Flu Buster Ltd manufactures a type of oral flu vaccine in capsules. These are produced in three separate departments sequentially: Mixing, Encapsulating, and Packaging.

The following information of process inputs, outputs, and work in process relates to the Encapsulating department for the month of April 2022:

Opening work in process 26,700kg

Raw materials input 110,600kg

Output completed 98,400kg

Closing work in process 29,200kg

The opening and closing work in process are respectively 50 percent and 70 percent complete as to conversion costs.

Raw materials are added at the beginning of the manufacturing process. However, conversion costs are incurred evenly throughout the manufacturing process.

Spoilages are assumed to occur at the stage of completion where the inspection takes place. All spoilages are assumed to be from units started during the month.

The inspection takes place when the products are 90% complete.

The opening work in the process included the transferred-in costs of $200,250 from the Mixing department (dept), raw material costs of $106,800 and conversion costs of $80,100.

Costs incurred during the period were:

Transferred-in costs,Mixing dept $553,000

Raw material input $331,800

Conversion costs $456,880

The normal spoilage is 3 percent of the units inspected.

Required:

(a) Assuming that the company uses the FIFO method of process costing, use the 4-step approach:

(i) Compute the cost per equivalent unit for each product cost category for the month of April. 

(ii) Calculate the cost of goods transferred to the Packaging department at the end of April. 

(iii) Calculate the cost of abnormal spoilage in April. (4 marks)

(iv) Calculate the cost of ending work in process in the Encapsulating department at the end of April. 

(v) Calculate the unit cost of the goods transferred to the Packaging department (rounded to 2 decimal places). (1 mark)

(vi) Present all the necessary journal entries.

(b) Assuming that the company uses the weighted-average method, use the 4-step approach to compute the cost of goods transferred to the Packaging department and the cost of ending work in process in the Encapsulating department at the end of April.

(c) Compare and demonstrate how the difference in the method of process costing will affect the values of completed units and the ending work in process in the Encapsulating dept.