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ipment. The fo There was 5,0 Dir Dir Pro No ity contro qu

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FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question 3 Tools & More uses three departments to produce plastic handles for screwdrivers. Forming the handles require mixing the raw materials, molding and drying. After the drying process, the screwdrivers are completed by assembling the handles and the shanks and packing for shipment. The following infomation relates to the molding process: There was no opening WIP stock 5,000 kilos of material at $43.08 per kilo entered the Direct materials added Direct wages incurred Production overhead Nomal loss is 4% of input process $92,000 65.700 75.100 A quality control check was done at the end of the molding process and 350 handles were rejected as spoilage. Spoiled units, regardless of their degree of completion, are sold at $45.00 each, and it is company's policy to credit the process account with the scrap value of the normal loss units. Closing WIP was 800 units but these were incomplete, having reached the following percentages of completion for each of the elements of cost listed Input material Direct material added Conversion costs 100% 75% 50% Required: i) Compute the number of equivalent units of work performed by the Molding Department during the period and the cost per equivalent unit for direct materials and conversion costs. ii) Assign total cost to: a. Units completed and transferred out to the Drying Department b. Units rejected as abnormal spoilage c. Units in the Molding department work in process inventory. iii) Prepare the journal entries to record the assignment of direct materials, direct wages and the allocation of manufacturing overhead to the Molding Department Account, as well as, the cost of the units completed and transferred out to the Drying Department. iv) Post the journal entries to the Work in Process Inventory - Molding Department T- account.
Transcribed Image Text:Question 3 Tools & More uses three departments to produce plastic handles for screwdrivers. Forming the handles require mixing the raw materials, molding and drying. After the drying process, the screwdrivers are completed by assembling the handles and the shanks and packing for shipment. The following infomation relates to the molding process: There was no opening WIP stock 5,000 kilos of material at $43.08 per kilo entered the Direct materials added Direct wages incurred Production overhead Nomal loss is 4% of input process $92,000 65.700 75.100 A quality control check was done at the end of the molding process and 350 handles were rejected as spoilage. Spoiled units, regardless of their degree of completion, are sold at $45.00 each, and it is company's policy to credit the process account with the scrap value of the normal loss units. Closing WIP was 800 units but these were incomplete, having reached the following percentages of completion for each of the elements of cost listed Input material Direct material added Conversion costs 100% 75% 50% Required: i) Compute the number of equivalent units of work performed by the Molding Department during the period and the cost per equivalent unit for direct materials and conversion costs. ii) Assign total cost to: a. Units completed and transferred out to the Drying Department b. Units rejected as abnormal spoilage c. Units in the Molding department work in process inventory. iii) Prepare the journal entries to record the assignment of direct materials, direct wages and the allocation of manufacturing overhead to the Molding Department Account, as well as, the cost of the units completed and transferred out to the Drying Department. iv) Post the journal entries to the Work in Process Inventory - Molding Department T- account.
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