On the following two pages are two problems based on LetusPlay Manufacturing. Ea

Question

On the following two pages are two problems based on LetusPlay Manufacturing. Each problem is a separate scenario. For each of the two problems, prepare two production cost reports (four reports in total) in an Excel spreadsheet: one report using weighted average inventory costing, the second using FIFO inventory costing. Problem 1 - LetusPlay Manufacturing LetusPlay Manufacturing produces a plastic toy in a two-stage manufacturing operation. During the month of June, the following data were recorded for the Finishing Department Units in BWIP Percentage of BWIP completed Units started Spoiled units Units in EWIP Percentage of EWIP completed Costs in BWIP 30,000 25% 140,000 20,000 40,000 50% Transferred-in costs Direct materials Conversion costs S 143,400 152,600 $ 49,650 Costs added in the current period Transferred in Direct materials Direct labour Overhead 670,800 712,400 518,200 Direct materials are incurred at the beginning of the process. Conversion costs are incurred uniformly throughout the process. Overhead is applied at the rate of 75% of direct labour costs. Inspection occurs when production is 75% complete. Normal spoilage is 10% of all good units that pass inspection. Spoiled units are disposed of with no net disposal value. LetusPlay recognizes spoilage in determining equivalent units of output and assigns a share of the production costs to the spoiled units

