Earthtones Paint Company uses a process-cost system. Materials are added at the beginning of a particular process,
Question:
Earthtones Paint Company uses a process-cost system. Materials are added at the beginning of a particular process, and conversion costs are incurred uniformly. Work-in-process at the beginning of the month is 40 percent complete; at the end, 20 percent.
One litre of material makes one litre of product. Data are as follows:
Beginning inventory .....................................................................550 litres
Direct material added ...............................................................7,150 litres
Ending inventory ...........................................................................400 litres
Conversion costs incurred .............................................................$34,986
Cost of direct materials added.......................................................$65,340
Conversion costs, beginning inventory .........................................$ 1,914
Cost of direct materials, beginning inventory ..............................$ 3,190
1. Use the weighted-average method. Prepare a schedule of output in equivalent units and a schedule of application of costs to products. Show the cost of goods completed and of ending work-in-process.
2. Prepare summary journal entries for the use of direct materials and conversion costs. Also prepare a journal entry for the transfer of goods completed, assuming that the goods are transferred to another department.
Ending InventoryThe ending inventory is the amount of inventory that a business is required to present on its balance sheet. It can be calculated using the ending inventory formula Ending Inventory Formula =...
Step by Step Answer:
Management Accounting
ISBN: 978-0132570848
6th Canadian edition
Authors: Charles T. Horngren, Gary L. Sundem, William O. Stratton, Phillip Beaulieu