 each
  • Other manufacturing costs incurred during April:

 

Direct material added

Direct labour Manufacturing overhead

$513,000

$365,000

$211,000

  • 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
  • At inspection 1,750 units were rejected as scrap. These units had reached the following degree of completion:

Input material

Direct material added Conversion costs

100%

50%

30%

  • 12,000 units were completed and transferred to Finished Goods
  • Work-in-process at the end of April had reached the following degree of completion:

 

Input material

Direct material added Conversion costs

100%

80%

40%

Required:

  • 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
  • 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.

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