Question

The Rally Company operates under a process cost system using the weighted average method. All direct materials are added at the beginning of production in the department, and conversion costs are incurred evenly through-out production. Inspection occurs when production is 100% completed.
Following are data for July. All unfinished work at the end of July is 25% completed. The beginning inventory is 80% completed.
Beginning inventories:
Direct materials ............. $ 4,000
Conversion costs .............. 3,200
Costs added during current period:
Direct materials ............. $36,000
Conversion costs ............. 32,000
Physical units:
Units in beginning inventory .......... 2,000
Units started this month ........... 18,000
Total units completed and transferred out .... 14,800
Normal spoilage ............. 1,200
Abnormal spoilage ............ 1,000

REQUIRED
A. Prepare a spreadsheet that uses a data input box and calculates information necessary for a weighted average process cost report and presents the cost report in an easily understood format.
B. Write out the journal entries for this period’s work under weighted average.
C. Copy the spreadsheet from Part (A) into a new worksheet, highlight the tab, and rename the worksheet “FIFO.” Now alter the weighted average calculations so that the spreadsheet uses data from the input box to calculate the information necessary for a FIFO process cost report and presents the cost report in an easily understood format.
D. Describe the advantages and disadvantages of the FIFO and weighted average process costing methods for Rally.



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  • CreatedJanuary 26, 2015
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