Reference no: EM133168449

Question - Larado Inc. uses a manufacturing costing system uniform and continuous to see the costs of its three workshops of production. The second workshop receives the units of the first workshop and incurs a uniform transformation cost throughout along the process. The units are inspected at workshop 2 a times advanced to 60%. All the raw material is then added to units in good condition.

Here is some additional information on the second production workshop for the month of January 2019:

a) At the beginning of January, 2,000 units were in production. It is estimated that they were advanced at 40%. Here are the costs related to these units:

Costs transferred from the first production workshop $110,000

Costs incurred in the second production workshop $1,800

b) During the month of January, 35,000 units went from first workshop to the second for a cost of $205,000.

c) Here are the actual costs incurred by the second workshop of production in January 2019:

Raw material $12,500

Processing cost $105,000

d) During the month of January. 32,000 units have been completed and transferred to the third workshop.

e) At the end of January. 4,000 units were in production; they were estimated to be 70% advanced.

f) Normal losses = 2% of good units

g) Larado Inc. uses the weighted average cost method.

Work to do: For the second production workshop,

1. Calculate normal losses and abnormal losses by units.

2. Calculate the equivalent production units for the raw material and processing costs.

3. Calculate the cost allocated to the work in progress inventory end of January 2019.

4. Calculate the total cost attributed to the correct transferred units from the second to the third production workshop.

5. Calculate the cost attributed to abnormal losses.