BETTERER Engine Corporation manufactures a single model of gasoline engine used in lawn mowers, portable generators and pumps. The basic engine block is cast from steel and machined in the Casting Department. Then it is transferred to the Assembly Department, where the crank shaft, valves and other component parts are added. After assembly, it is transferred to the finishing department where the engine is tested. Data related to February operations are: Quantity dataCastingAssemblyFinishingWIP, beg5001000300Stage of completion25%50%50%Transferred to next department270029002800WIP, end800800400Stage of Completion90%40%50%Cost data: WIP, beg Cost from preceding dept 6315042840Materials1092540258 Direct labor338124262760FOH2839124264140Factory costs: Materials146575116480 Direct labor163624440812240FOH484614440818360 1. Using FIFO compute for the total cost of units transferred out from Finishing Department. 2. Using Average method compute for the Equivalent unit for Casting. 3. Using Average method compute for the cost of goods sold assuming there was no beginning or ending inventory of finished goods for the month. 4. Using FIFO compute for the Equivalent unit for Finishing Department.

The question has multiple sub-parts, so first 3 sub-parts shall be answered. Under the average…

Answered: BETTERER Engine Corporation…

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter6: Process Costing

Section: Chapter Questions

Problem 16E: Heap Company manufactures a product that passes through two processes: Fabrication and Assembly. The...

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BETTERER Engine Corporation manufactures a single model of gasoline engine used in lawn mowers, portable generators and pumps. The basic engine block is cast from steel and machined in the Casting Department. Then it is transferred to the Assembly Department, where the crank shaft, valves and other component parts are added. After assembly, it is transferred to the finishing department where the engine is tested. Data related to February operations are:

Quantity data	Casting	Assembly	Finishing
WIP, beg	500	1000	300
Stage of completion	25%	50%	50%
Transferred to next department	2700	2900	2800
WIP, end	800	800	400
Stage of Completion	90%	40%	50%
Cost data:
WIP, beg
Cost from preceding dept		63150	42840
Materials	10925	40258
Direct labor	338	12426	2760
FOH	2839	12426	4140
Factory costs:
Materials	146575	116480
Direct labor	16362	44408	12240
FOH	48461	44408	18360

1. Using FIFO compute for the total cost of units transferred out from Finishing Department.

2. Using Average method compute for the Equivalent unit for Casting.

3. Using Average method compute for the cost of goods sold assuming there was no beginning or ending inventory of finished goods for the month.

4. Using FIFO compute for the Equivalent unit for Finishing Department.

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