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 information relates to the molding process: There was no opening WIP stock 5,000 kilos of material at $43.08 per kilo entered the process Direct materials added $92,000 Direct wages incurred 65,700 Production overhead 75,100 Normal loss is 4% of input 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 100% Direct material added 75% Conversion costs 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.
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 information relates to the molding process:
There was no opening WIP stock
5,000 kilos of material at $43.08 per kilo entered the process
Direct materials added $92,000
Direct wages incurred 65,700
Production overhead 75,100
Normal loss is 4% of input
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 100%
Direct material added 75%
Conversion costs 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.
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