A manufacturer uses process costing .It has one direct material cost pool and one conversion cost pool.Information
Question:
A manufacturer uses process costing.It has one direct material cost pool and one conversion cost pool.Information for the month is as follows:
Beginning of MonthEnd of Month
Work in process: 4,000 units 3,000 units
Conversion (% of completion in WIP): 40% 60%
Costs of Materials in WIP: $ 81,000 ?
Costs of Conversion in WIP: $ 93,000 ?
During the month:
Units started during the month: 25,100 units
Costs incurred for Materials: $300,000
Costs incurred for Conversion: $270,000
Total Spoiled Units detected:780 units
Other Income Statement Information:
Sales:$920,000
Admin expenses$200,000
Inspection occurs when units are 75% converted, and inspection determines if the units are "acceptable" or "spoiled".Normal Spoilage is based on 3% of units started.
85% of direct materials is added at the beginning of the process, and the remaining 15% of direct materials (for packaging) is added immediately after inspection.
There were no finished goods or raw material inventories at any point of the process.
Required:
Part A: an Income Statement for the month assuming that inventory is based on modified FIFO,
Part B:an Income Statement for the month assuming that inventory is based on Weighted Average.