Husky Ltd. manufactures toys using a continuous production process that flows through two departments: Forming and Finishing. In the forming department, various components are built and are transferred to the finishing department. In the finishing department, those components are assembled into Husky’s final product and once finished, are transferred to Husky’s Finished Goods Inventory. Any spoilage is detected at the end of the process (i.e. when the toys are 100% complete). Husky uses the FIFO method of accounting for costs. In the Finishing Department, Direct materials are added at 70% of conversion and conversion costs are added evenly throughout the process. Finishing DepartmentPhysical UnitsTransferred InDirect Materials Conversion Work in Process January 1 37,000 $ 76,400 $ 0 $ 30,062Degree of Completion in beginning WIP 65%Units Transferred in from Forming in January 232,500Good Units Transferred Out 240,000Work In Process January 31 24,000Normal Spoilage as a percentage of good units completed 2%Degree of Completion in Ending WIP 50%Costs added in January $ 488,250 $ 26,400 $ 288,375Required: Prepare the Journal Entry(ies) to transfer the costs of production out of the Finishing Department for January. Prepare a Cost of Production Worksheet for the Finishing Department to show how the journal entries are created.
Husky Ltd. manufactures toys using a continuous production process that flows through
two departments: Forming and Finishing. In the forming department, various
components are built and are transferred to the finishing department. In the finishing
department, those components are assembled into Husky’s final product and once
finished, are transferred to Husky’s Finished Goods Inventory. Any spoilage is detected
at the end of the process (i.e. when the toys are 100% complete).
Husky uses the FIFO method of accounting for costs.
In the Finishing Department, Direct materials are added at 70% of conversion and
conversion costs are added evenly throughout the process.
Finishing Department
Physical
Units
Transferred
In
Direct
Materials Conversion
Work in Process January 1 37,000 $ 76,400 $ 0 $ 30,062
Degree of Completion in
beginning WIP 65%
Units Transferred in from
Forming in January 232,500
Good Units Transferred Out 240,000
Work In Process January 31 24,000
Normal Spoilage as a
percentage of good units
completed 2%
Degree of Completion in
Ending WIP 50%
Costs added in January $ 488,250 $ 26,400 $ 288,375
Required:
Prepare the
Department for January. Prepare a Cost of Production Worksheet for the Finishing
Department to show how the journal entries are created.
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