Question

Energy Products, Inc., makes high-vitamin, calorie-packed wafers that are popular among professional athletes because they supply quick energy. The company produces the wafers in a continuous flow, and it uses a process costing system based on the average costing method. It recently purchased several automated machines so that the wafers can be produced in a single department. All direct materials are added at the beginning of the process. The costs for the machine operators’ labor and production-related overhead are incurred uniformly throughout the process.
In February, the company put a total of 231,200 liters of direct materials into production at a cost of $294,780. Two liters of direct materials were used to produce one unit of output (one unit 5 144 wafers). Direct labor costs for February were $60,530, and overhead was $181,590. The beginning work in process inventory for February was 14,000 units, which were 100 percent complete for direct materials and 20 percent complete for conversion costs. The total cost of those units was $55,000, $48,660 of which was assigned to the cost of direct materials. The ending work in process inventory of 12,000 units was fully complete for direct materials but only 30 percent complete for conversion costs.

Required
1. Using the average costing method and assuming no loss due to spoilage, prepare a process cost report for February.
2. From the information in the process cost report, identify the amount that should be transferred out of the Work in Process Inventory account, and state where those dollars should be transferred.



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  • CreatedMarch 26, 2014
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