PART 2 (25 marks) Standard Manufacturers produces steel doors for the furniture industry in a four-stage process - Cutting, Moulding, Welding and Assembly. The following data relates to the Welding Department for the month of January during which 20,000 doors valued at $65.50 each were transferred from the Moulding Department to the Welding Department. Other production costs incurred during the month are summarized as follows: Direct Materials Added Direct Manufacturing Wages Manufacturing Overhead $391,600 $638,000 $307,400 Normal losses are estimated to be 2% of input during the period. Inspection takes place during the processing operation, at which point damaged doors are separated from good doors and sold as scrap to local furniture manufacturers at $85 each. At inspection, 2,000 doors were rejected as scrap. These units had reached the following degree of completion: Transfer from Moulding Direct material added Conversion costs 100% 40% 20% Work-in-progress at the end of January was 4,000 doors and had reached the following degree of completion: Transfer from Moulding 100% Direct material added Conversion costs 80% 50% Direct materials added and conversion costs are incurred uniformly throughout the process. Required: (a) Compute the equivalent units and cost per equivalent units for direct materials (From Moulding & Direct materials added) and conversion costs. (10 marks)
PART 2 (25 marks) Standard Manufacturers produces steel doors for the furniture industry in a four-stage process - Cutting, Moulding, Welding and Assembly. The following data relates to the Welding Department for the month of January during which 20,000 doors valued at $65.50 each were transferred from the Moulding Department to the Welding Department. Other production costs incurred during the month are summarized as follows: Direct Materials Added Direct Manufacturing Wages Manufacturing Overhead $391,600 $638,000 $307,400 Normal losses are estimated to be 2% of input during the period. Inspection takes place during the processing operation, at which point damaged doors are separated from good doors and sold as scrap to local furniture manufacturers at $85 each. At inspection, 2,000 doors were rejected as scrap. These units had reached the following degree of completion: Transfer from Moulding Direct material added Conversion costs 100% 40% 20% Work-in-progress at the end of January was 4,000 doors and had reached the following degree of completion: Transfer from Moulding 100% Direct material added Conversion costs 80% 50% Direct materials added and conversion costs are incurred uniformly throughout the process. Required: (a) Compute the equivalent units and cost per equivalent units for direct materials (From Moulding & Direct materials added) and conversion costs. (10 marks)
Cornerstones of Cost Management (Cornerstones Series)
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Author:Don R. Hansen, Maryanne M. Mowen
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Chapter6: Process Costing
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Transcribed Image Text:PART 2
(25 marks)
Standard Manufacturers produces steel doors for the furniture industry in a four-stage process -
Cutting, Moulding, Welding and Assembly.
The following data relates to the Welding Department for the month of January during which 20,000
doors valued at $65.50 each were transferred from the Moulding Department to the Welding
Department.
Other production costs incurred during the month are summarized as follows:
Direct Materials Added
Direct Manufacturing Wages
Manufacturing Overhead
$391,600
$638,000
$307,400
Normal losses are estimated to be 2% of input during the period. Inspection takes place during the
processing operation, at which point damaged doors are separated from good doors and sold as scrap
to local furniture manufacturers at $85 each.
At inspection, 2,000 doors were rejected as scrap. These units had reached the following degree of
completion:
Transfer from Moulding
Direct material added
Conversion costs
100%
40%
20%
Work-in-progress at the end of January was 4,000 doors and had reached the following degree of
completion:
Transfer from Moulding
100%
Direct material added
Conversion costs
80%
50%
Direct materials added and conversion costs are incurred uniformly throughout the process.
Required:
(a)
Compute the equivalent units and cost per equivalent units for direct materials (From Moulding
& Direct materials added) and conversion costs.
(10 marks)
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