1). Spoilage occurs continuously through the department and normal spoilage should not exceed 10
percent of the units started.
Department 2 adds material (packaging) at the 75 percent completion point; this material does not
cause an increase in the number of units being processed. A quality control inspection takes place when
the goods are 80 percent complete. Spoilage should not exceed 5 percent of the units transferred in
from Department 1.
The following production cost data are applicable for operations for August 20X7:
Department 1 Production Data
Beginning inventory (65% complete)
Units started
Units completed
Units in ending inventory (40% complete)
Department 1 Cost Data
Beginning inventory:
Material
Conversion
Current period:
Material
Conversion
Total costs to account for
[tex]$ 1,550 2,300 $[/tex]38,080
78,645
1,000
25,000
22,000
2,800
[tex]$ 3,850 116,725 $[/tex]120,575
Department 2 Production Data
Beginning inventory (90% complete)
Units transferred in
Units completed
8,000
22,000
24,000
4,500
Units in ending inventory (20% complete)
Department 2 Cost Data
Beginning inventory:
Transferred in
Material
[tex]$40,800 24,000 Conversion 4,320 $[/tex] 69,120*
Transferred in
[tex]$113,700 Material' Conversion 53,775 11,079 Total costs to account for 178,554 $[/tex]247,674
Current period: use this figure.
Required:
B. Compute the equivalent units of production in each department.
b Determine the cost per equivalent unit in each department and compute the cost transferred out,
the cost in ending inventory, and the cost of spoilage (if necessary).
4
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