A product passes through three processes to completion. In the month of June, the costs of production
Question:
A product passes through three processes to completion. In the month of June, the costs of production were as follows:
Cost Element | Total Costs | Processes | ||
1 | 2 | 3 | ||
Additional Materials | 8,432 | 2,000 | 3,020 | 3,462 |
Direct Labor | 12,000 | 3,000 | 4,000 | 5,000 |
Direct Expenses | 726 | 500 | 226 | - |
Production Overheads are $6,000. 1,000 units at $5 are introduced to process 1 and the output of each process is as follows: Process 1; 920 units, Process 2; 870 units, and Process 3; 800 units
The company expects a normal loss of 10%, 5%, and 10% of input for processes 1, 2, and 3 respectively. The loss in each process is represented with scrap which is sold to a piggery farm owner at $3 per unit, $5 per unit, and $6 per unit for processes 1, 2, and 3 respectively.
Production overheads are absorbed in process on the basis of 50% of the cost of direct labor.
No beginning and closing inventory is registered.
Required;
Prepare process accounts and other relevant accounts.
Accounting Principles
ISBN: 978-0470533475
9th Edition
Authors: Jerry J. Weygandt, Paul D. Kimmel, Donald E. Kieso