Ramsha Industries makes rocking chairs. The chairs are assembled in the Assembly

Question

Ramsha Industries makes rocking chairs.  The chairs are assembled in the
Assembly Department and stained and sealed in the Finishing Department.  Chairs are
tested for quality in the Assembly Department before being transferred to Finishing.  
Normal spoilage (defective chairs) averages 1% of good units.
Ramsha uses the FIFO cost method of process costing. Activity during February: Stage of completion Production activity: Material Conversion Work in process, beginning inventory 100 80% 50% Started in February 800 Good units transferred out 800 Work in process, ending inventory 90 80% 50% How many, if any, units were rejected? What would be considered normal spoilage (in units)? Cost activity: Total Material Conversion Costs in beginning WIP $19,165 $7,540 $11,625 February costs 163,962 68,972 94,990 What is the total cost of the units transferred out? What is the cost of ending inventory? What is the unit cost of the goods transferred out in February? How much should be charged to Loss from Abnormal Spoilage? Ramsha Industries makes rocking chairs.  The chairs are assembled in the
Assembly Department and stained and sealed in the Finishing Department.  Chairs are
tested for quality in the Assembly Department before being transferred to Finishing.  
Normal spoilage (defective chairs) averages 1% of good units.
Ramsha uses the FIFO cost method of process costing. Activity during February: Stage of completion Production activity: Material Conversion Work in process, beginning inventory 100 80% 50% Started in February 800 Good units transferred out 800 Work in process, ending inventory 90 80% 50% How many, if any, units were rejected? What would be considered normal spoilage (in units)? Cost activity: Total Material Conversion Costs in beginning WIP $19,165 $7,540 $11,625 February costs 163,962 68,972 94,990 What is the total cost of the units transferred out? What is the cost of ending inventory? What is the unit cost of the goods transferred out in February? How much should be charged to Loss from Abnormal Spoilage?

Explanation / Answer

Units Material % Equivalent Units Materials materal cost Material cost/eq unit Conversion Equivalent Units Conversion Conversion cost Conversion cost /Eq unit Opening WIP 100 80% 80 50% 50 Opening WIP finished in Feb 20 20 50 50 Started in Feb 800 Started and transferred 700 100% 700 100% 700 Closing WIP 90 80% 72 50% 45 Total Spoilage 10 Normal spoilage 1% of good units 7 Abnormal spoilage 2 100% 2 100% 2 Equivalent Units 874      76,512 87.54 847        106,615 125.9 ( normal spoilage cost is absorbed as good production ) Total Units rejected = 10 units Normal Spoilage = 8 units Material Conversion Total Cost Equivalent Unit Cost 87.54 125.9 213.4160059 Units transferred 800 units Total cost of units transferred $              170,733 Closing Inventory Equivalent Material Equivalent Conversion Total Closing Inventory Units 90 72 45 Per Equivalent unit cost 87.54 125.9 Total Cost of inventory                       6,303                  5,664               11,967 So cost of ending inventory $          11,967.36 Units transferred 800 units Total cost of units transferred $              170,733 Unit cost of good units transferred $                213.42 Material Conversion Total Cost Equivalent Unit Cost 87.54 125.9 213.42 Abnormal loss units =2 Total abnormal spoilage cost to be charged ti Income statement $                426.83

Related Questions

Navigate

• Browse (All)
• Browse R
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.