Bonzoo Company produces Barfilers. The company has two departments -– the Prepar
ID: 2475116 • Letter: B
Question
Bonzoo Company produces Barfilers. The company has two departments -– the Preparation Department and the Processing Department. Bonzoo uses the Weighted Average cost method for the Preparation Department and FIFO for the Processing Department. To handle this cheap product, plastics are molded into the different formations by the Preparation Department. All formations cost the same. The Processing Department puts the pieces together, adds special additional parts along the way, and puts the finishing touches on the product.
Processing Department
The Processing Department assembles the pieces into the final product and puts on two coats of Plastic Protection. Once they start to assemble the product, the pieces are combined with the addition of a Petro Violator. This adds strength to the product. The Petro Violator is added at the 35% point. Once the product reaches the 65% point, the movable Mobil Vidar is added. Finally, near the end of the process, Plastic Protector is added. There are two coats added, one at the 85% point (the Plastic Protector) and one at the 90% point (the Special Plastic Protector).
Beginning Work-In-Process for the Processing Department is 45 percent complete as to conversion and contains the transfer-in costs from the Preparation Department of $730,000 and $55,000 for the Petro Violator. Conversion costs for beginning inventory is $450,000. The ending inventory has progressed to the 70% percent point based on conversion progress.
There are three points of inspection by the Processing Department
The first inspection is after the parts arrive from the Preparation Department. They are checked carefully to minimize problems. This inspection occurs when conversion reaches the 10% point in the process. Normal spoilage is 7.5% of the total good units completed and transferred out.
The second inspection is at the 65% conversion point when the Mobil Vidar is supposed to be added. This is a very delicate point. The Mobil Vidar is first added. Then the inspection test occurs. If the product including the Mobil Vidar passes the inspection, the product assembly continues; it not, the product including the Mobil Vidar is rejected and thrown away with no salvage value. Normal spoilage for the second inspection is 6% of total good units completed and transferred out.
A final inspection is made before the application of the Plastic Protector. This test assures that the product is properly completed. At that point, if the product does not pass, it is rejected; if it does pass, then the final steps in the process occur. Normal spoilage is .5% of total good units completed and transferred out. This third inspection occurs at the 80% conversion point in the process.
There are no additional inspections. Management feels the job is done and there is minimal risk with the rest of the process.
Spoiled units have no value and are discarded after inspection.
Processing Department
In Units:
Work in process, June 1 81,000
Units started in June ????
Successfully completed in June 260,000
Discovery of units spoiled at first inspection 22,050
Discovery of units spoiled at second inspection 12,000
Discovery of units spoiled at the third inspection 3,500
Work in process, June 30 26,500
Dollars:
The costs added to the process were for materials were $107,350 for the Petro Violator, $230,000 for the Mobil Vidar, $14,000 for the first coat of Plastic Protector, and $17,000 for the second coat of the Special Plastic Protector. The conversion cost incurred in June was $296,500.
Using EXCEL, construct spreadsheets that will generate the process cost reports for Processing Departments for June of 2015.
I KNOW THIS IS A LONG AND COMPLEX QUESTION AND I WOULD BE REALLY APPRECIATED IF ANYONE CAN ANSWER IT OR JUST GIVE SOME OUTLINES, THANKS!!
SOME OTHER INFOMATION MAY NEED FOR THE PREVIOUS DEPARTMEN ( THE PREPARATION DEPARTMENT):
$ 574,901.38
Total transferred to Processing Dep.$ 574,901.38
Explanation / Answer
Statement showing equivalent Unit Equivalent Units Physical Units Material Conversion Cost WIP (beginning) 81000 Started During Current Period (324050-81000) 243050 Total 324050 Units Completed 260000*100%, 260000* 100% 260000 260000 260000 Work in process, ending (given) 26500*100%; 26500*70% 26500 26500 18550 Units spoiled at the first inspection: 22050*0%; 22050*10% 22050 0 2205 Units spoiled at the second inspection: 12000*100%, 12000*65% 12000 12000 7800 Units spoiled at the third inspection: 3500*100%, 3500*100% 3500 3500 3500 Accounted for 324050 Work done in current period only (equivalent Unit) 302000 292055 Particulars Material Conversion Total Cost WIP 785000 450000 1235000 Cost incurred during the year 368350 296500 664850 Total Cost 1153350 746500 1899850 Equivalent Units 302000 292055 Cost per Equivalent Unit 3.82 2.56 Total costs to account for 1899850 Good Units Completed: (243050*0.52); (243050*1.83) 992950 664567 1657517 Cost of Normal Spoilage: (15600*3.82)+(12090*2.56) 59577.01987 30902.34716 90479.36703 Cost Transferred to Loss Account Abnormal Shortage: (-100*0.52)+(1415*2.56) -381.9039735 3616.77595 3234.871976 WIP ending : (26500*3.82)+(18550*2.56) 101204.553 47414.27128 148618.8243 1899850 Particulars Total Equivalent Material Equivalent Conversion units spoiled at the first inspection 12000.00 0 2205 units spoiled at the second inspection 3500.00 12000 7800 units spoiled at the third inspection 26500.00 3500 3500 42000.00 15500.00 13505.00 Normal Shortage: units spoiled at the first inspection (7.5%) 19500.00 0 1950 units spoiled at the second inspection (6%) 15600.00 15600 10140 units spoiled at the second inspection (5%) 13000.00 13000 13000 35100.00 15600 12090 Abnormal (gain)Shortage 6900.00 -100.00 1415.00