SPOILED UNITS The Dexter Production Company manufactures a single product. Its operations are a con- tinuous...

 

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SPOILED UNITS The Dexter Production Company manufactures a single product. Its operations are a con- tinuous process carried on in two departments-Machining and Finishing. In each produc- tion process, direct materials are added to the product in each department without in- creasing the number of units produced. For the month of June 19X5, company records indicated these production statistics: Units in process, June 1, 19X5 Units transferred from preceding department Units started in production Units completed and transferred out Units in process, June 30, 19X5 Units spoiled in production Percentage of completion of units in process at June 30, 19X5: Direct materials Direct labor Factory overhead Direct materials Direct labor Factory overhead (applied) MACHINING DEPARTMENT $240,000 140,000 65,000 MACHINING DEPARTMENT FINISHING DEPARTMENT $ 88,500 141,500 25,700 0 0 The units spoiled in production had no scrap value and were 50% complete as to direct material, direct labor, and factory overhead. The company's policy is to treat the cost of spoiled units in production as a separate element of cost in the department in which the spoilage occurs. Cost records showed the following charges for the month of June: 80,000 60,000 20,000 0 100% 50% 25% FINISHING DEPARTMENT 0 60,000 0 50,000 8,000 2,000 100% 70% 70% Required: Prepare a cost of production report for June for both departments. (Assume that spoilage was normal and that weighted average costing was used.) (AICPA adapted) SPOILED UNITS The Dexter Production Company manufactures a single product. Its operations are a con- tinuous process carried on in two departments-Machining and Finishing. In each produc- tion process, direct materials are added to the product in each department without in- creasing the number of units produced. For the month of June 19X5, company records indicated these production statistics: Units in process, June 1, 19X5 Units transferred from preceding department Units started in production Units completed and transferred out Units in process, June 30, 19X5 Units spoiled in production Percentage of completion of units in process at June 30, 19X5: Direct materials Direct labor Factory overhead Direct materials Direct labor Factory overhead (applied) MACHINING DEPARTMENT $240,000 140,000 65,000 MACHINING DEPARTMENT FINISHING DEPARTMENT $ 88,500 141,500 25,700 0 0 The units spoiled in production had no scrap value and were 50% complete as to direct material, direct labor, and factory overhead. The company's policy is to treat the cost of spoiled units in production as a separate element of cost in the department in which the spoilage occurs. Cost records showed the following charges for the month of June: 80,000 60,000 20,000 0 100% 50% 25% FINISHING DEPARTMENT 0 60,000 0 50,000 8,000 2,000 100% 70% 70% Required: Prepare a cost of production report for June for both departments. (Assume that spoilage was normal and that weighted average costing was used.) (AICPA adapted)

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In the case of normal loss the loss is absorbed by Process cost 16 a i AB ii Ex... View the full answer