Gary's Tools manufactures one of its products in a two-department process. A separate Work in Process Inventory account is maintained for each department, and the company uses a weighted average process costing system. The first department is Molding; the second is Grinding. At the end of production in Grinding, a quality inspection is made and then packaging is added. Overhead is applied in the Grinding Department on a machine-hour basis. Production and cost data for the Grinding Department for August 2010 follow:

Production Data

Beginning WIP Inventory (percent complete: material, 0; labor,

30; overhead, 40) .................... 1,000 units

Transferred in from Molding ................... 50,800 units

Normal spoilage (found at the end of processing during quality control) ... 650 units

Abnormal spoilage (found at end of processing during quality control) .... 350 units

Ending WIP Inventory (percent complete: material, 0; labor,

40; overhead, 65) .................... 1,800 units

Transferred to finished goods ...................? units

a. Prepare the August cost of production report for the Grinding Department. Gary's Tools assigns the cost of normal spoilage only to the products that are transferred out. As such, the company extends both the normal and abnormal spoilage units in the EUP schedule to all cost components except packaging (as packaging is not added to spoiled units). The cost of normal spoilage is attached to the units transferred to Finished Goods Inventory; the cost of abnormal spoilage is considered a period loss.
b. Prepare the journal entry to dispose of the cost of abnormalspoilage.

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Cost Data Beginning WIP Inventory Transferred in Material (label and package) Direct labor Overhead 6,050 325 980 $ 7355 Current period Transferred in Material (label and package) Direct labor Overhead $149350 12,250 23,767 50,190 235,557 $242,912 Total cost to account for