Grouper’s Closet mass-produces luxurious sleepwear for women. Consider the follo
ID: 2405311 • Letter: G
Question
Grouper’s Closet mass-produces luxurious sleepwear for women. Consider the following data for the flannel nightgown department for the month of January. All direct materials are added at the beginning of production in the department, and conversion costs are incurred evenly throughout production. Inspection occurs when production is 100% completed. Normal spoilage is 6,600 units for the month.
74,000
85,000
16,000
85,000
28,000
973,000
$
2,759,000
Prepare a process cost report using the FIFO method.
———
Physical Units Beginning WIP (25% complete) 11,000 Started during January74,000
Total to account for85,000
Good units completed and transferred out during current period: From beginning work in process 11,000 Started and completed 50,000 Spoiled units 8,000 Ending WIP (75% complete)16,000
Total accounted for85,000
Costs Beginning WIP: Direct materials $ 204,000 Conversion costs28,000
Total beginning WIP 232,000 Costs added during current period: Direct materials 1,554,000 Conversion costs973,000
Costs to account for$
2,759,000
Explanation / Answer
Process cost report using FIFO method: Units DM Conver costs Total B WIP 11000 0 8250 232000 75% Started and Completed 50000 50000 50000 Transferred out 61000 Normal spoilage 6600 0 0 Abnormal spoilage 1400 1400 1400 E WIP 16000 16000 12000 75% Equivalent units 67400 71650 Cost incurred 1554000 973000 2527000 Total cost to account for 2759000 Cost per Eq unit 23.05637982 13.5799023 Cost of B WIP 204000 28000 232000 added during month 0 8250*13.58=112035 112035 Total cost of B WIP 344035 Cost of Started and comp 50000*(23.06+13.58) 1832000 Cost of Tranf out 2176035 Cost of E WIP 16000*23.06=368960 12000*13.58=162960 531920 Cost of Abnormal spoilage 1400*23.06=32284 1400*13.58=19012 51296 2759251 less: Short & Excess on round of -251 Total cost accounted for 2759000
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