GROUP Assignment$\_$ Product Costing

PART $2$

$(25$ marks$)$

Standard Manufacturers produces steel doors for the furniture industry in a four$-$stage process Cutting, Moulding, Welding and Assembly.

The following data relates to the Welding Department for the month of January during which $20,000$ doors valued at $\backslash (\backslash$$ $65\mathrm{.}50\backslash )$ each were transferred from the Moulding Department to the Welding Department.

Other production costs incurred during the month are summarized as follows:

Direct Materials Added

Direct Manufacturing Wages

Manufacturing Overhead

$\backslash$$$391,600$

$\backslash$$$638,000$

$\backslash$$$307,400$

Normal losses are estimated to be $\backslash (21/2\backslash \%\backslash )$ of input during the period. Inspection takes place during the processing operation, at which point damaged doors are separated from good doors and sold as scrap to local fumiture manufacturers at $\backslash (\backslash$$ $85\backslash )$ each.

At inspection, $2,000$ doors were rejected as scrap. These units had reached the following degree of completion:

Work$-$in$-$progress at the end of January was $4,000$ doors and had reached the following degree of completion:

Direct materials added and conversion costs are incurred uniformly throughout the process.

Required:

$($a$)$ Compute the equivalent units and cost per equivalent units for direct materials $($From Moulding $\backslash$& Direct materials added$)$ and conversion costs.

$($b$)$ Compute the:

$-$ total cost of the doors completed and transferred out of the Assembly Department

$-$ cost of the unexpected losses

$-$ cost of ending work in process inventory in the Welding Department

$(3$ marks$)$

$($c$)$ Complete the Work in Process Inventory $-$ Welding Process T$-$account, clearly showing the ending balance.

$(5$ marks$)$

$($d$)$ Prepare the journal entries for the:

$\backslash (\backslash$cdot $\backslash )$ assignment of direct materials, direct labour incurred, and the manufacturing overhead applied to the Welding Process

$-$ cost of the units completed and transferred out to the Assembly Process

$(5$ marks$)$

$($e$)$ Given that $\backslash (30\backslash \%\backslash )$ of the unexpected losses were because of pifferage, prepare the abnormal loss statement, clearly showing Standard Manufacturers true loss associated with the Welding Department

$(2$ marks$)$