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 Transferred Physical Units $ 76,400 Direct Materials Conversion $ 30,062 Work in Process January 1 Degree of Completion in beginning WIP Units Transferred in from Forming in January Good Units Transferred Out 37,000 232,500 Copyrigh Work In Process January 31 Normal Spoilage as a percentage of good units completed Degree of Completion in Ending WIP Costs added in January Required: 240,000 24,000 2% 65% 50% $488,250 $26,400 $288,375 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 Transferred Physical Units $ 76,400 Direct Materials Conversion $ 30,062 Work in Process January 1 Degree of Completion in beginning WIP Units Transferred in from Forming in January Good Units Transferred Out 37,000 232,500 Copyrigh Work In Process January 31 Normal Spoilage as a percentage of good units completed Degree of Completion in Ending WIP Costs added in January Required: 240,000 24,000 2% 65% 50% $488,250 $26,400 $288,375 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.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text: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
Transferred
Physical
Units
$ 76,400
Direct
Materials
Conversion
$ 30,062
Work in Process January 1
Degree of Completion in
beginning WIP
Units Transferred in from
Forming in January
Good Units Transferred Out
37,000
232,500
Copyrigh
Work In Process January 31
Normal Spoilage as a
percentage of good units
completed
Degree of Completion in
Ending WIP
Costs added in January
Required:
240,000
24,000
2%
65%
50%
$488,250
$26,400
$288,375
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.
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