Eagle Eye procures fish and then makes them into fillets and then prepares the f
ID: 2588096 • Letter: E
Question
Eagle Eye procures fish and then makes them into fillets and then prepares the fish fillets for distribution. Direct materials are added at the initiation of the cycle. Conversion costs are incurred evenly throughout the production cycle. Before inspection, some fillets are spoiled due to non-detectible defects. Inspection occurs when units are 50% converted. Spoiled fillets generally constitute 5% of the good fillets. Eagle Eye utilizes the First-In, First-Out Method of Process Costing. The records from June 2018 indicate the following:
WIP, beginning inventory 6/1/2018 75,000 fillets
Direct materials (100% complete)
Conversion costs (40% complete)
Started during June 153,950 fillets
Completed and transferred out 6/30/2018 115,000 fillets
WIP, ending inventory 6/30/2018 32,000 fillets
Direct materials (100% complete)
Conversion costs (20% complete)
Costs for June:
WIP, beginning Inventory:
Direct materials $ 150,000
Conversion costs 97,910
Direct materials added 305,000
Conversion costs added 393,130
a) What is the number of total spoiled units?
b) Normal spoilage units totals?
c) Abnormal spoilage units totals?
d) What is the total cost per equivalent unit using the first-in first-out method of process costing for Direct Materials?
e) What cost is allocated to abnormal spoilage using the first-in first-out process-costing method?
f) What is the amount of direct materials and conversion costs assigned to ending work in process using the first-in first-out process-costing method?
Explanation / Answer
a. Number total spoiled units is 81,950.
b. Normal spoilage units = 5,750 (5% of good units i.e., 5% of 115,000)
c. Abnormal spoilage units = 76,200.
Working for the above is given below.
(d) Total cost per equivalent unit using the first-in-first-out method of process costing for Direct Material = $1.98
(e) Cost allocated to abnormal spoilage using the first-in-first-out process costing method = $255,649
(f) Ending work - in - process = $82,368.
Materials = $63,360. Conversion = $19,008.
Working for the above is given below.
Unit Information Units charged to production : Inventory in process , June 1 75000 Received from weaving department 153950 Total units accounted for by the cutting department 228950 Accounted by: Transferred out 115000 Ending inventory , June 30 32000 Total 147000 Spoilage (228,950 - 147,000) 81950 Normal spoilage (5% of goodd fillets) 5% of 115,000 5750 Abnormal spoilage 76200Related Questions
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