Explanation / Answer

a. Production cost report using weighted average inventory costing Quantity Schedule Units in BWIP 30000 Units started 140000 Units to be accounted for 170000 Units transferred out 110000 Normal spoilage 11000 Abnormal spoilage 9000 Units in EWIP 40000 Units accounted for 170000 Equivalent units Transferred in Direct Material Conversion cost Beginning WIP 30000 30000 30000 Percentage of completion 100% 100% 25% Equivalent units 30000 30000 7500 Units transferred out 110000 110000 110000 Spoiled 20000 20000 20000 Percentage of completion 100% 100% 75% Equivalent units 20000 20000 15000 Ending WIP 40000 40000 40000 Percentage of completion 100% 100% 50% Equivalent units 40000 40000 20000 Total equivalent units 200000 200000 152500 Cost per equivalent unit Transferred in Direct Material Conversion cost Total BWIP $143,400 $152,600 $49,650 $345,650 Cost added in the period $670,800 $712,400 $906,850 $2,290,050 Cost to be accounted for $814,200 $865,000 $956,500 $2,635,700 Total equivalent units 200000 200000 152500 Cost per equivalent unit $4.07 $4.33 $6.27 $14.67 Production report BWIP Equivalent units Cost per unit Total cost Transferred in 30000 $4.07 $122,100.00 Direct Material 30000 $4.33 $129,900.00 Conversion cost 7500 $6.27 $47,025.00 BWIP Total $299,025.00 Units transffered out 110000 $14.67 $1,613,700.00 Spoiled units Transferred in 20000 $4.07 $81,400.00 Direct Material 20000 $4.33 $86,600.00 Conversion cost 15000 $6.27 $94,050.00 Spoiled units cost $262,050.00 EWIP Transferred in 40000 $4.07 $162,800.00 Direct Material 40000 $4.33 $173,200.00 Conversion cost 20000 $6.27 $125,400.00 EWIP Total $461,400.00 Total cost $2,636,175.00 b. Production cost report using FIFO costing Quantity Schedule BWIP 30000 Units started 140000 Total Units 170000 Equivalent units Units completed Direct Material Conversion Cost From BWIP 30000 22500 From units started 80000 80000 80000 Spoiled Units 20000 20000 15000 Ending WIP 40000 40000 20000 140000 137500 Cost per equivalent unit Transferred in Direct Material Conversion cost Total BWIP $143,400 $152,600 $49,650 $345,650 Cost added in the period $670,800 $712,400 $906,850 $2,290,050 Cost to be accounted for $814,200 $865,000 $956,500 $2,635,700 Total equivalent units 140000 140000 137500 Cost per equivalent unit $5.82 $6.18 $6.96 $18.95 Production report Equivalent units Cost per unit Total cost Units transffered out From BWIP 22500 $6.96 $156,600.00 From units started 80000 $18.95 $1,516,000.00 Total cost $1,672,600.00 Spoiled units Transferred in 20000 $5.82 $116,400.00 Direct Material 20000 $6.18 $123,600.00 Conversion cost 15000 $6.96 $104,400.00 Spoiled units cost $344,400.00 EWIP Transferred in 40000 $5.82 $232,800.00 Direct Material 40000 $6.18 $247,200.00 Conversion cost 20000 $6.96 $139,200.00 EWIP Total $619,200.00 Total cost $2,636,200.00 a. Production cost report using weighted average inventory costing Quantity Schedule Units in BWIP 20000 Units started 150000 Units to be accounted for 170000 Units transferred out 145000 Normal spoilage 7250 Abnormal spoilage 2750 Units in EWIP 15000 Units accounted for 170000 Equivalent units Transferred in Direct Material Conversion cost Beginning WIP 20000 20000 20000 Percentage of completion 100% 0% 30% Equivalent units 20000 0 6000 Units transferred out 145000 145000 145000 Spoiled 10000 10000 10000 Percentage of completion 100% 0% 60% Equivalent units 10000 0 6000 Ending WIP 15000 15000 15000 Percentage of completion 100% 100% 80% Equivalent units 15000 15000 12000 Total equivalent units 190000 160000 169000 Cost per equivalent unit Transferred in Direct Material Conversion cost Total BWIP $95,800 $0 $35,640 $131,440 Cost added in the period $712,500 $825,200 $953,400 $2,491,100 Cost to be accounted for $808,300 $825,200 $989,040 $2,622,540 Total equivalent units 190000 160000 169000 Cost per equivalent unit $4.25 $5.16 $5.85 $15.26 Production report BWIP Equivalent units Cost per unit Total cost Transferred in 20000 $4.25 $85,000.00 Direct Material 0 $5.16 $0.00 Conversion cost 6000 $5.85 $35,100.00 BWIP Total $120,100.00 Units transffered out 145000 $15.26 $2,212,700.00 Spoiled units Transferred in 10000 $4.25 $42,500.00 Direct Material 0 $5.16 $0.00 Conversion cost 6000 $5.85 $35,100.00 Spoiled units cost $77,600.00 EWIP Transferred in 15000 $4.25 $63,750.00 Direct Material 15000 $5.16 $77,400.00 Conversion cost 12000 $5.85 $70,200.00 EWIP Total $211,350.00 Total cost $2,621,750.00 b. Production cost report using FIFO costing Quantity Schedule BWIP 20000 Units started 150000 Total Units 170000 Equivalent units Units completed Direct Material Conversion Cost From BWIP 20000 20000 14000 From units started 125000 125000 125000 Spoiled Units 10000 0 6000 Ending WIP 15000 15000 12000 160000 157000 Cost per equivalent unit Transferred in Direct Material Conversion cost Total BWIP $95,800 $0 $35,640 $131,440 Cost added in the period $712,500 $825,200 $953,400 $2,491,100 Cost to be accounted for $808,300 $825,200 $989,040 $2,622,540 Total equivalent units 150000 160000 157000 Cost per equivalent unit $5.39 $5.16 $6.30 $16.85 Production report Equivalent units Cost per unit Total cost Units transffered out From BWIP 20000 $5.16 $103,200.00 14000 $6.30 $88,200.00 From units started 125000 $16.85 $2,106,250.00 Total cost $2,297,650.00 Spoiled units Transferred in 10000 $5.39 $53,900.00 Direct Material 0 $5.16 $0.00 Conversion cost 6000 $6.30 $37,800.00 Spoiled units cost $91,700.00 EWIP Transferred in 15000 $5.39 $80,850.00 Direct Material 15000 $5.16 $77,400.00 Conversion cost 12000 $6.30 $75,600.00 EWIP Total $233,850.00 Total cost $2,623,200.00 Difference in Cost is rounding off difference

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