Reference no: EM133015705

Question: JigSaw Puzzle Company produces puzzles in small batches.

The company uses operation costing and manufactures their puzzles in four operations. In the Cutting operation, the puzzle pieces are cut to the correct sizes. In Finishing, the edges are smoothed to ensure a good fit. In Laminating, the puzzles are covered with a protective coating to protect the colored ink. In Packaging, the puzzles are inspected and packaged. Not all puzzles are laminated as some customers prefer a matte finish. During February of the current year, the following conversion costs will be incurred by the company: Cutting Finishing Laminating Packaging $140,000 $65,100 $42,000 $28,000 JigSaw Puzzle Company computes conversion cost rates per unit each month. In February, the company will manufacture 35,000 puzzles, 10,000 of which will NOT be laminated. Details of two work orders for February are as follows: W.O. #104 W.O. #105 Number of Puzzles Direct Materials costs Laminated? 2,000 $48,000 No 3,000 $76,000 Yes

REQUIRED:

1. Compute the Conversion Cost allocation rates per unit for February.

2. Calculate the total costs and the costs per puzzle for each of the two work orders.

3. Journalize W/O #105 from start to finish.

Assume all direct materials are added at the start of the Cutting operation. 4 Question IV - Backflush Costing (10 Marks) Maple Products Ltd produces hockey sticks. Data for the month of February for production of their top model, the "Canadian Pro D-Lux" is given below. The company uses JIT production and backflush costing with three trigger points for entries in the accounting system:

• incurrence of actual materials purchase costs

• completion of good output units

• sale of finished units Production data for February: Standard cost of 1 good unit of output: - direct materials $20 - conversion costs $25 Raw materials purchased (@ standard) $505,000 Conversion costs incurred $615,000 Good units of output 25,000 Units sold 23,500

REQUIRED:

1. Prepare summary entries under backflush costing for the month of February assuming that the raw materials had additional costs as follows: Unfavourable price variance $2,500 Unfavourable efficiency variance $3,500

2. Assume that all variances and underallocated or overallocated conversion costs are written off monthly to costs of Goods Sold. Prepare the pertinent journal entry.