Question

Toddler Toys produces toy construction vehicles for young children. Plastic pieces are molded in the plastics department. These pieces are transferred to the assembly department, where direct materials are added after some assembly has been done. For example, plastic pieces of road graders are put together, then the blades and wheel assemblies are added, and finally some details are painted on the sides and back. The direct materials are added in the assembly department when the process is 75% complete. Beginning inventory is 80% complete and ending inventory is 25% complete. Following are data for August.

Beginning inventory costs for the assembly department:
Transferred in ............. $4,000
Direct materials ........... 2,000
Conversion costs ............ 1,600
Total cost .............. $7,600
Costs incurred in the assembly department during current period:
Transferred in ...... $36,000
Direct materials ...... 18,000
Conversion costs ..... 16,000
Total cost ......... $70,000
Physical units in the assembly department:
Units in beginning inventory ......... 2,000
Units started this month .......... 18,000
Total units completed and transferred out ... 14,800
Normal spoilage ............. 500 (100% complete)
Abnormal spoilage ............ 1,500 (100% complete)

REQUIRED
A. Choose a process costing method for the assembly department. Explain your choice and describe its pros and cons.
B. Prepare a cost report using the method you chose in part (A).
C. Write out journal entries for the cost report you prepared in part (B).



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  • CreatedJanuary 26, 2015
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