'Brisbane Refinery Ltd' (BRL) processes canola oil for the Supermarket Chain G-Mart. It is involved in continuous processing to produce canola oil and uses FIFO process costing to account for its production costs. The FIFO is suitable for BRL as costs are quite unstable due to the volatile price of the canola seeds it uses in production. The canola seeds are processed through one department. Overhead is applied based on direct labour costs, and the application rate has not changed over the period covered by the problem. The Work-in-Process Inventory account showed the following balances at the start of the current period. Direct materials $195,500 Direct labour 390,000 Overhead applied 487,500 These costs were related to 78,000 litres that were in process at the start of the period. During the period, 90,000 litres were transferred to finished goods inventory. Of the litres finished during this period, 80 percent were sold. After litres have been transferred to finished goods inventory, no distinction is made between the costs to complete beginning work-in-process inventory and the costs of goods started and completed in work in process this period. The equivalent units for materials this period were 75,000 (using FIFO). Of these, 15,000 were equivalent units with respect to materials in the ending work-in-process inventory. Materials costs incurred during the period totalled $450,600. Conversion costs of $1,930,500 were charged this period for 140,625 equivalent units (using FIFO). The ending inventory consisted of 33,000 equivalent units of conversion costs. The actual manufacturing overhead for the period was $990,000. Required: Prepare the entries in ledge accounts in T-accounts format to show the flow of costs in the costing system.
'Brisbane Refinery Ltd' (BRL) processes canola oil for the Supermarket Chain G-Mart. It is involved in continuous processing to produce canola oil and uses FIFO process costing to account for its production costs. The FIFO is suitable for BRL as costs are quite unstable due to the volatile price of the canola seeds it uses in production. The canola seeds are processed through one department. Overhead is applied based on direct labour costs, and the application rate has not changed over the period covered by the problem. The Work-in-Process Inventory account showed the following balances at the start of the current period. Direct materials $195,500 Direct labour 390,000 Overhead applied 487,500 These costs were related to 78,000 litres that were in process at the start of the period. During the period, 90,000 litres were transferred to finished goods inventory. Of the litres finished during this period, 80 percent were sold. After litres have been transferred to finished goods inventory, no distinction is made between the costs to complete beginning work-in-process inventory and the costs of goods started and completed in work in process this period. The equivalent units for materials this period were 75,000 (using FIFO). Of these, 15,000 were equivalent units with respect to materials in the ending work-in-process inventory. Materials costs incurred during the period totalled $450,600. Conversion costs of $1,930,500 were charged this period for 140,625 equivalent units (using FIFO). The ending inventory consisted of 33,000 equivalent units of conversion costs. The actual manufacturing overhead for the period was $990,000. Required: Prepare the entries in ledge accounts in T-accounts format to show the flow of costs in the costing system.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
Transcribed Image Text:'Brisbane Refinery Ltd' (BRL) processes canola oil for the Supermarket Chain G-Mart. It is involved in
continuous processing to produce canola oil and uses FIFO process costing to account for its production
costs. The FIFO is suitable for BRL as costs are quite unstable due to the volatile price of the canola seeds
it uses in production. The canola seeds are processed through one department. Overhead is applied
based on direct labour costs, and the application rate has not changed over the period covered by the
problem. The Work-in-Process Inventory account showed the following balances at the start of the current
period.
Direct materials
$195,500
Direct labour
390,000
Overhead applied
487,500
These costs were related to 78,000 litres that were in process at the start of the period. During the period,
90,000 litres were transferred to finished goods inventory. Of the litres finished during this period, 80
percent were sold. After litres have been transferred to finished goods inventory, no distinction is made
between the costs to complete beginning work-in-process inventory and the costs of goods started and
completed in work in process this period.
The equivalent units for materials this period were 75,000 (using FIFO). Of these, 15,000 were equivalent
units with respect to materials in the ending work-in-process inventory. Materials costs incurred during
the period totalled $450,600.
Conversion costs of $1,930,500 were charged this period for 140,625 equivalent units (using FIFO). The
ending inventory consisted of 33,000 equivalent units of conversion costs. The actual manufacturing
overhead for the period was $990,000.
Required: Prepare the entries in ledge accounts in T-accounts format to show the flow of costs in the
costing system.
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
Step by step
Solved in 3 steps
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Recommended textbooks for you
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education