Consider Nally & Gibson’s plant operations in Georgetown. The plant processes limestone rock that is quarried in a nearby mine. Exhibit 14.6 (p. 645) shows the various processing steps. Process 3 is crushing and screening the rock. To produce the crushed limestone, the company starts with limestone rocks from its quarry in Georgetown, Kentucky and puts the rocks through a crushing process. Suppose that during May, the company quarried and shipped to its processing plant 288 tons of rock from its quarry and at the end of the month 15 tons remained in process, on average 20 per cent complete. The cost of rocks from the quarry for the last 5 months has been $120 per ton, so the cost of the limestone rock put into Process 3 is $120/ton times 288 tons, or $34,560. Labour and overhead cost during May in the rock crushing process were $35,880. Assume there was no work in process at the beginning of May.
1. Compute the cost of crushed rock processed and transferred out in May.
2. Compute the cost of the work in process inventory at the end of May.

Exhibit 14.6

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RESOURCES Direct material Direct labour Overhead PROCESS 1 Quarry or mine limestone rock PROCESS 2 Transport rock to plant PROCESS 3 Crush and screen limestone rock PROCESS 4 Stock limestone Exhibit 14.6 Process costing at Nally & Gibson Finished goods Cost of goods sold