Jones Manufacturing Co. Ltd. makes a product by way of three consecutive processes. Inspection takes place during the processing operation, at which point bad units are separated from good units and sold as scrap at $20 each. Normal losses are estimated to be 5% of input during the period. The following data relates to process 2 for the month of October. During October, 20,000 units valued at $400,000 were transferred from process 1 to process 2. Other costs incurred during the month were: Direct material added Direct labour Production overheads $272,000 $254,000 $ 120,400 At inspection, 3000 units were rejected as scrap. These units had reached the following degree of completion: Transfer from process 1 Direct material added Conversion costs 100% 80% 50% Work-in-progress at the end of October was 4,000 units and had reached the following degree of completion: Transfer from process 1 Direct material added 100% 60% 40% Conversion costs There were no unfinished goods in process 2 at the beginning of the period. Required: i) The work in process inventory - Process 2 T-account ii) A statement clearly showing the equivalent units for each cost element, namely Transfer from Process 1, direct material added and conversion costs. iii) Calculate: ✓ Cost per unit of finished product, by element of cost and total. ✓ Cost of units transferred to process 3 ✓ Cost of abnormal loss/gain ✓ Cost of uncompleted units in WIP at the end of October. -2- iv) Prepare the abnormal loss/gain statement, clearly showing the amount transferred to the costing profit and loss account. v) Present the journal entries to record the assignment of direct materials and direct labour and the allocation of manufacturing overhead to Process 2. Also give the journal entry to record the cost of the units completed and transferred out to Process 3.
Jones Manufacturing Co. Ltd. makes a product by way of three consecutive processes. Inspection takes place during the processing operation, at which point bad units are separated from good units and sold as scrap at $20 each. Normal losses are estimated to be 5% of input during the period. The following data relates to process 2 for the month of October. During October, 20,000 units valued at $400,000 were transferred from process 1 to process 2. Other costs incurred during the month were: Direct material added Direct labour Production overheads $272,000 $254,000 $ 120,400 At inspection, 3000 units were rejected as scrap. These units had reached the following degree of completion: Transfer from process 1 Direct material added Conversion costs 100% 80% 50% Work-in-progress at the end of October was 4,000 units and had reached the following degree of completion: Transfer from process 1 Direct material added 100% 60% 40% Conversion costs There were no unfinished goods in process 2 at the beginning of the period. Required: i) The work in process inventory - Process 2 T-account ii) A statement clearly showing the equivalent units for each cost element, namely Transfer from Process 1, direct material added and conversion costs. iii) Calculate: ✓ Cost per unit of finished product, by element of cost and total. ✓ Cost of units transferred to process 3 ✓ Cost of abnormal loss/gain ✓ Cost of uncompleted units in WIP at the end of October. -2- iv) Prepare the abnormal loss/gain statement, clearly showing the amount transferred to the costing profit and loss account. v) Present the journal entries to record the assignment of direct materials and direct labour and the allocation of manufacturing overhead to Process 2. Also give the journal entry to record the cost of the units completed and transferred out to Process 3.
Managerial Accounting
15th Edition
ISBN:9781337912020
Author:Carl Warren, Ph.d. Cma William B. Tayler
Publisher:Carl Warren, Ph.d. Cma William B. Tayler
Chapter3: Process Cost Systems
Section: Chapter Questions
Problem 1MAD: Dura-Conduit Corporation manufactures plastic conduit that is used in the cable industry. A conduit...
Related questions
Question
Transcribed Image Text:Jones Manufacturing Co. Ltd. makes a product by way of three consecutive processes.
Inspection takes place during the processing operation, at which point bad units are separated
from good units and sold as scrap at $20 each. Normal losses are estimated to be 5% of input
during the period. The following data relates to process 2 for the month of October. During
October, 20,000 units valued at $400,000 were transferred from process 1 to process 2. Other
costs incurred during the month were:
Direct material added
Direct labour
Production overheads
$272,000
$254,000
$ 120,400
At inspection, 3000 units were rejected as scrap. These units had reached the following degree
of completion:
Transfer from process 1
Direct material added
Conversion costs
100%
80%
50%
Work-in-progress at the end of October was 4,000 units and had reached the following degree
of completion:
Transfer from process 1
Direct material added
100%
60%
40%
Conversion costs
There were no unfinished goods in process 2 at the beginning of the period.
Required:
i) The work in process inventory - Process 2 T-account
ii) A statement clearly showing the equivalent units for each cost element, namely Transfer
from Process 1, direct material added and conversion costs.
iii) Calculate:
✓ Cost per unit of finished product, by element of cost and total.
✓ Cost of units transferred to process 3
✓ Cost of abnormal loss/gain
✓ Cost of uncompleted units in WIP at the end of October.
-2-
iv) Prepare the abnormal loss/gain statement, clearly showing the amount transferred to
the costing profit and loss account.
v) Present the journal entries to record the assignment of direct materials and direct
labour and the allocation of manufacturing overhead to Process 2. Also give the journal
entry to record the cost of the units completed and transferred out to Process 3.
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 2 steps with 7 images
Recommended textbooks for you
Managerial Accounting
Accounting
ISBN:
9781337912020
Author:
Carl Warren, Ph.d. Cma William B. Tayler
Publisher:
South-Western College Pub
Principles of Accounting Volume 2
Accounting
ISBN:
9781947172609
Author:
OpenStax
Publisher:
OpenStax College
Principles of Cost Accounting
Accounting
ISBN:
9781305087408
Author:
Edward J. Vanderbeck, Maria R. Mitchell
Publisher:
Cengage Learning
Managerial Accounting
Accounting
ISBN:
9781337912020
Author:
Carl Warren, Ph.d. Cma William B. Tayler
Publisher:
South-Western College Pub
Principles of Accounting Volume 2
Accounting
ISBN:
9781947172609
Author:
OpenStax
Publisher:
OpenStax College
Principles of Cost Accounting
Accounting
ISBN:
9781305087408
Author:
Edward J. Vanderbeck, Maria R. Mitchell
Publisher:
Cengage Learning
Managerial Accounting: The Cornerstone of Busines…
Accounting
ISBN:
9781337115773
Author:
Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Publisher:
Cengage Learning
Cornerstones of Cost Management (Cornerstones Ser…
Accounting
ISBN:
9781305970663
Author:
Don R. Hansen, Maryanne M. Mowen
Publisher:
Cengage Learning