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Assignment - Process Costing and Spoilage
Kabana Industries manufactures widgets in two stages. The first phase of production occurs in the Assembly Department. Units are then transferred to the Finishing Department where the product is finished and packaged for shipment to distributors. This question deals with the Finishing Department.
The Finishing Department adds material (Material "A") to the widget as soon as it is received from the Assembly Department. Packaging material (Material "B") is added when the production is 95% complete. Inspection takes place when production is 85% complete.Following is the data recorded for the Finishing Department for the month of September:
Units of beginning work-in-process inventory
15,625
Units of ending work-in-process inventory
31,250
Percentage completion of units in beginning work-in-process inventory
55%
Cost of Material "A" in beginning work-in-process inventory
$171,875
Cost of Material "B" in beginning work-in-process inventory
?
Transferred-in cost in beginning work-in-process inventory
$187,500
Conversions costs in beginning work-in-process inventory
$359,375
Percentage completion of units in ending work-in-process inventory
92%
Costs of Material "A" added in the month of September
$835,800
Costs of Material "B" added in the month of September
$93,750
Conversion costs added during September
$1,968,750
Transferred-in costs added during September
$1,317,975
Units started in September
109,375
Units completed and transferred to finished goods inventory
78,125
Normal spoilage is 5% of all good units that pass inspection. The company pro-rates the normal spoilage between cost of goods manufactured and ending work-in-process. The company uses the weighted average method for cost assignment.
Required: For September, prepare a production report, summarizing total costs to account for and assigning the costs to units completed and transferred out, to abnormal spoilage and to units in ending work-in-process.
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