Weighted Average Method, Physical Flow, Equivalent Units, UnitCosts, Cost AssignmentMimasca Inc. manufactures various holiday masks. Each mask is shaped from a piece of rubberin the molding department. The masks are then transferred to the finishing department, wherethey are painted and have elastic bands attached. Mimasca uses the weighted average method. InMay, the molding department reported the following data:a. BWIP consisted of 15,000 units, 20% complete. Cost in beginning inventory totaled$1,656.b. Costs added to production during the month were $26,094.c. At the end of the month, 45,000 units were transferred out to finishing. Then, 5,000 unitsremained in EWIP, 25% complete.Required:1. Prepare a physical flow schedule.2. Calculate equivalent units of production.3. Compute unit cost.4. Calculate the cost of goods transferred to finishing at the end of the month. Calculate thecost of ending inventory.5. CONCEPTUAL CONNECTION Assume that the masks are inspected at the end of themolding process. Of the 45,000 units inspected, 2,500 are rejected as faulty and arediscarded. Thus, only 42,500 units are transferred to the finishing department. Themanager of Mimasca considers all such spoilage as abnormal and does not want toassign any of this cost to the 42,500 good units produced and transferred to finishing.Your task is to determine the cost of this spoilage of 2,500 units and then to discusshow you would account for this spoilage cost. Now suppose that the manager feels thatthis spoilage cost is just part of the cost of producing the good units transferred out.Therefore, he wants to assign this cost to the good production. Explain how this wouldbe handled. (Hint: Spoiled units are a type of output, and equivalent units of spoilagecan be calculated.)
Weighted Average Method, Physical Flow, Equivalent Units, Unit
Costs, Cost Assignment
Mimasca Inc. manufactures various holiday masks. Each mask is shaped from a piece of rubber
in the molding department. The masks are then transferred to the finishing department, where
they are painted and have elastic bands attached. Mimasca uses the weighted average method. In
May, the molding department reported the following data:
a. BWIP consisted of 15,000 units, 20% complete. Cost in beginning inventory totaled
$1,656.
b. Costs added to production during the month were $26,094.
c. At the end of the month, 45,000 units were transferred out to finishing. Then, 5,000 units
remained in EWIP, 25% complete.
Required:
1. Prepare a physical flow schedule.
2. Calculate equivalent units of production.
3. Compute unit cost.
4. Calculate the cost of goods transferred to finishing at the end of the month. Calculate the
cost of ending inventory.
5. CONCEPTUAL CONNECTION Assume that the masks are inspected at the end of the
molding process. Of the 45,000 units inspected, 2,500 are rejected as faulty and are
discarded. Thus, only 42,500 units are transferred to the finishing department. The
manager of Mimasca considers all such spoilage as abnormal and does not want to
assign any of this cost to the 42,500 good units produced and transferred to finishing.
Your task is to determine the cost of this spoilage of 2,500 units and then to discuss
how you would account for this spoilage cost. Now suppose that the manager feels that
this spoilage cost is just part of the cost of producing the good units transferred out.
Therefore, he wants to assign this cost to the good production. Explain how this would
be handled. (Hint: Spoiled units are a type of output, and equivalent units of spoilage
can be calculated.)
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