Ramsha Industries Makes Rocking Chairs. The Chairs Are Assembled In The Assembly
ID: 2528674 • Letter: R
Question
Ramsha Industries Makes Rocking Chairs. The Chairs Are Assembled In The Assembly Department ... Question: Ramsha Industries makes rocking chairs. The chairs are assembled in the Assembly Department and s... 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 in the Assembly Department. Ramsha uses the FIFO cost method of process costing. Activity during February in the Assembly Department: Production activity:
Material Conversion
Work in process, beginning inventory 1,000 90% 50%
Started in February 6,000
Good units transferred out 6,000
Work in process, ending inventory 900 95% 75%
Cost activity: total material conversion
Total Material Conversion Costs in beginning WIP 83,830 $ 65,080 $ 18,750 $
February costs 525,570 387,520 138,050
What is the total cost of the units transferred out? What is the cost of ending inventory?
How much should be charged to Loss from Abnormal Spoilage?
What is the unit cost of the goods transferred out in February?
Explanation / Answer
FIFO method Beggining units 1000 Transferred out 6,000 Started intro production 6000 Normal spoilage 60 Abnormal spoilage 40 Ending units 900 7000 7,000 Equivalent units Material Conversion Beginning units 1000 1000 Completion in current period 10% 50% A 100 500 Units started and completed 5,000 5,000 Completion 100% 100% B 5000 5000 Abnormal spoilage 40 40 Completion 100% 100% C 40 40 Ending Units 900 900 Completion 95% 75% D 855 675 Total units A+B+C 5995 6215 Per unit cost Cost Total units Per unit cost Material cost 387520 5995 64.64 Conversion cost 138050 6215 22.21 525570 86.85 Cost of goods sold Material convertion cost Beginning inventory completed Completion 10% 50% Per unit cost 64.64 22.21 Units 1000 1000 Total cost A 6464 11106 17570 Abnormal spoilage Completion 100% 100% Per unit cost 64.64 22.21 Units 40 40 Total cost B 2586 888 3474 Units started and completed Completion 100% 100% Per unit cost 64.64 22.21 Units 5,000 5000 Total cost C 323203 111062 434265 Beginning WIP 65080 18750 83830 Total A+B+C 539139 Ending work in progress Completion 95% 75% Per unit cost 64.64 22.21 Units 900 900 Total cost 55268 14993 70261
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