Process Costing Pfizer Ltd produces a Covid 19 vaccine using a weighted-average process costing. The company’s production processes are split into two separate departments. The First Department produces the small bottle containers and sends them to the Second Department, where actual vaccines are produced and injected into the bottles to be sent to the distribution centres. The Second Department receives the bottle containers from the First Department as ‘Transferred In’ and injects the vaccine into the bottles at the beginning of the process. Preservatives (as the second material) are injected into the bottles at 60% level of completion. Vaccines are tested at 80% level of completion, and good units are packed at 100% level of completion. Spoilages up to 3% of units that passed the inspection will be considered normal. The bottle (Transfer In) costs of all spoilages are charged back to the First Department for 80 cents per unit, and the bottle costs of normal spoilages are treated as recovery cost offsetting the conversion cost of the period. You need to separate normal recovery from abnormal recovery (see the workshop solution for process costing). There were 10,000 units of vaccines at the beginning of the period (BWIP) in Department 2, which were 55% complete in terms of conversion cost. Furthermore, there were 30,000 units of vaccines at the end of the period (EWIP), which were 90% complete. During the current production process, the second department received 130,000 bottles from the first department (as Transfer In) and completed 100,000 vaccines and sent them to its distribution department for sale. The following information is available for the month of operation in the Second Department: Direct Materials ($) Transfer In Costs ($) Preservatives Conversion Costs ($) Packaging Costs of BWIP $15,000 $5,000 $0 $5,000 $0 Costs added during the period $170,000 $65,000 $30,000 $115,000 $20,000

Required:

Prepare a full process costing report (including all five steps) for the Second Department for the month using the weighted average method to answer all questions.

Answer rating: 100% (QA)

The second process involve item of cost 1 Transfer in bottles 2 Vaccine Injected at the beginning of the period 3 Preservatives injected at 60 level of completion 4 Conversion cost on a uniform basis ... View the full answer