Grass Co. Business operates several production processes including the production of bulk

animal feed for cattle. One such product is produced in three separate process operations -

Testing, Mixing & Packaging. The information below is of the costs incurred in, and output

from the Mixing Process during the period just completed.

(i) Input from Testing: 120,000 kilos valued at an average cost of $24.05 per kilo

(ii) Other manufacturing costs incurred during the period:

Direct material added$790500

Direct labour$380400

Manufacturing overhead $788520

(iii) Normal losses of materials, which occurs in the early stages of the Mixing Process

(after all materials have been added), is expected to be 3% of input.

(iv) At inspection, a batch of 5,000 kilos of the feed was discarded. The feed had all the

materials but was estimated to be 40% complete for labour and overhead. Losses

from this process are stored in piles & sold as scrap to local farmers at $25.60 per

kilo.

(v) 112,000 kilos were completed and transferred to the Packaging Process.

(vi) Closing work in process was 100% complete, apart from Mixing Process conversion

costs, which were 70% complete.

(vii) The equipment was cleaned at the end of the previous period hence there were no

units in process at the beginning of the period.

Required:

(a) compute a statement of equivalent production to determine the equivalent units and

conversion costs and the cost per equivalent unit for direct materials (From Testing

& Direct Material Added), and conversion costs.

(b) Calculate the:

- Total cost of feed mixed and transferred to the Packaging Process

- Cost of unexpected losses

- Cost of ending work-in-process inventory in the Mixing Process

(c) compute the Work-In-Process Inventory - Mixing Process T-account, clearly

showing the ending balance.

(d) show the journal entries necessary to record the assignment of direct materials,

direct manufacturing wages and manufacturing overhead applied to Process 2. Also

show the journal entries to record the cost of the feed mixed and transferred to the

Packaging Department.

Answer rating: 100% (QA)

Answer Okay lets go through this stepbystep a Statement of Equivalent Production for the Mixing Proc... View the full answer