Question 1 Please and thanks! Honey Dews Company produces organic honey, which i

Question

Question 1 Please and thanks!

Honey Dews Company produces organic honey, which it sells to health food stores and restaurants. The company owns thousands of beehives. No direct materials other than honey are used. The production operation is a simple one. Impure honey is added at the beginning of the process and flows through a series filterings, leading to a pure finished product. Costs of labor and overhead are incurred uniformly throughout the filtering process. Production data for April and May are as follows:

Beginning work in process inventory   April       May
   Units (liters) 7,100       12,400
   Direct materials $2,480       ?*
   Conversion costs $5,110       ?*
Production during the period
   Units started (liters) 288,000   310,000
   Direct materials $100,800   $117,800
   Conversion costs $251,550   $277,281
Ending work in process inventory
   Units (liters) 12,400       16,900

*From calculations at end of April.

The beginning work in process inventory for April was 80 percent complete for conversion costs, and ending work in process inventory was 20 percent complete. The ending work in process inventory for May was 30 percent complete for conversion costs. Assume that there was no loss from spoilagge or evaporation.

   Requirements
1. Using the FIFO method, prepare a process cost report for April.
2. From the information in the process cost report, identity the amount that should be transferred out of the Work in Process Inventory account, annd state whereh those dollars should be transferred.
3. Repeat requirements 1 and 2 for May.

Explanation / Answer

1./

AMOUNT $ BEGINNING WORK IN PROCESS DIRECT MATERIAL 7100LTRS 100% COMPLITED 0 CONVERSION COST 80% COMPLITED ($5110 / 80%) * 20% 1277.5 ADD 100% COMPLITED PRODUCTION DURING MONTH 275600 LTRS DIRECT MATERIAL ($100800 /288000) * 275600 96460 DIRECT LABOUR ($251550 / 288000) * 275600 240719.38 LESS ENDING WORK IN PROCESS DIRECT MATERIAL 100%COMPLITE ($100800 /288000) * 12400 (4340) DIRECT LABOUR 30% COMPLITE [($251550 / 288000) * 12400] * 30% (3249.19) TOTAL PROCESS COST 330867.69

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