You have recently been appointed as the cost accountant for Silky Hair Co. Ltd., a manufacturer of
Question:
You learn that the mixing department is the last stage of the shampoo production process. Units transferred from the previous department use direct labour and overhead inputs evenly in mixing. A secret ingredient is also added to each unit at the 40% point in processing.
You also find out that the beginning inventory for the month of November was 4,000 units with the following costs:
Transferred-in costs ...............$ 16,000
Direct materials ........................3,600
Conversion costs .....................24,000
In addition, during November, 16,000 units were transferred to mixing at a $4 unit cost. The ending inventory consisted of 5,000 units that were 60% complete. During the month, direct materials of $26,400 were added and 8,500 hours of direct labour were used at a wage rate of $12.00 per hour.
The overhead rate for 2012, applied on a basis of direct labour hours, was based on a predicted annual usage of 120,000 hours and a cost function derived from the following overhead equation: Y = 60,000 + 2X, where Y is the total overhead costs and X is the direct labour hours.
Instructions
Using weighted-average process costing techniques, calculate the following for the mixing department for November 2012:
(a) The predetermined overhead rate for 2012
(b) The number of equivalent units in ending inventory
(c) The unit cost of items transferred to finished goods
(d) The value assigned to ending inventory
Ending Inventory
The ending inventory is the amount of inventory that a business is required to present on its balance sheet. It can be calculated using the ending inventory formula Ending Inventory Formula =...
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Related Book For
Managerial Accounting Tools for Business Decision Making
ISBN: 978-1118033890
3rd Canadian edition
Authors: Jerry J. Weygandt, Paul D. Kimmel, Donald E. Kieso, Ibrahim M. Aly
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