Larado Inc. uses a manufacturing costing systemuniform and continuous to see the costs of its three workshopsof
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workshop and incurs a uniform transformation cost throughoutalong the process. The units are inspected at workshop 2 atimes advanced to 60%. All the raw material is thenadded to units in good condition.
Here is some additional information on the secondproduction workshop for the month of January 2019:
a) At the beginning of January, 2,000 units were in production. It is estimatedthat they were advanced at 40%. Here are the costs related to theseunits:
Costs transferred from the first production workshop $110,000
Costs incurred in the second production workshop $1,800
b) During the month of January, 35,000 units went fromfirst workshop to the second for a cost of $205,000.
c) Here are the actual costs incurred by the second workshop ofproduction in January 2019:
Raw material $12,500
Processing cost $105,000
d) During the month of January. 32,000 units have beencompleted and transferred to the third workshop.
e) At the end of January. 4,000 units were inproduction; they were estimated to be 70% advanced.
f) Normal losses = 2% of good units
g) Larado Inc. uses the weighted average cost method.
Work to do: For the second production workshop,
1. Calculate normal losses and abnormal losses byunits.
2. Calculate the equivalent production units for theraw material and processing costs.
3. Calculate the cost allocated to the work in progress inventory.end of January 2019.
4. Calculate the total cost attributed to the correct transferred unitsfrom the second to the third production workshop.
5. Calculate the cost attributed to abnormal losses.
Related Book For
Managerial Accounting
ISBN: 978-0697789938
13th Edition
Authors: Ray H. Garrison, Eric W. Noreen, Peter C. Brewer
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