Michael’s Pottery makes decorative garden pieces using three consecutive processes: Moulding, Baking & Spraying. Quality control check takes place during the process, at which point, rejected units are separated from good units. The following details relate to production for the month of October 2020, for the Baking Department. i) Work-in-process, October 1: -0- ii) Transfer from Moulding: 2,000 units valued at $336.40 each iii) Other manufacturing costs incurred during October: Direct material added $202,120 Direct Manufacturing Wages $212,840 Manufacturing Overhead Applied $306,160 iv) Normal losses are estimated to be 5% of the units transferred in during the period. Losses from the Baking Department are deemed to be scrap and sold at $382 each. v) At inspection 300 decorative pieces were rejected as scrap. These units had reached the following degree of completion: From Moulding 100% Direct material added 40% Conversion costs 12½% vi) 1,200 pieces were completed and transferred out to the Spraying Department vii) Work-in-process at the end of October had reached the following degree of completion: From Moulding 100% Direct material added 70% Conversion costs 55% Direct materials added and conversion costs are incurred uniformly throughout the process. Answer the following: d) State the journal entries necessary to record the assignment of direct materials, direct manufacturing wages and manufacturing overhead applied to the Baking Department. Also give the journal entries to record the cost of goods completed and transferred to the Spraying Department. e) Given that 25% of the unexpected losses were because of pilferage, prepare the abnormal spoilage statement, clearly showing Michael Pottery’s true loss. Please use the format in the image attached when answering questions d and e.
Michael’s Pottery makes decorative garden pieces using three consecutive processes: Moulding, Baking & Spraying. Quality control check takes place during the process, at which point, rejected units are separated from
good units.
The following details relate to production for the month of October 2020, for the Baking Department.
i) | Work-in-process, October 1: -0- | |
ii) | Transfer from Moulding: 2,000 units valued at $336.40 each |
iii) Other
Direct material added $202,120
Direct Manufacturing Wages $212,840
Manufacturing
iv) Normal losses are estimated to be 5% of the units transferred in during the period. Losses from the Baking Department are deemed to be scrap and sold at $382 each.
v) At inspection 300 decorative pieces were rejected as scrap. These units had reached the following degree of completion:
From Moulding 100%
Direct material added 40%
Conversion costs 12½%
vi) 1,200 pieces were completed and transferred out to the Spraying Department
vii) Work-in-process at the end of October had reached the following degree of completion:
From Moulding 100%
Direct material added 70%
Conversion costs 55%
Direct materials added and conversion costs are incurred uniformly throughout the process.
Answer the following:
d) State the
e) Given that 25% of the unexpected losses were because of pilferage, prepare the abnormal spoilage statement, clearly showing Michael Pottery’s true loss.
Please use the format in the image attached when answering questions d and e.
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