In its Department R, Recyclers, Inc., processes donated scrap cloth into towels
ID: 2410948 • Letter: I
Question
In its Department R, Recyclers, Inc., processes donated scrap cloth into towels for sale in local thrift shops. It sells the products at cost. The direct materials costs are zero, but the operation requires the use of direct labor and overhead. The company uses a process costing system and tracks the processing volume and costs incurred in each period. At the start of the current period, 600 towels were in process and were 60 percent complete. The costs incurred were $2,517.
During the month, costs of $24,750 were incurred, 3,300 towels were started, and 300 towels were still in process at the end of the month. At the end of the month, the towels were 20 percent complete.
Required:
a. Prepare a production cost report; the company uses weighted-average process costing. (Round "Conversion costs" to 2 decimal places.)
In its Department R, Recyclers, Inc., processes donated scrap cloth into towels for sale in local thrift shops. It sells the products at cost. The direct materials costs are zero, but the operation requires the use of direct labor and overhead. The company uses a process costing system and tracks the processing volume and costs incurred in each period. At the start of the current period, 600 towels were in process and were 60 percent complete. The costs incurred were $2,517 During the month, costs of $24,750 were incurred, 3,300 towels were started, and 00 towels were stil in process at the end of the month. At the end of the month, the towels were 20 percent complete costing. (Round Conversion costs" to 2 decimal places.) b. Show the flow of costs through T-accounts. Assume that current period conversion costs are credited to various payables. (Do not round intermediate calculations. Round your answers to 2 decimal places.)Explanation / Answer
Recyclers Inc Production Cost Report - Weighted Average Flow of Production Units Compute Equivalent Units Physical Units Conversion Costs Units to be accounted for Beginning WIP (600*60%) 600 Units started this period 3,300 Total Units to be accounted for 3,900 Units accounted for Units completed and transferred out 3,600 3,600 Units in Ending inventory (300*20%) 300 60 Tota l Units accounted for 3,900 3,660 Costs Total Costs Conversion Costs Costs in beginning WIP inventory 2,517 2,517 Current Period Costs 24,750 24,750 Total Costs to be accounted for 27,267 27,267 Cost per equivalent Unit Conversion cost (27267/3660) 7.45 Costs assigned to units transferred out Conversion Costs (3600*7.45) 26,820 Cost assigned to ending WIP Inventory 447 Conversion Costs (60*7.45) Total Costs to be accounted for 27,267 Work In Progress Beginning Inventory 2517 Finished Goods Inventory 26820 Transfer to Finished Inventory This Period Costs: Various Payable 24750 Transfer to Various Payables Ending Inventory 447 Various Payable Beg Bal Cash/Expenses 24750 Various Payables recorded Work in Progress 24750 Various expenses transferred to WIP Ending balance - - Finished Goods Inventory Debit Credit Description Beg Bal Work In Progress 26820 Transfer from Work in Progress Ending bal 26820