MA19 Problem: Process Costing – Equivalent Units – Satarelli Corp.

MA19 Problem: Process Costing – Equivalent Units – Satarelli Corp.

Sartarelli Corporation is a manufacturer that uses process costing to account for costs of  production. Sartarelli manufactures a product in three separate departments: Moulding,Assembly, and Finishing. The following information was obtained for the AssemblingDepartment for the month of June:Work in process, June 1 – 1,000 units made up of the following:

 Degree of  Amount Completion

Moulding department costs transferred in $32,000 100%Costs added by the Assembly DepartmentDirect materials 20,000 100Direct labour 7,200 60Manufacturing overhead 5,500 50Work in process, June 1 $64,700During the month of June, 5,000 units were transferred in from the Moulding Department at acost of $160,000. The Assembly Department added the following $150,000 of costs:Direct materials $ 96,000Direct labour 36,000Manufacturing overhead 18,000$150,000Four thousand units were completed and transferred to the Finishing Department.At June 30, 2,000 units were still in WIP. The degree of completion of WIP at June 30 was asfollows:Direct materials 90%Direct labour 70Manufacturing overhead 35

 Required – 

Calculate the cost of the units transferred out to the Finishing department and the value of theending WIP assuming that the Sartarelli Company used (a) the weighted average method and (b)the FIFO method.

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CMA Ontario

P-36

MA20 Problem: Process Costing – Equivalent Units – Tsizis Corporation

Tsizis Corporation makes a product called Turbulence in one department of the company. Directmaterials are added at the beginning of the process. Labor and overhead are added continuouslythroughout the process. Spoilage, if any, occurs at the beginning of the process just after materials have been added but before any conversion costs have been incurred.The following information relates to production during November:1. Work in process inventory, November 1 (4,000 kg. - 75 percent complete):Direct materials $22,800Direct labour 24,650Manufacturing overhead 21,8602. Direct materials:Inventory, November 1 - 2,000 kg. $10,000Purchases, November 3 - 10,000 kg. 51,000Purchases, November 18 - 10,000 kg. 51,500Sent to production during November - 16,000 kg.3. Direct labour costs - $103,350.4. Manufacturing overhead costs - $93,3405. Transferred out to finished goods inventory – 15,000 kg.6. Work in process inventory, November 30, 3,000 kg., 33 1/3 percent complete as toconversion costs.The FIFO method is used for both materials inventory valuation and for WIP inventories.The controller has determined that any spoilage in excess of 1,300 units is abnormal spoilage.

 Required – 

Calculate the cost of the units transferred out to finished goods inventory and the value of theending WIP. Calculate the value of abnormal spoilage.