MA21 Problem: Process Costing – Equivalent Units – Gagnon Company

MA21 Problem: Process Costing – Equivalent Units – Gagnon Company

The Gagnon Manufacturing Company uses a process costing system for its three productiondepartments: Initiation, Assembly, and Finishing. The following data is available for theAssembly department for the month of September:Opening WIPUnits 15,000 Costs -Transferred-in $97,650Direct materials 186,450Conversion costs (60% complete) 77,670 Units transferred in from the Initiation Department 46,000 Units transferred out to the Finishing Department 48,500 Costs added during monthTransferred-in $298,540Direct materials 460,650Conversion costs 382,956 Units in ending WIP (25% completed as to conversion costs) 9,000 The Assembly department adds direct materials when the process if 40% complete. Inspectiontakes place when the process is 75% complete at which time all spoiled units are detected. Theengineering department has concluded that any spoiled units in excess of 1,500 for the month of September can be considered abnormal spoilage.

 Required – 

Calculate the cost of the units transferred out to finished goods inventory, the value of the endingWIP and the value of abnormal spoilage under (a) the FIFO method and (b) the weighted average method.