PART 2. (22 marks) Mangal Furnishings produce serving trays for the tourist industry in a five-stage process - Cutting & Shaping, Assembly, Sanding, Finishing and Packaging. Upon entering the finishing process, before the trays are stained and polished, a specialized piece of equipment is used to engrave a logo on each tray. After Packaging, the trays are sent to the business warehouse for delivery to customers. The following data relates to the Finishing Process for the month of March during which 3,800 trays valued at $597.90 each were transferred in from the Sanding Process. Other production costs incurred during the month are summarized as follows: Direct Materials Added Direct Manufacturing Wages Hireage cost of specialized logo equipment Manufacturing Overhead $343,380 $830,150 $21,300 $412,100 Process inspection occurs during the process and normally 2% of the trays entering the Finishing process are rejected and sold as scrap to local retailers at $750 each. During the month 195 of the trays were rejected at inspection, as they were not properly sanded. These trays had reached the following degree of completion: Transfer from Sanding Direct material added Conversion costs 100% 85% 50% During the month 3,205 trays were finished and transferred to the Packaging Process. Work-in-progress at the end of March had reached the following degree of completion: Transfer from Sanding Materials added Conversion costs 100% 621% 40% Materials added and conversion costs are incurred uniformly throughout each process. There were no incomplete units in the Finishing Process at the beginning of the period. Required: a) b) Prepare a statement of equivalent production to determine the equivalent units for direct materials (From Sanding & Direct Material Added), and conversion costs and the cost per equivalent unit for direct materials and conversion costs. (9 marks) Compute the: ■ total cost of the trays finished and transferred out to the Packaging Process ■ cost of the unexpected losses · cost of ending work in process inventory in the Finishing Process. (3 marks) c) Post all transactions to the Work in Process Inventory - Finishing Process T-account. What is the ending balance? (5 marks) d) Prepare the journal entries for the: ■ assignment of product costs to the Finishing Process. The cost of hireage was paid by cash ■ cost of the trays finished and transferred out to the Packaging Process. (3 marks) e) Upon investigation, management has determined that 35% of the unexpected losses resulted from pilferage by employees. Prepare a statement, to determine Mangal Furnishings true loss associated with the Finishing Process. (2 marks)

PART 2. (22 marks) Mangal Furnishings produce serving trays for the tourist industry in a five-stage process - Cutting & Shaping, Assembly, Sanding, Finishing and Packaging. Upon entering the finishing process, before the trays are stained and polished, a specialized piece of equipment is used to engrave a logo on each tray. After Packaging, the trays are sent to the business warehouse for delivery to customers. The following data relates to the Finishing Process for the month of March during which 3,800 trays valued at $597.90 each were transferred in from the Sanding Process. Other production costs incurred during the month are summarized as follows: Direct Materials Added Direct Manufacturing Wages Hireage cost of specialized logo equipment Manufacturing Overhead $343,380 $830,150 $21,300 $412,100 Process inspection occurs during the process and normally 2% of the trays entering the Finishing process are rejected and sold as scrap to local retailers at $750 each. During the month 195 of the trays were rejected at inspection, as they were not properly sanded. These trays had reached the following degree of completion: Transfer from Sanding Direct material added Conversion costs 100% 85% 50% During the month 3,205 trays were finished and transferred to the Packaging Process. Work-in-progress at the end of March had reached the following degree of completion: Transfer from Sanding Materials added Conversion costs 100% 621% 40% Materials added and conversion costs are incurred uniformly throughout each process. There were no incomplete units in the Finishing Process at the beginning of the period. Required: a) b) Prepare a statement of equivalent production to determine the equivalent units for direct materials (From Sanding & Direct Material Added), and conversion costs and the cost per equivalent unit for direct materials and conversion costs. (9 marks) Compute the: ■ total cost of the trays finished and transferred out to the Packaging Process ■ cost of the unexpected losses · cost of ending work in process inventory in the Finishing Process. (3 marks) c) Post all transactions to the Work in Process Inventory - Finishing Process T-account. What is the ending balance? (5 marks) d) Prepare the journal entries for the: ■ assignment of product costs to the Finishing Process. The cost of hireage was paid by cash ■ cost of the trays finished and transferred out to the Packaging Process. (3 marks) e) Upon investigation, management has determined that 35% of the unexpected losses resulted from pilferage by employees. Prepare a statement, to determine Mangal Furnishings true loss associated with the Finishing Process. (2 marks)

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 1E: Entries for materials cost flows in a process cost system The Hershey Company manufactures chocolate...

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Transcribed Image Text:PART 2. (22 marks) Mangal Furnishings produce serving trays for the tourist industry in a five-stage process - Cutting & Shaping, Assembly, Sanding, Finishing and Packaging. Upon entering the finishing process, before the trays are stained and polished, a specialized piece of equipment is used to engrave a logo on each tray. After Packaging, the trays are sent to the business warehouse for delivery to customers. The following data relates to the Finishing Process for the month of March during which 3,800 trays valued at $597.90 each were transferred in from the Sanding Process. Other production costs incurred during the month are summarized as follows: Direct Materials Added Direct Manufacturing Wages Hireage cost of specialized logo equipment Manufacturing Overhead $343,380 $830,150 $21,300 $412,100 Process inspection occurs during the process and normally 2% of the trays entering the Finishing process are rejected and sold as scrap to local retailers at $750 each. During the month 195 of the trays were rejected at inspection, as they were not properly sanded. These trays had reached the following degree of completion: Transfer from Sanding Direct material added Conversion costs 100% 85% 50% During the month 3,205 trays were finished and transferred to the Packaging Process. Work-in-progress at the end of March had reached the following degree of completion: Transfer from Sanding Materials added Conversion costs 100% 621% 40% Materials added and conversion costs are incurred uniformly throughout each process. There were no incomplete units in the Finishing Process at the beginning of the period. Required: a) b) Prepare a statement of equivalent production to determine the equivalent units for direct materials (From Sanding & Direct Material Added), and conversion costs and the cost per equivalent unit for direct materials and conversion costs. (9 marks) Compute the: ■ total cost of the trays finished and transferred out to the Packaging Process ■ cost of the unexpected losses · cost of ending work in process inventory in the Finishing Process. (3 marks) c) Post all transactions to the Work in Process Inventory - Finishing Process T-account. What is the ending balance? (5 marks) d) Prepare the journal entries for the: ■ assignment of product costs to the Finishing Process. The cost of hireage was paid by cash ■ cost of the trays finished and transferred out to the Packaging Process. (3 marks) e) Upon investigation, management has determined that 35% of the unexpected losses resulted from pilferage by employees. Prepare a statement, to determine Mangal Furnishings true loss associated with the Finishing Process. (2 marks)

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