Red Chemical Inc. uses process costing system in its two producing departments. In department 2, inspection...

 

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Red Chemical Inc. uses process costing system in its two producing departments. In department 2, inspection takes place at the 96% stage of completion, after which materials are added to good units. A spoilage rate of 3% of good output is considered normal. Department 2 records for April shows: Received from department 1 30,000 units Cost $135,000 Materials $12,500 Conversion cost (labor + factory overhead) $139,340 Transferred to finished goods 25,000 units Ending work in process inventory (50% complete) 4,200 units Required: Computed the following: a) Equivalent Production Units b) Compute the per unit cost c) Compute the cost of the units transferred to warehouse d) Compute the cost of units in process on 30th April e) explains how companies adjust their normal and abnormal losses during production Red Chemical Inc. uses process costing system in its two producing departments. In department 2, inspection takes place at the 96% stage of completion, after which materials are added to good units. A spoilage rate of 3% of good output is considered normal. Department 2 records for April shows: Received from department 1 30,000 units Cost $135,000 Materials $12,500 Conversion cost (labor + factory overhead) $139,340 Transferred to finished goods 25,000 units Ending work in process inventory (50% complete) 4,200 units Required: Computed the following: a) Equivalent Production Units b) Compute the per unit cost c) Compute the cost of the units transferred to warehouse d) Compute the cost of units in process on 30th April e) explains how companies adjust their normal and abnormal losses during production

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